Digital marketing is a technique which uses modern digital technology to market goods or services by pulling website traffic and/or attracting attention of potential customers through social media sites. This is achieved by creating content that attracts attention and encourages readers to share it across their social network platforms.
Digital Marketing Agency provides services which include Search Engine Optimization (SEO), Pay per Click (PPC) and Social Media Marketing services. The agency will use digital marketing channels such as social media, mobile application, email and web for delivering the above-mentioned services. The agency will also design complete digital marketing campaigns for its clients. The major steps involved in delivery of the services include research, strategy building, campaign designing, launching, optimizing, refining, tracking, promoting and publishing.
This “Pre-feasibility Document” provides details for setting up Digital Marketing Agency. Nowadays, due to the increasing use of communication technology and social media, both corporate and individual clients require the services and support of a standard digital marketing agency; to enable them to effectively reach out their target market. The increasing use of technology increases the success prospects of the proposed project. Digital Marketing Agency may be established in major cities such as Lahore, Karachi, Islamabad, Faisalabad, Peshawar, Rawalpindi, Quetta, Gujranwala, Sialkot, Multan and Hyderabad.
The proposed agency is assumed to provide services for maximum of 10,080 hours in a year. During the first year of operations, the project is estimated to provide services at 55% of its total service capacity, which is equal to 5,544 service hours. The service capacity is assumed to increase at a rate of 5% per annum with a cap at 90% of total capacity. High return on investment and steady growth of business is expected with the entrepreneur having some prior experience or education in the related field of business.
The proposed project will be set up in a rented building having an area of 1,125 sq. ft. The project requires a total investment of PKR 5.40 million. This includes capital investment of PKR 4.80 million and working capital of PKR 0.61 million. The project will be established using 100% equity financing. The Net Present Value (NPV) of project is PKR 21.74 million with an Internal Rate of Return (IRR) of 56% and a Payback period of 2.63 years. Further, the proposed agency is expected to generate Gross Annual Revenues of PKR 12.47 million in 1st year after coming into operations, Gross Profit (GP) ratio ranging from 55% to 74% and Net Profit (NP) ratio ranging from 5% to 31% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 48% (4,804 service hours) with gross revenue of PKR 10.81 million in a year.
The proposed project may also be established using leveraged financing. At 50% debt financing at a cost of KIBOR+3%, the proposed agency provides Net Present Value (NPV) of PKR 24.84 million, Internal Rate of Return (IRR) of 56% and Payback period of 2.61 years. Further, this project is expected to generate Net Profit (NP) ratio ranging from 3% to 32% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 51% (5,120 hours) with breakeven revenue of PKR 11.52 million.
The project will generate direct employment opportunity for 10 people. The legal business status of this project is proposed as “Sole Proprietorship”.