What is Digital Marketing? Is it possible to start a digital marketing business to make money marketing online?

Digital Marketing (also known as online marketing) is the process of raising awareness of a business or brand via online channels. It is a very much in-demand service and can be very profitable.

Some examples of different types of digital marketing include paid ads (think Google), SEO (search engine optimization), content creation (blogs and online videos), and social media (Facebook ads). Digital marketing as a business model covers a wide range of different services that can be turned into a money-making business model. In this review of the digital marketing business model, we will dive into the different types of digital marketing, profit potential, and how to get started.

Digital Marketing Business Model Overview

What is Digital Marketing?

Before we look at “Digital Marketing”, let’s get a handle on what “marketing” is. Marketing and what a “marketer” does is frequently misunderstood. The “Digital” portion of Digital Marketing is a much simpler concept as it is a delivery channel.

Understanding Marketing

Marketing is a process. That process is focused on getting potential customers interested in your product or services. Marketing is not creating an advertisement.

Marketing involves:

research (finding potential customers),

promotion (reaching out to those potential customers),

selling (converting those potential customers into paying customers),

product delivery (getting the product or service to the customer) and

building loyalty (creating repeat customers).

Marketing as a process seeks to understand the customer and match a business’s product or services to their needs.

Neil Borden, a professor of marketing at Harvard, coined the term “marketing mix”. Professor Borden’s ideas were further refined to be the more commonly known “4 Ps” of marketing by E. Jerome McCarthy. Following the previous author links will provide more detail of the “4 Ps” of marketing, but in essence, they stand for:

  1. Product (a physical item or a service that the potential customer needs or wants)
  2. Price (what the potential customer will pay for the product or service)
  3. Place (where the potential customer can be reached)
  4. Promotion (what you say to the potential customer)

The concept and process of marketing involves deep understanding of these elements and how they relate to the customer experience.

Understanding the “Digital” Part of Digital Marketing

The ‘Digital” part of Digital Marketing is the channel used (the internet) to reach potential customers. The “internet” is a huge concept, and people use the internet in many different ways and access the internet with different tools.

Modes of Internet Access

There are many different ways to access the internet and get “online”. The number of access methods increases as technology advances, further integrating the “digital” world with the “actual” world. Some of these access methods are:

Computers

The original way to connect to the internet. Typically, users would use a desktop computer, laptop or server to connect to the internet, either via a wired ethernet connection or via WIFI.

Smartphones

An entire new industry of mobile devices connect to the internet wirelessly using your cellular carrier’s data connection. This enabled “on the go” internet connections for the first time.

Tablets

Tablets were a later offshoot of the smartphone, offering a larger touchscreen and many of the same functionalities of the smaller screen smartphones.

Smartwatch

As technology progresses, more and more functionality is crammed into a smaller space. Watches and other wearable technologies have brought phones, texting and other capabilities to the wristwatch.

IoT

IoT, otherwise known as the “internet of things” attaches different things (refrigerator, dishwasher, light switches, and speakers) to the internet.

Types of Internet Use

Some of the different types of internet use are:

Entertainment

People use the internet for many different types of entertainment such as playing games, streaming music, and streaming video. As internet speeds have increased, the level and complexity of entertainment has increased as well and are now entering the era of interactive 3-D environments.

Search

Search has become a bigger and bigger part of the typical user’s internet experience. Google, the king of search, has become the default portal to find information on the internet.

Local Search

Local search, a subset of search, has become more important as the Internet matures. Search engines now deliver pertinent, local information from the search request, based on the user’s geographic location. Local search results deliver information on nearby businesses, directions, and even traffic conditions.

Social Media

Social media is a more recent development in the maturing of the internet. It has become a way to connect people around the world, instantly. People share their lives with others online, enabling people to be part of other people’s lives, regardless of their geographic location.

eMail

Email, otherwise known as electronic mail, has basically replaced old fashioned written letters to become the de facto mode of communication today.

Remote Control and Monitoring

Other uses of the internet included remote control and monitoring of items in different geographic locations from one central portal. Some of the more common uses are controlling the lights in your house via the Lutron app, for example. With the Lutron hardware and the Lutron app, you can control the lights in your home using your phone, from anywhere in the world.

Applications

The internet has also given rise to applications online. In the past, Applications needed to be downloaded to your computer to operate. Now, the applications operate in the cloud and all you need is an internet browser to use these applications.

Putting it All Together – Understanding Digital Marketing

Digital marketing as a business requires you to be able to understand:

  • Where your customers are when they are accessing the internet
  • How they are accessing the internet
  • What they are doing on the internet

Understanding these three things about customer behavior enables the digital marketer to create programs to reach these users and sell them on your client’s products or services.

What do I need to get Started with Digital Marketing and making money marketing online?

What do I need to do to get started with digital marketing?

Step 1: Choose a Niche.

There is a huge range of digital marketing services that customers need. There is content marketing, search engine optimization (SEO), email marketing, analytics expertise, product marketing, social media marketing, paid marketing, paid search marketing, and many more.

Even more challenging is that each of these categories has a huge number of subcategories in which to specialize. Under social media, for example, you can specialize in marketing on specific platforms such as Instagram, Facebook, Twitter and more. There are even subspecialties within platforms such as paid versus free marketing.

A focus on a specific niche will enable you to develop your needed expertise quickly, as well as help you target clients. The faster you can acquire clients, the sooner you will be making money marketing online.

Step 2: Brand Your Company.

Identify your business name and brand identity.

Run trademark searches to make sure you are not infringing on someone else’s trademark. Search your business name in Google to see if there are any conflicts. Buy a domain name, create a logo and outline your brand’s mission.

Step 3: Set Up Your Back Office

One of the keys to making money marketing online, or any business for that matter, is control of back-office processes. How are you going to get paid? How is accounting handled?

Online businesses have many different tools that make invoicing customers easy. You can set up a Stripe or Paypal account in minutes, and integrate payment processing with WooCommerce on your WordPress website.

Step 4: Choose Your Tools.

Once you have your niche, you need to find the right tools for the job. There are a lot of tools to improve productivity for Digital Marketers, even including places to outsource some of the work if you get overwhelmed with the workload.

Your toolkit also has to include finding learning resources to get better. Digital marketing is a constantly changing and evolving industry, and what worked one year may actually be harmful the next year.

Step 5: Get Your Business Online.

As a digital marketer, you need a website. This is where you showcase your work for your clients. You will need to choose a domain, get hosting and build a website. It is very simple to set up a website with WordPress and you can be online in less than 1 hour.

In addition to your website, you should secure all relevant social media profiles (Twitter, Facebook, Instagram, etc.) that you think you may use in your marketing efforts. Additionally, you should secure all of your new brand’s local business profiles (Yelp, Yellow Pages, etc) to build backlinks and improve your website’s authority.

Step 6: Get Clients

Ok, you are now online and in business. The next step is to get out there and get clients. The great thing about digital marketing is that you will be doing the same thing for your clients that you do on a daily basis for yourself!

PROS AND CONS of Digital Marketing

PROS AND CONS

Pros

Incredible demand for Digital Marketing Services

Every business needs marketing to thrive. Basically there is unlimited demand. Most clients can’t even answer the question “what is digital marketing”, but they know they need it.

Very Inexpensive to Start

All you need is a basic website to get started. No need for expensive applications.

Inexpensive to Learn (Free)

There are tons of free sources online to help you learn the business and keep you up to date. Some of your tool vendors even have online courses to help you be a better marketer.

Incredible Amount of Productivity Tools

Digital Marketing has an incredible amount of productivity tools. There are analytics websites, automation tools, keyword research tools, outsourcing tools and more. Many of these tools have free tiers to help you get started.

Strong Outsourcing Market

There is a huge outsourcing market for digital marketing services and even entire white label agencies. You need to do your research, but there are quality companies that can help you with your workloads at reasonable prices.

You can Make a lot of Money

When you combine high demand with the need for quality work, the profit potential for making money marketing online is enormous. IF you do quality work.

The math is fairly simple.

If you are choosy with clients and have 20 clients with an average profit of $1,000 per month, that is $240,000 per year. That being said, the workload would be high (if you provide quality services), but you profit $240,000 per year. The ability to earn substantial amounts of money is what leads to an incredible level of competition.

Cons

Incredible Competition

Yep. When you combine the ability to make a lot of profit with huge demand for the service, you get a lot of competition.

A LOT of competition.

You are competing with agencies and freelancers around the world for clients. You are competing with companies with a much lower cost structure, in both labor costs and infrastructure. There will always be someone offering what they say are the “same” services for a much lower price.

Don’t compete on price, differentiate your company from your competitors.

No “Moat”

With low costs to set up, free tools to amplify performance, free training, and a strong outsourcing market, there is no real moat (or barrier to entry) for making money marketing online.

Takes a Lot of Time

Digital marketing is incredibly time-consuming. It is easy to get overloaded if you take on too much work and don’t have established processes.

Client Perception

Everyone has been inundated with “SEO Services” and “First Page of Google” emails. It is probably every other email in my spam folder. Clients have seen so much spam over the years, they don’t know where to start. It is an uphill battle to change that perception.

Clients

When you have clients, you have client issues. Be prepared to deal with these issues as the come up.

My Digital Marketing Approach

Overall Approach

I actually use digital marketing as a “loss leader” to capture recurring subscription income. Recurring subscription income is generated from marketing analytics dashboards, hosting, domain renewals and other information technology services that are on a monthly or annual billing cycle.

The marketing services don’t actually “lose” money, but I don’t count that as residual income. I look at the time impact and view the time spent as building the residual part of the business.

Tightly Focused Niche.

I focus on a very small niche in an underserved market. Every business owner is looking for ways to increase the bottom line. Find a group of small businesses that everyone else is ignoring and target them exclusively.

Low Recurring Time Impact.

I chose to focus on marketing services that have a higher initial time impact and a smaller time impact going forward. Choosing to write 10,000 words of content per month for 1 client would be a huge recurring workload that is not scaleable.

Least Amount of Outsourcing Possible.

Yes, I know that this makes no sense. It is the “Levered Income” after all, why not leverage other people’s time?

I have found that I spend more time correcting other people’s SEO mistakes than it would have taken me to do the work myself. There is a very strong “buy-sell” market going on in the digital marketing marketplace. You might pay $50 to outsource something to someone, and they then outsource it again (and on and on). There are so many people taking a piece that there is no “value add” for the client.

Don’t Take Every Client.

I don’t take every client.

I focus on clients that are easy to work with and have an understanding of online marketing (or want to learn). You cannot serve the world of people out there, and it pays to be choosy when taking on a new client.

Creating a Platform versus Just Services.

I always focus on creating a platform.

Digital Marketing is a great platform to build on. In addition to hosting, domains and other technology recurring services, it is a great place to integrate affiliate marketing for recurring income. You are already putting the effort into creating content to attract clients, so it makes sense to monetize that work beyond services alone.

Digital Marketing Lever Rank

LEVER RANK

The Levered Income “Lever Rank” rates a tool or business model on how much it levers your time and effort into generating you income. Working at a job is ranked at a “1” (1 hour of work generates 1 hour of pay) and someone that just gives you free money (I wish I knew someone like this) is ranked at a “100”.

Digital marketing has a Lever Rank of 20 due to the incredible competition, lack of “moat”, time demands and lower amount of residual income generated per work unit. You can leverage tools streamline the work process, but you are still “working” for that income. With enough customers, you can scale up with employees, buildings, HR departments, and all of the associated infrastructure, but again, you are working for that income.

Going through our shortlist of questions that we try to answer when evaluating a business model:

IS THERE A MARKET FOR DIGITAL MARKETING?

Absolutely. There is a limitless demand for quality work. If a company makes $1.50 for every dollar they spend with you, why would they ever stop?

HOW MUCH RISK IS ASSOCIATED WITH DIGITAL MARKETING?

Digital Marketing risk has two components.

If you hire freelancers and outsource workloads, you have very little operational risk from an employee or HR standpoint. However, you are responsible for what you and your staff do. You should have very clear terms of service limiting your liability and consult with an attorney to prepare a proper Terms of Service and other client paperwork.

Content marketers should understand licensing and what you can and cannot do with licensed materials. If you are using stock photography for example for posts, companies like iStockPhoto will have clear outlines of proper use.

Depending on the type of marketing you are doing, you may need business insurance (always a great idea in my opinion), but it is typically inexpensive.

HOW LONG IN THE FUTURE IS THE DIGITAL MARKETING BUSINESS MODEL EXPECTED TO PAY RESIDUAL INCOME TO THE BUSINESS OWNER?

As I said above, the residual income portion is lower with digital marketing.

There are a lot of other services that bundled in with the marketing portion that can deliver more residual income. Selling hosting to your customers as part of your services is a great way to generate substantial residual income in the future.

IS THE AMOUNT OF RESIDUAL INCOME FIXED OR DOES IT GROW OVER TIME?

Focusing on Digital Marketing specifically, there is very little residual income moving forward. This business model is primarily a leveraging of tools to increase productivity that generates Levered Income.

HOW MUCH INVESTMENT IS NEEDED TO START UP A DIGITAL MARKETING BUSINESS?

Very little.

You need a domain name, hosting, business email and a website. You can be online in less than an hour for under $100. However, you will need tools to help you be more productive. Most of these tools have “free” starter tiers that are enough to get going initially.

HOW MUCH MONEY IS NEEDED TO RUN A DIGITAL MARKETING BUSINESS?

This varies depending on the tools used and advertising campaigns to get clients. Like all online businesses, operating costs are minimal. Just the cost for monthly hosting, website maintenance, and productivity tools.

You can choose to spend on paid advertising and this can become costly very quickly. With so many dollars on the line, pay per click ads can get very expensive ($5.00 and more per click).

HOW MUCH TIME AND EFFORT IS NEEDED TO START UP A DIGITAL MARKETING BUSINESS?

Starting up the business is quite easy and fast using free technologies available. It is just setting up a website.

HOW MUCH TIME AND EFFORT IS NEEDED TO RUN A DIGITAL MARKETING BUSINESS?

A lot.

There is tremendous competition and marketing for clients can be expensive. In addition to pay-per-click campaigns, it is important to market on social media as well as have a developed content marketing strategy.

Make no mistake about it, Digital Marketing is a business. As it grows (which it can quickly), you will need to either outsource work or hire employees to scale. Each choice comes with all of the management headaches and other issues that accompany having staff.

CAN A DIGITAL MARKETING BUSINESS LEAD TO OTHER SYMBIOTIC OR SUPPORT BUSINESSES IN THE FUTURE?

Absolutely.

However, in most instances, people become digital marketers because they had to learn that skill to promote their other online businesses.

Understanding Digital Marketing is the core of being successful in any business online. It is more important than the website itself. Digital Marketing generates the traffic needed to convert into customers. A lot of people can make a great website, but very few excel at getting visitors.

IS LEARNING THE DIGITAL MARKETING BUSINESS MODEL HELPFUL TO STARTING OTHER BUSINESSES?

Yes.

As I said above, to do anything online and be successful you need to understand how to market your website. This is otherwise known as Digital Marketing. If you're going to offer a digital service you need visitors to come to your website and be converted into customers. If you're selling something online you need those visitors to look at your product and then purchase from you.

If you have a clear understanding of digital marketing, and what you need to generate more traffic to websites, you are able to open several businesses. Obviously you can open a digital marketing business and make money marketing online.

You can create software applications to help generate traffic. You can create social media applications to make posting easier, interact with the followers, and even post directly from your website to your social media profiles.

In addition to making software tools, you can open virtually any type of online business and make money online, if you know how to market to customers digitally.

Final Thoughts on Digital Marketing

I go back and forth on whether or not digital marketing is a great business model.

On one hand, you can make a lot of money marketing online. Also, when you are looking at the whole “what is digital marketing” world, you realize that there is infinite opportunity out there.

If you are really into social media, you can market on Facebook, if you like pictures you can market on Instagram, if you like video you can market on YouTube. In the social media arena alone, you can specialize in virtually anything and you will be able to find clients that are interested in reaching those social media users.

On the other hand, it is extremely time-consuming. There is very little leverage as far as making money without trading effort. You can leverage tools, freelancers, processes and employees to be more effective and make more income. However, this begins to approach the more traditional business model.

Levered Income seeks to leverage business models and tools to increase income while consuming less of your time. Since everyone needs it, and there is a huge demand, I consider the “Digital Marketing” portion of this business model to be the “loss leader” in offering other products and services that have a much, much higher Lever Rank.

In my Digital Marketing businesses, I look for other services that can be bundled with Digital Marketing that offer recurring income that requires virtually no time expense. Hosting, domain sales, and SSL certificates are some examples of high Lever Rank services that can be bundled with Digital Marketing.

So, do I think it's a great business model?

By itself, no.

Combined with other high Lever Rank services in a platform approach, Digital Marketing is an incredible business opportunity.