Advertising Agency Business Plan
If you want to start an advertising agency or expand your current ad agency, you need a business plan.
The following advertising agency business plan template gives you the key elements to include in your own advertising agency business plan. It can be used to create a business plan for a full-service digital marketing agency, social media marketing agency, email marketing agency, creative agency, public relations firm, or a creative agency business plan.
Advertising Agency Business Example
I. Executive Summary
Business Overview
[Company Name], located in [insert location here], is a full service advertising agency that helps businesses achieve brand visibility and attain their marketing and sales goals. The Company focuses on branding, creating advertising material, and ad placement. From logos and taglines to ad campaigns, the Company creates custom solutions and strategies that perfectly fit its clients’ businesses and industry. The Company’s goal is to become one of the region’s leading advertising agencies and compete with the leaders in the industry.
Services
[Company Name] will provide a variety of services to its clients. Its services include:
- Creative services
- Media planning and buying
- Social media management
- Other related advertising advisory and consulting services
Customer Focus
[Company Name] will primarily serve entrepreneurs and start-ups, corporate organizations, as well as small businesses within a 100-mile radius of the business location. The demographics of these customers are as follows:
- 510,000 corporations and small businesses
- Average income of $80,000
- 50% in Mgt./Professional occupations
Management Team
[Company Name] is led by [Founder’s name], who has been in the advertising industry for [x] years. [Founder] has extensive experience working for a leading advertising firm prior to starting his own ad agency. He will have the help and support of his business partner, [Insert Name], who will handle the admin tasks for the company.
Success Factors
[Company Name] is qualified to succeed due to the following reasons:
- There is increasingly high demand for advertising services in the community, and [Founder’s name]’s reputation has resulted in an explicit demand for the agency’s services.
- There has been a shift toward organic social advertising over the past few years. [Founder] specializes in seamlessly integrating ads into social media content.
- The management team has a track record of success in advertising.
- The advertising industry has proven successful in the United States.
Financial Highlights
[Company Name] is currently seeking $190,000 to launch an advertising agency. Specifically, these funds will be used as follows:
- Office build-out and Startup costs: $100,000
- Working capital: $90,000 to pay for marketing, equipment and salaries.
Top line projections over the next five years are as follows:
| Financial Summary | FY 1 | FY 2 | FY 3 | FY 4 | FY 5 |
|---|---|---|---|---|---|
| Revenue | $560,401 | $782,152 | $1,069,331 | $1,379,434 | $1,699,644 |
| Total Expenses | $328,233 | $391,429 | $552,149 | $696,577 | $776,687 |
| EBITDA | $232,168 | $390,722 | $517,182 | $682,858 | $922,956 |
| Depreciation | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
| EBIT | $225,168 | $383,722 | $510,182 | $675,858 | $915,956 |
| Interest | $6,016 | $5,264 | $4,512 | $3,760 | $3,008 |
| Pre Tax Income | $219,152 | $378,458 | $505,670 | $672,098 | $912,948 |
| Income Tax Expense | $76,703 | $132,460 | $176,985 | $235,234 | $319,532 |
| Net Income | $142,449 | $245,998 | $328,686 | $436,864 | $593,416 |
| Net Profit Margin | 25% | 31% | 31% | 32% | 35% |
II. Company Overview
Who is [Company Name]?
[Company Name], located in [insert location here], is a full service advertising agency that helps businesses attain their marketing and brand visibility goals. The Company focuses on branding, creative content, and ad placement. From logo design to targeted campaigns, the Company creates custom advertising solutions and strategies that perfectly fit its client’s businesses and industry. The Company’s goal is to become one of the leading advertising agencies in the region, and compete with the leaders in the industry.
[Company Name]’s History
[Founder’s Name] is an entrepreneur with a passion for creative and innovative advertising, who seeks to provide a one-of-a-kind marketing experience. [Company Name] will work to become a well-known advertising company in [Location].
[Founder’s Name] has selected an initial location and is currently undergoing due diligence on each property and the local market to assess the most desirable location for the advertising agency.
Since incorporation, the company has achieved the following milestones:
- Developed the company’s name, logo, and website
- Determined the list of services to be offered
- Determined equipment requirements
- Began recruiting key employees with experience
[Company Name]’s Services
The Company will be offering the following products and services:
- Creative services
- Media planning and buying
- Social media management
- Other related advertising advisory and consulting services
III. Industry Analysis
[Company Name] competes against small, individually owned advertising agencies and major regional or national chains. There are 83,645 advertising agencies in the U.S. The number of businesses in the advertising agencies industry in the U.S. has grown 5.1% per year on average over the last five years.
The primary positive factor affecting this industry is the demand driven by increases in consumer spending, and increases in total marketing budgets. The growing economy, rising per capita income, and favorable spending patterns in North America are projected to open wider opportunities for advertisers to promote their products and increase regional market growth.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve entrepreneurs and start-ups, corporate organizations, as well as small businesses in the [Location] area. Over time, the company expects that it will gain regional and national recognition.
The precise demographics of the town in which the business resides is as follows:
| Total Businesses | 38,124 |
|---|---|
| Forestry, Fishing, Hunting, and Agriculture Support | 0.29% |
| Mining | 0.35% |
| Utilities | 0.23% |
| Construction | 9.64% |
| Manufacturing | 4.16% |
| Wholesale Trade | 5.62% |
| Retail Trade | 14.54% |
| Transportation and Warehousing | 2.83% |
| Information | 1.81% |
| Finance and Insurance | 6.56% |
| Real Estate and Rental and Leasing | 4.75% |
| Professional, Scientific and Technical Services | 11.36% |
| Management of Companies and Enterprises | 0.69% |
| Admin, Support, Waste Mgt, Remediation Services | 5.15% |
| Educational Services | 1.20% |
| Health Care and Social Assistance | 10.80% |
| Arts, Entertainment and Recreation | 1.66% |
| Accommodation and Food Services | 8.59% |
| Other Services (Except Public Administration) | 9.78% |
Customer Segmentation
The Company will primarily target the following customer segments:
- Food and Beverage Companies: This sector tends to spend a lot of money on advertising, to keep customers’ attention and loyalty. [Company name] is located in a region with a significant number of food and beverage manufacturers, which presents a substantial market opportunity.
- Retailers: Similarly, the retail market invests heavily in advertising and promotional services. The company expects to count a substantial number of retailers among its clientele.
- Tourism: The region enjoys a robust tourist trade, and liberally invests in purchasing ad services such as rich media, video, and mobile-social displays. [Company name] has well-established relationships with a variety of travel and entertainment operators in the region, giving it a strategic advantage over other ad agencies in the area.
V. Competitive Analysis
Direct & Indirect Competitors
Lumia
Established in 1984, Lumia is a professional advertising agency focused on specialty brands. Part of a global network of agencies, Lumia provides advertising, marketing and corporate communications services to customers worldwide. Its network operates in all major markets worldwide and provide a range of services, which the company groups into four fundamental disciplines: advertising, customer relationship management (CRM), public relations and specialty communications.
Optimum Productions
Established in 2012, Optimum Productions is a full-service agency that distinguishes itself by its senior-level hands-on approach, in which the principals work directly on all brands. The company offers a range of services, including:
• Market and category analytics
• Strategic planning and customer insight research
• Project management
• Positioning research and development
• Visual identity
• Verbal identity
• Editorial and copy services
• Art, graphic, and studio services
Campbell Marketing
Established in 1993, Campbell Marketing, Inc. is a full-service advertising agency, serving clients with its brand building Incite process, developing motivating brand experiences.
Campbell Marketing offers a range of services, including:
• Brand identity
• Positioning and messaging
• Campaign development
• Launch planning
• Professional sales promotion
• Digital communications
• Rebranding services
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Management: The Company’s management team has x years of advertising experience that allows them to serve customers with unparalleled professionalism.
- Relationships: Having lived in the community for xx years, [Founder’s Name] knows all of the local leaders, media, and other influencers. Furthermore, he will be able to draw from his existing personal and professional relationships to develop an initial client base.
- Location: [Company Name]’s location is near the center of town, giving the company access and visibility to area businesses.
VI. Marketing Plan
The [Company Name] Brand
[Company name] seeks to position itself as leading-edge competitor in the advertising industry. Customers can expect an innovative, high-quality marketing experience for their brands.
The [Company Name] brand will focus on the Company’s unique value proposition:
- Convenient location.
- Offering a wide variety of high-quality creative and advertising services.
- Providing excellent customer service based on experience combined with innovation.
Promotions Strategy
[Company Name] expects its target market to be food and beverage, retail, and entertainment businesses. The Company’s promotions strategy to reach the audience includes:
Pre-Opening Events
Before opening the advertising company, [Company Name] will organize pre-opening events designed for prospective customers and press contacts. These events will create buzz and awareness for [Company Name] in the area.
Advertisement
Advertisements in print publications like newspapers, magazines, etc., are an excellent way for businesses to connect with their audience. The Company will advertise its company offerings in local and regional magazines and news dailies. Obtaining relevant placements in industry magazines and journals will also help in increasing brand visibility.
Public Relations
[Company Name] will formulate a compelling PR campaign to boost its brand visibility among the target audience. It will look to distribute stories about its services and company culture in various media outlets like podcasts, television stations, radio shows, etc.
Social Media Marketing
Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The Company will use social media to develop engaging content and post customer reviews that will increase audience awareness and loyalty.
Word of Mouth Marketing
[Company name] will encourage word-of-mouth marketing from loyal and satisfied clients. The Company will use recommendations and word-of-mouth marketing to grow the customer base through the network of its existing customers.
Pricing Strategy
[Company Name]’s pricing will be moderate, so customers feel they receive great value when engaging their advertising services. The customer can expect to receive quality services at a more affordable price than what they would pay at a larger advertising company.
VII. Operations Plan
Functional Roles
To execute on [Company Name]’s business model, the company needs to perform many functions, including the following:
Service Functions
- Business Development
- Ad executive
- Creative executive
- Administrative assistant
Administrative Functions
- General & administrative functions including legal, marketing, bookkeeping, etc.
- Hiring and training staff
Milestones
[Company Name] expects to achieve the following milestones in the following [] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is led by [Founder’s name], who has been in the advertising industry for [x] years. While [Founder] has never run a advertising business himself, he spent his early career working for a major advertising firm in progressively responsible roles. His time at the firm culminated in the management of the local office for xx years.
[Founder] graduated from the University of ABC, where he majored in Marketing.
Hiring Plan
[Founder] will serve as the CEO. In order to launch the advertising agency, the company will need to hire the following personnel:
- Creative Director
- Digital Marketing Specialist
- Human Resources Manager
- Web Designer
- Content Creator
- Sales Executive
- Accountant
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come from:
- Search engine optimization (SEO)
- Lead generation
- Email marketing
- Digital display advertising
- Social media management
- Other related advertising advisory and consulting services
The major costs for the company will be staff salaries. In the initial years, the company’s marketing spend will be high, as it establishes itself in the market. [Company Name].
Capital Requirements and Use of Funds
[Company Name] is currently seeking $190,000 to set up its advertising agency. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Office build-out and Startup costs: $100,000
- Working capital: $90,000 to pay for marketing, equipment and salaries.
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Average Number of Clients | |
|---|---|
| FY 1 | 42 |
| FY 2 | 63 |
| FY 3 | 96 |
| FY 4 | 162 |
| FY 5 | 243 |
| Annual Rent | $36,000.00 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRETAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
