Advertising Agency Business Plan Template

Written by Dave Lavinsky
advertising agency business plan template
Table of Contents
Table of Contents

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.

You can download our Advertising Agency business plan template (including a full, customizable financial model) to your computer here.
 

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 SummaryFY 1FY 2FY 3FY 4FY 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 Margin25%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 Businesses38,124
Forestry, Fishing, Hunting, and Agriculture Support0.29%
Mining0.35%
Utilities0.23%
Construction9.64%
Manufacturing4.16%
Wholesale Trade5.62%
Retail Trade14.54%
Transportation and Warehousing2.83%
Information1.81%
Finance and Insurance6.56%
Real Estate and Rental and Leasing4.75%
Professional, Scientific and Technical Services11.36%
Management of Companies and Enterprises0.69%
Admin, Support, Waste Mgt, Remediation Services5.15%
Educational Services1.20%
Health Care and Social Assistance10.80%
Arts, Entertainment and Recreation1.66%
Accommodation and Food Services8.59%
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

You can download our Advertising Agency business plan template (including a full, customizable financial model) to your computer here.

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:

DateMilestone
[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 142
FY 263
FY 396
FY 4162
FY 5243
Annual Rent$36,000.00

 
5 Year Annual Income Statement

Year 1Year 2Year 3Year 4Year 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
PRE-TAX 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 1Year 2Year 3Year 4Year 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 1Year 2Year 3Year 4Year 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
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