Digital Agency

How Profitable Is A Digital Agency? (Updated for 2024)

Pat Walls

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Updated: September 27th, 2024

How Profitable Is A Digital Agency? (Updated for 2024)

So you want to start a digital agency?

And the first question that came to your mind was, “well, are digital agencies actually profitable?”

Especially considering:

You could start a digital agency with as low as $10
Based on our data, digital agencies generate an average of $2.23M per year
You could see gross margins as high as 95% with digital agencies

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a digital agency.

Let’s dive in!

Is a digital agency profitable?

Yes, a digital agency is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $2.23M per year with an estimated gross margin of 20%, you could expect to recover your investment within 10 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your digital agency.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your digital agency is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a digital agency worth it?

If you’re wondering if a digital agency is worth it, the answer is a big YES. With digital agencies, you have the potential to earn $2.23M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a digital agency to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful digital agencies case studies.

Examples Of Profitable Digital Agencies

Here are a few examples of profitable digital agencies, and a few more details about them:

1. Power Move Marketing ($264K/year)

Hailey Brooke McFadden, a former college volleyball player and sideline reporter, started Power Move Marketing after realizing the lack of professional marketing services offered to e-commerce businesses. With a focus on empowering women and providing excellent customer service, PMM has quickly grown, making $22,075 per month and projected to make nearly $300,000 in its first year. By prioritizing employee satisfaction and creating a positive company culture, McFadden has found success and aims to grow PMM into a marketing powerhouse with over 100 employees.

Is it profitable? Yes
How much money it makes: $264K/year
How much did it cost to start: $400

How I Started A $22K/Month One-Stop Shop Marketing Company For E-commerce Businesses

Power Move Marketing is an innovative digital marketing company founded by Hailey Brooke McFadden, which has achieved an impressive monthly income of $22,075 and is projected to make almost $300,000 in its first year, by offering a one-stop-shop for e-commerce businesses looking for a marketing powerhouse with a female positive culture.

Read this case study

Read by 11,652 founders

2. The Pedowitz Group ($18M/year)

Jeff and Cherie started The Pedowitz Group in 2007, leveraging their expertise in sales and marketing. They saw an opportunity to provide consulting services in the digital marketing space and quickly gained momentum through word-of-mouth and industry referrals. Today, they have achieved over $20 million in annual revenue and continue to focus on growth and providing excellent service to their clients.

Is it profitable? Yes
How much money it makes: $18M/year
How much did it cost to start: $500

How This Couple Started A $20M/Year Sales And Marketing Consulting Firm

Pedowitz Group, a $20M+ consulting agency, shares the story of how they grew their business by prioritizing customer retention/loyalty, being platform-agnostic, and focusing on strong results aligned with clients' key business objectives.

Read this case study

Read by 4,331 founders

3. NAV43 ($1.14M/year)

Ben Dankiw, co-founder and CEO of NAV43, came up with the idea for his technical digital marketing agency while working as a marketing coordinator. With a strong analytical mindset and experience in Google Ads, he realized the impact he could have on brands at a larger level. After partnering with colleagues and building a client roster, they scaled the business to an MRR in the 6-figures and continue to attract and retain customers through their SEO and PPC services.

Is it profitable? Yes
How much money it makes: $1.14M/year
How much did it cost to start: $25K

How Our SEO & PPC Agency Is Aiming $2M/Year With 40 Retainer Clients

NAV43 is a technical digital marketing agency specializing in SEO, CRO, and PPC services, known for its SEO delivery, averaging an MRR in the 6-figures with a client roster across e-commerce, lead generation, and publisher sites.

Read this case study

Read by 1,819 founders

Learn more about starting a digital agency:

Where to start?

-> How much does it cost to start a digital agency?
-> Pros and cons of a digital agency

Need inspiration?

-> Other digital agency success stories
-> Marketing ideas for a digital agency
-> Digital agency slogans
-> Digital agency names

Other resources

-> Digital agency tips

How much can you make with a digital agency?

With a digital agency, you can make an average of $2.23M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $10. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 10 months.

How much does a digital agency make a week?

Based on our data, average weekly revenue for a digital agency ranges around $46.4K. As such, you could see monthly revenues of $186K.

To know if your digital agency achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your digital agency.

How much do digital agencies owners make?

The income of a digital agency owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established digital agency is about $46.4K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as a digital agency owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Digital Agency Profit Margins

Generally speaking, a digital agency can expect profit margin of around 20%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a digital agency, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, digital agency owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, digital agency owners can ensure long-term sustainability and profitability for their business.

Digital agency owner salary

The salary of a digital agency owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established digital agency, in a prime position, might see an average weekly salary around the ballpark of $9.28K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, based on many of our examples, a digital agency may be a promising business to start - but the success of your digital agency mostly depends on your effort and your approach.

If you focus on these, you'll have a much higher chance of a profitable digital agency.

Part of

Starting A Digital Agency: Everything You Need To Know

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