In-House vs. Marketing Agency: Which Is Better?
Hiring in-house sounds great, but do you understand how many hats your team will need to wear?
The costs of hiring in-house.
You’re going to need someone on the team who has a deep understanding of Google analytics and tag management… Someone who specializes in copywriting… Someone who understands the actual execution build-out with daily, weekly, and monthly maintenance, plus the benchmarks of how ad performance is going… Someone who understands how conversion tracking is doing. In other words, you’re going to need to hire about four people right there. How much will this cost?
If you’re a small business and you’re doing well — say a few million dollars a year — you might not have the ability to take on the management of those roles. If you hire in-house digital marketers, who’s going to manage them? Who’s going to hold them accountable? Who’s going to set the strategy? Who’s going to guide them?
The statistics are quite high about businesses in general, not even being able to find the right combination of people. There’s the problem of finding qualified people in your particular market. There’s the problem of lacking skills or lacking creativity. Worse, there’s the problem of myopic vision where your digital marketer works in a silo and isn’t even aware of what they don’t know.
Plus, if you want to hire an in-house digital marketer, then you’re going to pay a significant price for quality professionals. Most companies could not or would not justify that expense. Enterprise companies, larger companies doing 20 million plus a year, fine. But what about you?
These are all factors that impact your company’s revenue and continue to be a significant expense over and above the salary alone. Check out our blog post about the questions necessary to ask a web design company before hiring them.
Are you going to hire a marketing agency or are you going to hire in-house? Is it a matter of cost? Is it a matter of ease?
How are you going to quantify the benefits or disadvantages of each in order to come to a conclusion?
Some Main Topics To Consider
What stage is your business in?
The first step is to figure out what stage your business is in. Is it just starting off as a business or are you trying to grow and scale? An agency will certainly come with a price tag. That price tag can be justified in some situations. You get a ton of resources with an agency, which is why successful companies choose to hire them.
But an agency does not have to be an all-in-one solution. Instead, you could hire a digital marketing agency — not to run the entire digital marketing department on your behalf, but to do some targeted, specific actions. It could be a paid search only agency, it could be an SEO-only agency, it could be an agency that does SEO, web design, and paid search. There are various combinations of services and offerings that agencies can provide.
These actions could certainly advance your company in the digital sphere while being considerably less expensive than hiring in-house on a full-time basis. Initially, the cost will seem greater on a monthly service basis, but when you look at it over a 12-month period, hiring an agency at least part-time would likely be less expensive.
We recommend entertaining a specific agency only if it is focused on digital marketing. It’s the future of business. But if that same agency also does TV commercials, films videos, and creates magazine ads and billboards, that’s probably not the digital-focused agency that you’re looking for. How they buy media is on a very different scale. How radio and TV is sold is very different from how Facebook ads and Google ads are sold.
Make sure the firm you partner with understands the position your business is in. They should take the time to investigate your unique business needs before forming a strategy.
Industry Knowledge & Experience
Make sure the agency you partner with has the industry knowledge and experience you need. You don’t want to pay for somebody else’s learning curve. One thing to be aware of is that a lot of agencies get college grads or B-listers from other companies and put them into an agency environment. You certainly want to make sure you vet out the agency and have a clear understanding of who’s actually going to be on your team.
A major advantage of hiring an agency is that they’re able to incorporate trends from other accounts. They can aggregate that data and apply that towards your account. So, if specific bidding strategies are working, or if certain types of ad formats are working well in other channels, you will get a compound everyone else’s strategy into yours. This will ultimately help you see faster gains.
There certainly is a time-savings advantage as well. An agency could perform a significant 15-minute review of something that might take an in-house employee hours and hours to review. This is because agencies work across many industries and companies, and they have the tools to see patterns quickly from a higher perspective.
If you are an eCommerce business, someone’s going to have to manage your email, paid search, SEO strategy, and any sort of affiliate or referral programs you have. That’s one position. And then, you’re going to have to hire someone to write the copy. Then, who’s going to create the content that you plan to promote? In many cases that’s more than a full-time job. Trying to put that on one person is how you either get poor-quality work or how someone’s going to get burned out.
Whereas if you work with an agency, that same payload is split up amongst X number of people, and you get a team to rely on where each person has a specialty. And as specialists in that area, they can drill down and focus on key points to driving your business.
Let’s do the math
Any startup or small- to medium-sized business that gets into a relationship with an agency, more than likely it’s going to be a several thousand dollars per month expense. But before people get too scared by those kinds of numbers, remember that such an expense is also the average salary for a starting position of someone answering the phones in your office.
It’s fairly straightforward. Whether you’re looking at the time allowance or you’re looking at a dollar share, what are you actually getting for your money?
If you can justify the expense of a receptionist who is only indirectly related to revenue, why wouldn’t you justify the expense of an agency that directly leads to increased revenue and profit?
It’s also important to ask, while many businesses are in their growing stages, whether they even have the workload to justify hiring someone in-house? Most small businesses need a little bit of a wide variety of services, not necessarily one person solely focused on SEO, for example.
If you decide to take the step to outsource digital marketing to an agency or to consultants, what will it look like? The most important element is to take the time to find the right partners.Without the right partners, nothing’s going to work out. But with the right people and done the right way — with strategy — it could be a winning solution.
Once you’ve decided on an agency, you then need to understand exactly what you’re going to get from them. They should take the time to define exactly what their role is and how involved they will be.
Consulting or Implementation?
What many business owners don’t realize is that some digital marketing agencies will act as a consultancy or will advise you on specific strategies, but they won’t actually do the implementation. That means they are relying on you to actually implement their ideas. If they outline a plan for you, who’s going to implement it? Are you paying only for the advice or are you actually paying for the work to be completed? Often times, an agency will come back with a list of things for the client to do and now the client’s standing there thinking, “How am I supposed to do that?”
So, you have to get super clear on what the deliverables are and who’s involved with what before you decide it’s the right move for you.
You need to understand what you’re going to get for your money.
- Who’s going to be on the team?
- Is it hourly or is it project-based or is there a monthly scope of work that’s defined?
- Who’s defining it?
- What is the actual definition and where is it coming from?
- Is it based on your unique business goals?
- Is the agency just using a template?
- Is it based on a generic strategy that may or may not work?
At the end of the day, it all comes back to your business. Your bottom line is relying on it being right. There’s nothing worse than paying someone to do bad SEO that’s going to negatively affect you. It’s not going to affect the agency. They’re going to be long gone at that point. Check out our blog post about how to choose professional SEO management for more info on this subject.
Agencies have the ability to scale with your company as it grows. For example, we have clients where we handle a single channel for them and nothing more. We do only one specific function for them. Then we have other clients where we’re much more involved in their entire marketing strategy.
We can start off at one point and grow together over time and continue to provide value in an a la carte way that makes sense. It’s not just about trying to fit a square peg into a round hole. And it’s not about trying to bring in too much when it’s unnecessary. It’s about providing a level of service and attention that’s over and above one individual hired for a specific purpose in-house. Nevertheless, companies should have an end goal of hiring in-house eventually, since there would come a time during scaling when it makes sense.
Getting started with an agency will certainly give you a jump start into the digital marketing landscape. You can explore a couple of different verticals with people who actually specialize in digital marketing. You can see exactly what gains traction, so by the time you’re ready for your first in-house marketing hire, you can focus on a specialist in the area you know is most important to you. For example, if you worked with an agency for a year and found out that you got very good returns on social media, you can seek a hire who specializes in that area.
Meanwhile, the agency can still work in tandem or on a hybrid model where they can still be a resource to your business even after you hire in-house. We have clients who have someone in-house to handle some aspect of digital marketing — oversee the marketing budgets, manage certain channels, etc. — but they still need to outsource some of the work to a specialist in other fields.
An Outside Perspective
An agency can provide a bit of an outside perspective too. They’re not spending time in your office every day. They’re not involved with whatever the office politics are. Regardless of the office climate, it’s a neutral third-party who has your best interests at heart.
You get straightforward, honest opinions from people who don’t necessarily have any vested interests that otherwise might tempt your employees to make decisions based on emotion. Keeping that outside perspective even after your first in-house hire is a good idea since it gives you that unique viewpoint and continues to provide value.
Make sure that the agency you’re working with bases their recommendations and strategy on actual data. They should deeply understand market trends and base decisions on what’s actually working in the real world.
Another advantage that most people overlook about hiring an agency is the ability to see what prospective customers are actually searching for online. In many industries, business owners are so familiar with industry lingo and terms that they forget the customers don’t think that way. Then they bring in an outside marketing agency who doesn’t understand the lingo, so they use natural language instead. This usually ends up making the marketing channels much more profitable since it speaks the language of the customers.
Making The Right Choice For Your Business
So, we looked at some major benefits of outsourcing to an agency. We highlighted some points of when it becomes a good idea to hire in-house. So, how do you make a decision?
If your business is just getting started and you have a small budget, putting it all into hiring one person is probably not the direction you want to go. Getting started with an agency, even if you’re going to spend a little more than what it might cost you to do it in-house, will give you a team of people to jump start your marketing initiatives.
Or if you’re still a small operation and there’s not a lot of time to manage people, to outline a strategy, to actually be able to review and benchmark how the progress is coming along, that would be another great reason to outsource your digital marketing to an agency.
What if you have an established business with an in-house marketing team but you’re stalled?
What if you’ve already been working with a marketing agency for several years but you’ve plateaued? Maybe there are specific verticals you can’t maximize because the agency isn’t able to provide the resources that you need. In that case, you should consider switching to a different agency.
Obviously, you want the transition to be smooth. You need to make sure there’s a chain of command for the data and the assets that have been collected over the years. Whether it’s technical aspects for website SEO, an email marketing campaign, or a paid search account, you certainly want to make sure you’re not starting fresh from day one.
An agency brings tools, techniques, and a large skill set. They bring a lot to the table, especially in their digital tool stack. For example, we’re paying thousands of dollars a month for software and tools. Our clients benefit from them without carrying the costs.
Whereas if you hire someone in-house and you started looking to subscribe to software tools, you could easily be in the $600 to $700 range just for your SEO tools alone. You haven’t even considered the price of your email marketing and your paid search software yet. These tools all have a cost, but it’s what allows an agency to be able to scale and to be able to handle multiple clients effectively.
Yes, hiring an agency can be costly, but think about salaries. Do you imagine that you could hire a director of marketing for $1,000 a month? It’s absolutely not going to happen. Depending on the market you’re in, you’re likely going to spend $150,000 to $200,000 for that one person’s salary. And oftentimes that one person may be able to orchestrate digital marketing, but they will still have to outsource a ton of roles because they are only one person.
In most scenarios, there can be tremendous benefit if the right agency is found and if the right group of people are coming to the table with their skill set and tools. Many times, companies will see a significant return on their investments. And whichever agency you work with, certainly they should be providing you with clear numbers on how the performance is going and how you can engage your returns.