How Much Does It Cost to Hire a Digital Marketing Agency?

Looking to invest in the long-term growth of your Chicago business? Hiring a reputable digital marketing agency is a solid place to start.

Working with a dedicated team of digital marketing experts means handing off all the tedious day-to-day digital tasks—web design, SEO, PPC, email marketing, social media marketing, video marketing, etc.—to a group of dedicated experts.

For the ambitious small business owner, this translates to saving time and cutting down on stress while expanding opportunities for growth.

However, like most small business owners, you may be concerned about digital marketing agency costs and how they will impact your already tight budget. 

In this article, we'll explore precisely what determines your digital marketing fee. We’ll look at average hourly rates for U.S. digital marketers in 2023, pricing models, deliverables, and hidden expenses and how they impact your value and ROI. 

We’ll even throw in some tips for choosing the perfect agency!

Let’s start by looking at the top deciding factors for an agency’s costs.

Factors Affecting the Cost of Hiring a Digital Marketing Company 

To get a good idea of what’s behind the price tag, we’ve got to break down the factors that come into play. The following are the 5 major elements that will influence your digital marketing agency’s cost.

1. Scope of Services Required

Whether it's mastering the art of SEO, conquering social media, running PPC ad campaigns, or creating gripping content, the more services you require, the higher the ticket price. 

Each service or channel adds value and expertise to your marketing efforts, so it's essential to align the scope with your business goals and budget.

2. Size and Complexity of the Business or Project

If your business is a heavyweight champ in its industry or your project requires specialized skills and resources, it's natural to expect the cost to go up. 

Larger businesses often have more intricate needs, require tailored strategies, and demand additional staff or resources to achieve optimal results.

On the other hand, small businesses and start-ups often start with the basics, resulting in a relatively lower fee.

3. Industry Competitiveness and Target Audience

In fiercely competitive industries or when targeting specific niche markets, digital marketing becomes a strategic battle. 

Winning over customers and outshining competitors can demand extra efforts and innovative tactics, which may come with a higher price tag. 

The complexity of reaching and engaging your target audience can also influence a digital marketing agency’s cost as it requires careful planning, research, and execution.

4. Geographic Location of the Company

Where you're based matters! The cost of digital marketing services can vary depending on regional market trends and economic factors. 

For example, agencies in major cities or more competitive markets may charge higher rates due to increased demand and operating costs.

Meanwhile, agencies in smaller towns or less competitive markets may offer more cost-effective options.

5. Reputation and Experience of the Digital Marketing Agency

Quality comes at a price, and a digital marketing agency’s experience and reputation play a significant role in determining costs. 

Established agencies with a rock-solid reputation and a proven track record of deliverables that convert often command higher prices. 

Their expertise, industry knowledge, and ability to navigate complex marketing challenges make them sought after by businesses willing to invest in premium services.

Digital Marketing Agency Pricing Models 

When it comes to the cost structure of digital marketing services, different agencies employ various pricing models to suit their clients' needs. Let's explore some common pricing models.

Hourly rates

In this model, the agency charges based on the number of hours dedicated to your project. It provides transparency and flexibility, especially for projects with varying workloads or when specific tasks require specific expertise.

Monthly retainer

With a monthly retainer, you pay a fixed fee for a predefined set of services each month. This model is beneficial for businesses that require ongoing support and a consistent level of service.

Performance-based pricing

This model ties payment to achieving specific outcomes or goals, such as lead generation, sales, or website conversions. It aligns the agency's success with your business objectives, providing an incentive for them to deliver tangible results.

Project-based pricing

For specific projects or campaigns, agencies may offer a flat fee. This model provides clarity on costs and is suitable when the scope and deliverables are well-defined.

Each pricing model has its pros and cons, so it's important to discuss with the agency which model suits your business and goals best.

Average Digital Marketing Agency Costs and Price Ranges 

Hourly Rates

According to a survey by Credo, the average hourly rate for U.S. digital marketers in 2023 is $167.28 per hour. 

In general, your company’s digital marketing needs will vary based on the number of channels you want to incorporate, as well as your budget. If you are willing to dish out, there are experienced agencies who have the know-how to give your business a serious jumpstart.

Monthly Retainer

Credo reports that more than half of all agencies require a minimum monthly retainer of up to $2,000. Just over a quarter of agencies have a minimum monthly retainer of $2,000 - $5,000, and 13.59% require retainers upwards of $5,000. Another 10% report either not having a minimum or not offering monthly retainers.

Fixed Fee

If you’re looking for a fixed-fee price, you can expect to pay $3,500 to $10,000 per project according to Price It Here. However, if you are looking for 1-2 services to start, you can expect to pay anywhere from $125 - $15,000 per month. 

Expect basic services such as copywriting and web design to be on the lower end of the scale at around $125 - $3,400 per month, while more specialized and ongoing services such as social media marketing and PPC campaigns to be on the higher end, at around $4,000 to $10,000 per month according to Expert Market. 

Remember: this all depends on your unique needs, the extent of your ideal strategy, and of course, your digital marketing agency’s experience. 

Additional Costs to Consider 

As you start to understand the cost of hiring an agency, it's crucial to be aware of potential additional expenses that may arise during a campaign. Here are some key digital marketing agency costs to keep in mind:

• Advertising budgets for paid campaigns

  Running paid campaigns on platforms like Google Ads or social media requires a dedicated budget for ad spend. This refers to the funds allocated to actually run your campaigns on different platforms, maximizing reach and visibility.

• Cost of content creation, graphic design, or video production

  Developing compelling content, eye-catching graphics, or engaging videos often involves hiring professionals or allocating resources for in-house production. These creative elements play a vital role in attracting and engaging your target audience.

• Software or tool subscriptions

  To effectively analyze data, optimize SEO, and manage social media, digital marketing often relies on specialized software or tools. These subscriptions come with associated costs and are essential for monitoring and improving campaign performance.

• Ex: BuzzSumo, Ahrefs for SEO; Hootsuite, Zoho for social media management.

Value Over Price: Why Investing in Quality Matters

If there’s one piece of advice you can take away from this article it’s this: don't fall into the trap of hiring a cheap digital marketing agency. 

Cutting corners with your digital marketing strategy may actually cost you more in the long run. Instead, prioritize long-term value over the ticket price. 

Before signing a contract or paying a retainer, consider doing the following to secure the best value for your budget:

• Thoroughly research agencies

• Read client testimonials

• Look for case studies and proven performance metrics

• Consider reputation and expertise 

Remember, a quality agency brings valuable insights, strategic guidance, and innovative approaches that can elevate your digital presence and deliver successful results.

Choosing solely based on price can result in subpar outcomes and, in the worst case, can even damage your brand. Investing in quality ensures tailored strategies, expert execution, and measurable outcomes aligned with your business goals. 

Evaluating the Return on Investment (ROI) 

One of the best ways to determine the value you’re getting from a digital marketing agency is to think about the ROI. 

Why? ROI lets you know how effective and profitable your marketing efforts are. 

By leveraging their industry knowledge and experience, a digital marketing agency can:

• develop targeted campaigns

• optimize your online presence

• boost conversions

• provide you with valuable audience insights

• drive traffic to your site

While it may be difficult to estimate ROI prior to working with an agency, you can certainly keep track of this as you go.

How To Evaluate ROI from Your Digital Marketing Service:

1. Define Your Goals

Clearly define your marketing objectives and align them with your business goals for focused evaluation.

2. Set Key Performance Indicators (KPIs)

Identify relevant metrics and establish KPIs to measure campaign success. These could include metrics like website traffic, website ranking, click-through rates, conversion rates, engagement metrics, customer acquisition cost, or return on ad spend. Select the KPIs that are most relevant to your business and industry.

3. Track and Analyze Data

Use analytics tools like Google Analytics to gather data and gain insights into campaign performance and audience behavior. Regularly review the data to make sure the value aligns with your digital marketing agency’s costs.

4. Calculate Cost vs. Revenue

Determine total costs and compare them to revenue generated to calculate ROI.

5. Assess Incremental Revenue

Consider indirect impacts like brand visibility, customer loyalty, and lifetime customer value when evaluating ROI.

6. Benchmark and Compare

Compare performance against industry benchmarks and previous campaigns for insights and improvement opportunities.

So, when you’re evaluating the cost of hiring a digital marketing company, remember: It's not just about the upfront costs, but rather the long-term value and overall impact their services can have on your business's growth and success.

Choosing a Digital Marketing Company That Meets Your Financial Needs

Ready to pick the perfect digital marketing agency for your growing business? Here is a checklist to spark your journey: 

• First, get clear on your business goals and budget. This will help you determine the initial scope of your marketing efforts, making it easier to look for agencies that specialize in those particular services.

• Remember to cushion your budget for additional fees, such as ad spend, subscription fees, etc.

• Take the time to research each agency’s reputation, expertise, and track record. Reading client testimonials and case studies (if available) can give you a sneak peek into their abilities. 

• Think long-term value and return on investment (ROI). 

By following these steps, you’ll be able to connect with an agency that aligns with your goals and delivers quantifiable results.