How to open an advertising agency from scratch: a step-by-step guide

The advertising field attracts with a variety of directions and the opportunity to realize your creative ideas in one of them. In addition, this niche is profitable and therefore interesting for those who want to start their own business. Customers are willing to pay a lot of money for the successful promotion of their products on the market. In order for the advertising business to flourish, it is necessary to understand its specifics. In this article we will take a closer look at the advertising field.

Pros and cons of business

The advantages include the high profitability of the company with proper organization of work. Such services are in great demand, so problems with finding clients usually do not arise. Also, the advantages include relatively small capital investments at the start.

The disadvantages include a lot of competition in the market. At the initial stages of work you will have to work with small and medium-sized entrepreneurs. The income may be small, but it will allow you to build a good reputation and portfolio, which will give you the opportunity to find larger clients.

Market description and analysis

Given the high demand and earning opportunities, competition among advertising content producers is very high.

The following may offer the development and production of advertising materials:

• marketing department designer;
• advertising agencies;
• production agencies;
• freelancers.

Creative agencies have the most competitors:

• direct competitors offering similar services;
• freelancers;
• creative departments in the client’s company;
• manufacturing companies.

Competition is lower among production agencies that can offer not only information services, but also produce:

• banners and banner products;
• booklet;
• leaflets;
• brochures;
• flyers;
• catalogues;
• stretch marks;
• video-audio clips, etc.

Media platform holders have the least amount of competitors:

• advertising departments of information distribution channels (media);
• other media buyers.

The target audience

The main target audience for advertisers are manufacturers and companies providing services in the B2C segment (Business to clients: Business to client).

These may be manufacturers:

• food;
• everyday goods;
• clothes;
• jewelry;
• cars, etc.

Also included in the B2C category are companies that provide services to a wide range of consumers:

• cinemas;
• shopping centers;
• beauty salons, etc.

Manufacturers of products belonging to the B2B segment (Business to business: Business to business). As a rule, large advertising budgets are not needed.

This category includes:

• manufacturers of business goods;
• companies providing business services.

It is enough for them to have promotion specialists and good departments on their staff:

• marketing;
• sales representatives;
• logistics.

Competitive advantages

To stand out in the market, it is important for an advertising agency to show that:

• its employees understand their work and are highly qualified;
• a creative product can increase sales;
• the agency has large clients;
• the company has successfully completed projects;
• its employees can be trusted.

Advertising campaign

In order for a major client to notice an advertising agency, it is necessary to take care of its image, including in professional circles.

To promote you can:

• participate in conferences;
• participate in exhibitions;
• write on professional forums;
• attract a famous designer (manager, marketer) to the company;
• launch a series of publications in the media that are read by brand managers and marketers;
• start a professional blog;
• conduct free (or for a nominal fee) lessons for brand managers of organizations.

Types of similar agencies

Before opening a company, you need to decide on its format . She may be:

• full service agency;
• design studio (specializing in the development of signs, logos, styles, and so on);
• a narrow-profile agency that specializes in one type of advertising;
• manufacturing company (production of business cards, banners, souvenirs, etc.);
• buyer (advertising on TV, radio and other media).

It is easier for a company that provides a full range of services to get promoted, but it will also require a large amount of money to open.

Interesting information about this type of business is presented in the following video:

Other advertising business ideas

In addition to making money by opening an agency, there are other equally profitable types of advertising business. Let's look at two of them.

Advertising video stands

This type of advertising involves broadcasting advertisements through a display stand. The information is loaded onto a flash drive, which is built into the rack. The main advantage is the ability to broadcast about 20 advertisers’ ads on one stand. Such a stand can be a very profitable purchase.

They place racks in shopping centers or business centers. You can start by purchasing one stand, and then open a network of advertising video stands throughout the city. As a rule, such an investment pays off quickly.

Outdoor advertising in city format

Another popular way to make money is city format billboards. We see such billboards every day on the busy streets of the city. This type of outdoor advertising is installed in areas with high traffic.

The billboard itself does not require large investments. It is profitable to install a dozen of such structures throughout the city at once, then a quite significant amount will come out per month.

In addition, you can learn how to open your own PR agency. This industry is adjacent to advertising and is also profitable and in demand in modern realities.

Possible range of services

Nowadays, advertising has different forms, ranging from printed materials to banners on the Internet. You need to decide what services you will provide, since the full range may not be affordable for you at the start.

Services include:

• placement of outdoor advertising, including banners, signs and billboards;
• production of printed products (flyers, brochures, business cards, etc.)
• placement of information in the media;
• carrying out promotions and PR;
• creating videos and commercials;
• website promotion;
• production and distribution of souvenirs and so on.

To make it easier to decide on a direction, you need to study the market in your region. Find out what types of services are in greatest demand and what services your competitors provide. Remember, to interest your customers, you need to offer them something new, something that others don’t have.

Pitfalls of the advertising business

About 80% of young advertising firms exist for less than a year for simple reasons:

• The dull face of the company. Just as a shoemaker is without boots, advertising agencies are often left without a bright, creative name. If you are competing for the creative pedestal, then first of all take care of a non-standard name and a flashy logo. Would you really trust advertisers whose name does not evoke any emotions?
• Openness to cooperation and desire to work for results at any time of the day . Worthy clients will brighten up your portfolio and improve your reputation in the eyes of a potential customer. But refusing small or budget tasks is contraindicated. Clients are all-seeing, and pickiness will scare off the most persistent customer. Offer as much help as you can and even a little more at any time so that your interlocutor feels protected and feels that low sales are a thing of the past.
• Lack of unique services. Many companies become successful thanks to small but very useful services. For example, 1000 flyers or business cards as a gift for orders over 50,000 rubles, recommendations from specialists on improving the logo, slogan, brand. The client will be interested and will definitely return next time.
• Lack of contact information in public sources. Local media, directories, and forums are suitable for disseminating information about the company.
• Improvement and continuous learning. The business environment changes daily. Dynamics are not always stable, because to remain in a leading position in the market you need to adapt. Development and new knowledge will come in handy. If your team has no incentive to hone its talent, then the campaign will fail in advance.

Registration and required documents

After you have decided on the concept and direction of activity, you need to register the company. To register, select one of the organizational and legal forms: individual entrepreneur or LLC.

Registration of an individual entrepreneur will cost a significantly lower amount; opening will require less time and documents. However, it is preferable to initially register the company in the form of an LLC.

The package of required documents depends on the chosen form. You can find out what documents are needed at the tax office. You also need to pay a state fee:

• for individual entrepreneurs in the amount of 800 rubles;
• for LLC in the amount of 6,500 rubles.

When registering an LLC, you need to pay half of the authorized capital (its minimum amount is 10,000 rubles), and the second half is paid during the first year of the company’s activity.

Registration of business activities

It takes several weeks. You decide which form of registration will be most practical:

• IP
• LLC, JSC

If there is only one founder, then it is financially and legally more profitable to register an individual entrepreneur. LLC and OJSC are intended for establishment by several persons.

For registration you need approximately from 3,000 to 25,000 rubles (payment of state fees and notary services). Licenses for advertising business are not provided in accordance with Federal Law No. 128 dated 08.08.2001.

Selecting a location

The next step is to find an office.
The size of the room depends on how many people will work in it. Typically, meetings with clients take place on neutral territory or at the customer's premises. Despite this, it is advisable for the office to be located near the city center or in a well-developed area. It should be convenient to get to, since the customer may want to visit you at the office.

For the same reason, it is recommended to make cosmetic repairs to the rented premises. Buy furniture and make it look presentable as first impression is very important.

Step-by-step opening instructions

Opening a profitable advertising business from scratch is not so difficult, just follow the instructions:

1. Create a business plan.
2. Complete the necessary registration documents (IP, LLC).
3. Find a room.
4. Equip the room, make its design.
5. Purchase equipment for office and production.
6. Hire staff.

Documentation

You can open your own business as an entrepreneur or founder of a company (joint stock, limited liability).

Open an individual entrepreneur

To open an advertising agency with the status of an individual entrepreneur, you must provide the tax office with:

• application in form P21001 (it indicates the data of the individual, OKVED codes);
• photocopy of passport (all pages);
• paid receipt (state duty);
• application for transition to a simplified taxation regime (written in triplicate);
• power of attorney (if necessary).

For entrepreneurs who want to start an advertising business, OKVED 74.40 is suitable.

It allows:

• prepare advertising;
• place advertisements in the media;
• sell airtime;
• provide space for advertising.

Individual entrepreneurs with the choice of OKVED 74.40 cannot:

• produce printing materials;
• research market conditions;
• engage in activities related to PR;
• conduct advertising photography;
• produce advertising messages for radio, television, cinema.

Vyacheslav Khokhryakov talks about how to open an individual entrepreneur on your own.

Open an LLC

To register an LLC you will need:

• register the name of a legal entity;
• provide the exact legal address of the LLC;
• select activity codes according to OKVED;
• calculate and deposit the authorized capital;
• open a bank account.

The following is provided to the tax office:

• application in form P11001, you can download it on the tax office website;
• decision of the founder or minutes of the meeting of founders;
• LLC charter (2 copies);
• paid receipt (state duty);
• documents confirming the presence of a legal address (purchase and sale agreement, lease).

The channel “Man and the Law” tells how to register an LLC in Russia.

Room and design

Premises for an advertising agency can be purchased or rented. When inviting clients to pay a large sum for an advertising campaign, it is important to invite them to negotiations in a cozy office, preferably in the city center.

When renting a room, for example, in a business center, it is not always possible to design the space. Often ready-made office space is provided for rent.

In the case of design, even if you can’t repaint the walls, you can experiment:

• Furnished;
• with decor
• with lighting.

You can also create creative installations from mobile materials.

If you have your own premises, there are many possibilities for its redevelopment and decoration. Everything is limited by legal requirements and the designer’s imagination.

When purchasing office space, you must provide:

• ease of access to the building;
• parking;
• availability of transport for employees;
• availability of shops (cafes) nearby.

The photo shows examples of the design of the offices of international advertising agencies.

BBDO

ForteGrey

JCDecaux

JCDecaux

Leo Burnett Moscow

McCANN

McCANN

Ogilvy

Ogilvy

RussOutdoor

TWIGA

TWIGA

Equipment and inventory

To fully operate, an advertising agency needs office equipment.

If the agency assumes the presence of production, then it will also need to calculate the costs of printing equipment.

Staff

The effectiveness of an advertising agency depends on its staff.

To fully operate the agency you will need:

• creative workers;
• managers;
• office staff.

You can retain the running of the business and the position of director.

Table - creative workers.

Table - managers.

Table - office staff.

You can search for employees:

• on one's own;
• entrust the search to an HR agency.

When recruiting creative workers, it is necessary to check their level of professionalism. For this purpose, a technical task is drawn up, by completing which the applicant will demonstrate knowledge and skills.

Equipment purchase

When renovations are completed in the selected premises, you can purchase equipment. You definitely need to purchase:

• several computers;
• Printer;
• Xerox;
• scanner;
• telephone sets for multi-channel communication;
• devices for connecting the Internet.

Here you can download for free a detailed sample business plan for this activity

Keep in mind that designers need powerful computers. You also need to take care of installing the necessary software.

Financial plan

Before you start looking for funds to open an advertising agency, you need to draw up a financial plan. It should determine the composition of the costs of the first stage, as well as provide funds for further development.

Starting investments

At the first stage, you will need to invest in the following expense items:

• premises;
• technology;
• production equipment.

Regular expenses

Regular costs include:

• employee salaries;
• rental of premises;
• public utilities.

Calendar plan

Example of a calendar plan.

Income

It is impossible to calculate the income from the advertising business in advance. Agencies offer different prices for creative, which are negotiated during personal meetings and calculated based on the cost of servicing the client.

The ideal option for cooperation between a manufacturer and an advertising agency is an annual service, which takes into account:

• wage costs for personnel serving the brand;
• office maintenance costs;
• agency margin.

Recruitment

When selecting employees, remember that the success of your company depends on the experience and qualifications of the staff. To minimize the risk of bankruptcy, hire personnel with experience in the advertising field . Such workers will be able to perform their work efficiently and on time. In addition, they often have their own clientele who will use the services of your agency.

The number of employees depends on the size of the company and the number of services provided. For a medium-sized company, you need to hire:

• creative director , responsible for developing new ideas;
• two managers who will search for customers;
• two designers , one of whom is responsible for the development of the advertising product, and the second for the layout;
• director who will negotiate with customers and sign contracts with them.

But it is not advisable to hire an accountant.
It is better to seek help from an outsourcing company. It is also advisable to have several freelancers on hand. They will help in-house designers get the job done when an emergency happens.

Step-by-step instructions on how to properly open a law firm are given here. If you are interested in how to open a gym in a small town, read this material.

What kind of employees does an advertising agency need?

To fully operate the agency, you will need about 5-6 employees. Among them should be designers, a sales manager, and a creative director.

It makes more sense to hire two designers. While the first will be creative and create an original product, the second’s task will include layout. In addition, you may need freelance copywriters. In addition to visual content, sometimes you will have to come up with a text product.

The sales manager will be involved in affiliate marketing and cold calling, and the creative director will be responsible for original ideas. You can also hire a director who will coordinate the work of the entire team if you do not want to take on this responsibility yourself.

Advertising and customer search

Don't forget that the advertising agency also needs to be promoted. Advertising is the best way. You can use different methods, ranging from banners to sending emails.

• To find customers, you need to create a database of potential clients. Decide what industry you would like to work in. For example, your priority is to develop advertising for cafes and restaurants or companies specializing in a certain production.
• It is necessary to write down the names of companies, their phone numbers and emails. The manager then contacts them and offers agency services. But keep in mind that you can find clients this way if you offer them something new.
• Don't forget about the so-called word of mouth. If you do your work efficiently, clients will tell their partners, colleagues and acquaintances about you.

How to calculate a business plan

Even if you are going to invest your own money, be sure to calculate a business plan. This will help determine the required amount of investment, the level of planned income, the payback period of the project, the main organizational measures and their features. In the case of raising borrowed funds, a properly drawn up business plan is the main factor in the investor’s decision in your favor.

What should an advertising agency business plan include:

• Project summary.
• Description of the concept.
• Marketing analysis.
• Production plan (if it is planned to produce any type of advertising and souvenir products).
• Organizational plan and personnel plan.
• Financial plan.

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At the request of the investor, the business plan of an advertising agency can be supplemented with other sections - for example, on risk assessment or development prospects.

Real example!

You can get acquainted with real business success stories - our interlocutor talks in detail about how he personally opened an advertising agency and how he developed it.

Potential problems and solutions

Many agencies close within a short period of opening. The fact is that this type of business also has problem areas. But if you approach possible problems correctly, your company will be able to operate for a long time and generate good income.

The main potential problem is the lack of clients. This is due to a lot of competition in this business segment. But the problem is completely solvable, you need:

• choose a catchy company name so that it is easy to remember;
• after opening the agency, place information about it in city directories, since many potential clients often use it;
• at the start, work with small and medium-sized entrepreneurs to earn experience and reputation, which will make it possible to conclude contracts with large and prestigious customers.

Posting advertisements

The main type of activity with which to start providing services is posting advertisements. The price of one ad is 5 rubles (production, placement). The cost of one ad is 1 ruble. If you manage to place 500 ads per day, your income will be 2 thousand rubles. Ideally, if you have several customers, then you can post their ads in parallel: spend much less time, but earn several times more.

To interest the client, it is advisable to create a price list, where you indicate all types of advertising services that you offer and their cost. Such a commercial offer can be sent to potential clients by email for review.

Opening and operating costs

Investments at the start depend on the size of the company, the number of employees and other factors. Below are approximate costs:

• rental of premises – 60 thousand rubles;
• office renovation – 25 thousand rubles;
• purchase of furniture - from 25 thousand rubles;
• Internet and telephone connection – up to 10 thousand rubles;
• purchase of equipment – ​​from 125 thousand rubles.

After the first month of work, it is necessary to pay salaries to employees:

• director – 30-40 thousand rubles;
• designers - 20-25 thousand rubles;
• managers - 10-12 thousand +% of transactions.

You also need to pay for the services of an accountant (5 thousand rubles), allocate funds for bonuses, pay taxes, telephone, internet, and purchase consumables.

Expenses and income

Initial investments in the business and the composition of current expenses are determined by the line of business. So, if a company is going to specialize in the field of creative branding, then at a minimum, it needs good equipment: computers, MFPs (color laser printer, scanner, copier). You cannot skimp on its quality: the product must be attractive to the client. In addition, licensed software will be purchased.

Fixed operating expenses of the agency that form the cost of production:

• labor costs, personal income tax and contributions to social funds;
• purchase of materials for creating advertising media (paper, paints, etc.);
• payment of utilities, telephone, internet;
• remuneration for tax agents (media buyers and others);
• maintenance of vehicles (if any);
• payment for time and space in print publications and on TV;
• expenses for distribution of outdoor advertising;
• payment for promoter services.

The company's income consists of the following components:

• fee (remuneration) for work from the advertiser;
• commission payments from advertising distributors (10–15% of the budget);
• sale of manufactured advertising media (billboards, printing, souvenirs);
• payment for promotions and other events (negotiable rates, hourly).

Practitioners claim that the profitability of a creative business is about 40%, sometimes even higher. There are few large clients with a budget of 500 thousand and they will not appear immediately. On small-volume orders, the profitability is usually up to 25%. When drawing up the financial part of a business plan, you need to include average prices for services in the region according to a pessimistic forecast. The first year of a new agency’s work, as a rule, is spent on its own promotion and creating a high-quality portfolio.

You will have to look for clients in all possible ways: through personal visits to offices and convincing directors of the usefulness of their services, mailing lists, and advertising in the media. You need to make maximum use of Yandex, Google, 2Gis applications, including maps, where there are no restrictions on the number of entered addresses. After all, most often potential clients look for the provider of the service they need using geosearch.

Calculating project profitability

It is quite difficult to calculate how much income your company will generate. This is due to the fact that each agency sets its own markups, but usually at least 40% of the order cost is profit . In addition, profitability is influenced by cooperation with partners and their prices for work.

With an average pace of work and completing two or three orders per week, the company’s income is 200-300 thousand rubles per month . A good company can make a profit of up to 600 thousand per month.

Advertising platforms

Today there are several dozen platforms for advertising. Despite the fact that the basic principles of advertising remain the same in all directions, it is necessary to focus on a few and bring them to perfection.

Advertising on television channels and newspapers

Today there are many motion design programs that allow, if you have the necessary skills, to quickly produce advertising content. Platforms for posting videos can be television channels. For advertising agencies, TV channels offer a discount, which can be an excellent addition to the fee. In TV newspapers the discount can reach 30%.

Periodicals

The effectiveness of advertising in print media has dropped somewhat after the advent of the Internet, but magazines and newspapers still retain their audience, which allows them to achieve good results. Using various graphic programs (Adobe Illustrator, Photoshop), you can create layouts for magazines through the efforts of agency employees and receive additional profit. Advertising in print media will require creative thinking, as well as knowledge of the basic rules for writing advertising slogans and texts. Constant cooperation, just as in the case of television channels, allows you to receive a percentage of the cost of services.

Leaflets and information booklets

Advertising using a variety of leaflets allows you to find a potential audience right on the street. Relatively low printing costs allow you to achieve good results when advertising new stores or catering establishments. The profitability of this type of advertising will depend on the cost of the service for creating advertising layouts, as well as agreements with printing houses.

Billboards and outdoor advertising

Today, such sites remain one of the most popular. Drivers passing by, one way or another, glance at the billboards and the visual images penetrate the subconscious. As a rule, outdoor advertising spaces belong to other companies that rent out the space. Therefore, the agency in this situation receives a percentage of cooperation with the printing industry and billboard owners.

Advertising using virtual visualization technologies

The advancement of technology has created excellent opportunities to create new advertising platforms. Projective graffiti technology makes it possible to use surfaces such as floors, walls, shop windows, bar counters, etc. for advertising. Large companies can afford such an advertising campaign, but the use of such platforms significantly increases the prestige and reputation of the customer. An advertising agency can earn money by creating visual content for such advertising, as well as a percentage for attracting clients to companies that provide equipment for rent. This type of activity of an advertising agency requires the involvement of video designers and employees with programming skills.

Summary

The production of outdoor advertising is a multidisciplinary business. In this area, you can either carry out part of the work or the entire process from A to Z. It all depends on the amount of initial investment.

The least creative, but most common, at first, may be the production not of the advertising itself, but of signs, stands, plaques and signs for government agencies. These are typical orders, but they are quite stable. Full-fledged outdoor advertising requires creativity and experience, but it also brings in more income. The return on investment in a small outdoor advertising agency varies from a year to a year and a half.