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How to Start a Digital Marketing Agency in India

By Deepak Kanakaraju in digital marketing agency —
How to Start a Digital Marketing Agency in India

Recently I had announced that I am going to start a digital marketing agency called Pixel Track. You might have also noticed that I promised to write about the journey as I go along. I am just getting started with forming the company and I want to talk about the journey so far.

If I keep writing about my journey from time to time it will make sure that I will not miss out on any details. This series of posts will help you go ahead and start your own agency as well.

Deciding to start an agency is a very big leap that I have taken in my life. Earlier I used to work as full time digital marketing manager in several companies and in such cases it was very easy to handle the workload.

We have to understand that it is always exciting to start something new. But there are very few people who can take it to completion. We have to be one of those few people. Usually after starting something there is going to be a small dip in the enthusiasm because of the challenges that one has to go through. But you have to stay confident and motivated to continue through the dip and then you will see a high rise again.

You can cross this dip only if you have a bigger purpose to give meaning to what you are doing. You should genuinely want to help clients with their digital marketing activities and digital marketing should be something that excites you. If you are going to do this only for the sake of money I don’t think you can be successful in it. But if you have the right attitude then I am here to help you share my journey and I hope to see you as a successful agency owner someday.

The Challenges

There are many challenges that faces an agency owner. Apart from handling clients, you need to keep a check on hiring, accounting, payroll, account management, and marketing process. The mindset shifts entirely from ‘job seeker’ to ‘job provider.’ You become responsible for others’ growth- be it your clients or team members.

Due to an endless list of competitors, winning and retaining clients demands a high level of expertise. There is no overnight success. In the initial days, you have to put in extra sweat by over delivering, extra hours by compromising your personal life.

The Opportunity

Now, coming to the exciting and promising part.

According to the ‘Digital Advertising in India’ report, current spending on digital marketing is 12%. According to some CMO’s, some brands and industries spend up to 50-55 % of their marketing budget on digital. Interestingly, some of the new age online retail firm spends as high as 75-80 %.

The possibilities are infinite. You just have to keep the positive attitude and maintain your composure throughout every jump and bump. Many people think that how is it possible to compete in such a competitive market where there are so many Agencies out there. The good news is that agency services are not very easy to scale.

Unlike software products agency services cannot be replicated very quickly. That means that a lot of clients are still waiting for a good digital marketing agency to take on their marketing activities. There are plenty of offline and online businesses around you who are still waiting to get a good digital marketing help.

For example, I heard that recently a digital marketer reached out to a school who had no Facebook page or had no YouTube channel. He helped them set up all these online properties and help them gain a thousand likes on their Facebook page. He was able to charge a small service fee for the school for this setup.

Agency services can be as simple as this and it can go all the way to complex campaigns like launching a viral campaign for a high profile product launch. Clients do not have the time of the resources to learn digital marketing themselves. And they definitely cannot go ahead and hire a hot-shot digital marketer full time. Their only hope is to find a digital marketing agency who can help them optimise their campaigns and that could be you.

Internet adoption in India is at an all time high. 26% of the population has access to the Internet via mobile phones. Around 5% to 7% of the population has access to the Internet via desktop and laptop computers. If you consider high-quality Internet users, they are the uses who used desktops and this percentage can go up to 30% by 2025. Which means the current market size can grow by 5x in the next 7-8 years.

Most of the businesses in India still do not have a proper digital marketing presence and they will not be able acquire customers for their business if they don’t have a digital marketing strategy in place. If you are reading this right now and if you cannot help these people; who else do you think will help them have a digital marketing presence?

So let’s get started on this exciting journey of starting a digital marketing agency and hope you will be able to get the maximum value out of these posts. Keep the following topics close to your heart while starting your digital marketing agency:

1. Choosing a Brand Name

What’s in the name? If you think the same, give it a thought because your agency’s name stays forever with you. Some take it casually without giving a thought. Some take names which resemble with the name of an authority site. This cheap publicity, for the useless mileage, doesn’t sustain for long. The name not only defines your digital presence but conveys your vision.

I love Facebook pixels a lot and I love the way they can track user behaviour on the site. pixels are not limited to Facebook alone, almost every email marketing tool and advertising tool today uses pixels to track users behaviour. So I came up with the name ‘Pixel Track’ as the name for my digital marketing agency.

2. Choosing a Domain Name

I have always been a guy who has preferred dot coms for websites. But I like the name Pixel Track a lot and I couldn’t get the .com version of it. I would have definitely wanted a .com domain name if there are a lot of people who are going to remember the name and visit the website. Having a dotcom name is very important for a B2C website.

In this case since Pixel Track is going to be a purely B2B business. I will not be having a lot of type it traffic to my website. In that case having a .in would suffice because a lot of sales is going to be driven by the sales team with a direct contact with the decision maker. I am still trying to get in touch with the owner of the .com name. When Pixel Track becomes an established brand and if the .com version has no brand or website with them, we might even be able to get the domain name for free.

3. Logo Design and Business Cards

Humans are very visual creatures. We remember what we see better than what we read. A good logo helps in increasing brand recall. It makes your presence unique and memorable. It doesn’t mean you have to spend loads of money perfecting your logo.

For my logo, I took the help from Learn Digital Marketing Facebook group members through logo competition. I liked one of the entries and finalized it. In future, we might spend time on analyzing different sample logo design. Once the agency starts getting clients, we might also allocate a budget for an improved design.  To get the highest quality designs, I prefer using 99designs.com. For a lower budget, 48hourlogo.com is not a bad choice either.

You can also get a business card designed along with your logo. Any local printing company can help you get quality business cards printed. Business cards are an effective direct marketing tool for reflecting sincerity towards your work.

They come handy in the following situations:

  • Tradeshows
  • Airport Lounges
  • Industry Conferences
  • Bus/Taxi/Train/Plane
  • Happy Hours
  • Business Centres

You never know from where you make a valuable business connection. Always be ready with your business card to strike a meaningful conversation. Make your business card professional and standard. Don’t try any tricks with it. Also do not make the business card unnecessarily expensive.

4. Get a Partner or Go Solo: Your Decision

For Pixel Track, I have got a co-founder who will join the agency as Chief Operations Officer (COO). While choosing the partnership path, make sure you are on the same page with your partner/s. The following questions must be clear in advance to avoid confusion at a later stage:

  • How does inclusion strengthen the agency’s goals?
  • How much workload ease off with the addition?
  • Does my partner commit for a long-term relationship?

I chose a partner because, apart from the agency work, I have to invest quality time on:

  • Structuring courses for providing a learning environment at an affordable cost.
  • Focusing on building a hiring platform for digital marketing aspirants.
  • Working on top-of-the-funnel activities to engage with the audience.
  • Building the brand for bringing in as many people in the ‘Digital Deepak’ brand.
  • Converting a percentage of readers into paying clients for my services and consultancy.

5. Understanding the Partnership Deed

If you want to start agency on your own, go for sole proprietorship where a single individual owns, manages, and controls the business. People prefer partnerships and proprietorship over Pvt Ltd. companies and Limited Liability Partnership (LLP) because the former ones are easy to set up with less statutory compliances.

As I have a partner, we created a partnership deed for which CA charged us INR 14,000 for the complete process. This includes getting TAN, PAN and GST as well (explained below). For an agency, a simple partnership works well because it doesn’t require any investor and issued shares.

Partnership deed is a written legal document highlighting the rights and responsibilities of the partners. It promotes mutual understanding and trust among the partnership members.

Although not mandatory, it is better to register your agency under the Indian Partnership Act. The registration gives you the right to file a lawsuit against the third party, co-partner protection, property protection, to name a few.

6. Taxation and Accounting in India

Whatever you read hear about taxation is not legal advice and just my own experience. For legal reasons I would request you to consult with a lawyer and a chartered accountant.

There are types types of taxation is involved in running a company.

  • Direct Tax or Income Tax
  • Indirect Tax (GST) – Tax on Consumption
  • Tax Deduction on Payments made by you to your vendors or employees

1. Direct Tax (Tax on Income)

Direct taxation is the tax that you would pay on your income. If you are running your company and if you break even, then you do not need to pay any tax on income because you have no income.

To pay tax to the Income Tax Department you need a PAN number for the company. You can apply for a PAN number after the company is registered. This number is just like the PAN number that you have for personal income taxes, but the PAN number will be for the company. Good news is that you don’t need Aadhar card for the company!

Note that you have to be an employee in your own company and you can pay yourself a salary if you want. If you don’t want to withdraw a salary during the initial days, you can just mark a token salary for yourself. Your will be paying personal income tax like an employee on the income from your own company. And this income has all the benefits like deductions on housing loan, insurance etc.

2. Indirect Tax (Tax on Spending – GST)

Indirect tax is the tax that you have to pay on consumption. Whenever you buy something for your company like a computer you have to pay a sales tax on it.

We used to have value added tax which was charged by the state and we used to have service tax which was charged by the central government. Both of this is now replaced by GST. this simplifies the indirect taxation to a huge extent and once the GST system is an place businesses will be able to operate faster and smoother.

To pay indirect taxes you need a GST number. Your chartered accountant will help you get a GST number along with PAN number.

One important thing to note about GST is the input credit. Which means that you can balance the GST that you collect and the GST that you pay.

To help you understand consider the following example:

  • I provide INR 1,00,000 worth of services to my client. And when I send him the invoice I have to charge 18% GST on it. Which means that the total amount that the client has to pay is 1,18,000 rupees. I have to deposit the GST that I collected against my GST number. However I would have many expenses as well in running my company.
  • For the sake of simplicity consider that I do not have any other expenses apart from a computer which I purchased for INR 1,00,000. The total cost of the computer is INR 1,18,000 including GST. In this case you can see that I need a computer to provide services worth INR 1,00,000 to my client. And, I have already paid 18% GST in the process of creating value for my client.
  • Since I have already paid INR 18,000 in GST, I can take it as an input credit, and I don’t need to deposit the 18% GST that I collected against my GST number. Which means I can keep the INR 1,18,000 I charged from my client and I have no GST liability on it.

In cases of offline purchase I need to update this manually. Certain vendors have a facility where you can update the GST number with them and they will update the input credit for you.

For example, Facebook ads on Google ads will update your GST account with the spend that you have done. The GST system is still yet to be completely robust and in the meantime we might have a lot of errors. But eventually once the system is perfect you will have it working seamlessly.

3. Tax Deduction at Source

Apart from the direct tax that you pay on income at the indirect tax that you pay on consumption you also have to take care of the taxation for your partners and employees.

Tax deduction at source is a system which was devised to prevent people who evade income taxes. If you have a professional working with you and if you are paying a fee of INR 1,00,000 to this professional, then you have to deduct 10% on this amount, and deposit against his PAN number. To do this deduction you need a TAN number! You need to do a similar procedure if you have full time employees and if you are paying a monthly salary to them.

If you have been an employee before you know how this works, your employer will deduct tax at source and they will deposit against your PAN number. If your total tax liability for the year is less than the amount that they have deducted then you can get a refund from the IT Department. If your total tax liability is more than the TDS which has been deposited against the account then you have to go ahead and pay the extra tax.

Dealing with Accounting and Taxation

The Indian government has made it very complex to deal with the taxation issues and we need a chartered accountant and accountant inside our office to take care of all these things. You need to maintain books of accounts and maintain records of all the expenses and income that you are generating.

In the beginning, you can manage your bookkeeping with accounting software programs such as QuickBooks and Zoho Invoice. Such software simplify customer invoicing and automate payment collections.

As clients and employees count increases, the accounting becomes more complex. In that case, you have an option to hire an accountant or outsource your accounting service.

Final Words

Aim for consistency. Never stop learning. No matter how small the client is, don’t take any project lightly. If you are in, give your best shot. There will be times when you need a break to avoid burnout. In those situations, switch off from all work-related stress and invest time in your hobbies. I love riding bikes. The warmth of the fresh air, caressing my body, rejuvenates my mind. Set the expectations clear with your clients. Never set unreal targets to attract your prospects.

Under promise and over deliver.

All the best for starting your Digital Marketing Agency!

If you have any questions, leave a comment below!