Social media marketing has become a profitable industry since the late 2010s. In 2022, the market was estimated to be worth $117 billion and is growing yearly as companies shift their focus from traditional marketing channels to social media marketing which has proven its effectiveness.
In this blog post, we will cover the profitability of social media marketing agencies to help you get an understanding of the overall return of starting a social media marketing agency.
Table of Content:
Is a Social Media Marketing Agency Profitable?
Is Starting a Social Media Marketing Agency Worth it?
How Can your Agency Turn a Profit?
How Much Can Social Media Marketing Agencies Make?
Is a Social Media Marketing Agency Profitable?
Most successful social media agencies can cover their expenses and make a profit within the first 7 months of their establishment.
I won’t generalize here since each agency has its obstacles and other elements that affect whether your investment is successful. However, social media agencies tend to turn a profit, and the revenue grows as the agency expands and attracts new customers and projects.
Depending on your investment you should start making money after a couple of months or so. Most successful social media agencies can cover their expenses and make a profit within the first 7 months of their establishment. However, The first few months can be challenging as you navigate your way through generating a profit and proving your worth to existing clients.
To keep you on track, you should monitor all of your expenses from the get-go. This will help assess growth and make any necessary adjustments to your initial business plan.
Is Starting a Social Media Marketing Agency Worth it?
Social media marketing agencies are generally worth every penny you put into them.
Again, it depends on different elements from the quality of the work to the market, but social media marketing agencies are generally worth every penny you put into them. According to a report by Agency Analytics, social media marketing agencies can make anywhere from $1,500 to $25,000 a month for each client.
Social media marketing agencies have a profit margin of approximately 11% to 20% depending on how large they are and how much they charge for their services. Either way, starting a social media marketing agency is very much worth it. Mainly because it has low overhead costs and high upside potential.
However, for this industry to be worth it for your agency, your agency will have to be worth it for your clients. Creating curated and unique social media marketing campaigns for your clients is an essential practice among many others we detailed in full in this blog post.
How Can your Agency Turn a Profit?
There are different avenues social media marketing agencies can dive in to make money. They mainly offer services like creating effective social media campaigns, paid or organic, and executing them. This includes creating content, scheduling, and automating social media posts. Many agencies use social media management tools, like Nuelink, that accommodate agencies to manage and collaborate with and on multiple clients’ socials at once.
Social media managers also help influencers and content creators maintain an active social media presence. Besides managing their content, social media agencies help content creators secure paid partnerships with companies looking to sponsor them. They usually make a percentage off the sponsorship which can be quite a bit of money depending on the following of the creator.
These are but a few of the services they offer. You can read more about the different services agencies offers in this blog post.
How Much Can Social Media Marketing Agencies Make?
There is, however, no straight answer for how much social media marketing agencies make.
If you are keeping up with the industry, you know that big social media companies like Google and Facebook are making less money on Ads but that is nothing to fret about. This doesn’t mean that the industry is losing money since this money is funneled to more effective channels like TikTok and influencer marketing. So, to maximize your profit you will need to adapt to these new changes.
Different social media marketing agencies have different pricing models. These models usually fall under one of these categories:
- The Hourly Model: This is the most common model for agencies. You can change your hourly rate as you grow as a business.
- The Retainer Model: This helps you have an idea of your monthly recurring revenue. You can offer a package deal and charge more for extra services.
- The Performance-Based Fee Model: Although this model is based on scalable metrics that can only be collected after finalizing your campaigns, you should charge an upfront payment to cover your agency’s expenses.
There are other models that some agencies go for. There is, however, no straight answer for how much social media marketing agencies make. Depending on your initial investment, it can be anything from $240K to millions of dollars in annual revenue.
Overall, the success of your social media marketing agency and how much profit it makes depend on the quality of the work and the type of services you offer. These are things you have to determine when you are starting your agency.
