Digital Marketing Agency vs. Hiring In-House

To reach more customers, increase revenue, and grow as a business, every company needs to approach marketing the right way. For many growing companies, outsourcing marketing to an agency or consultancy is the most viable option. At a certain point, however, most organizations decide to take their marketing in-house. While some have good reasons for the decision, many others feel they just have to go in-house without considering the benefits and drawbacks of the move.

Is your brand at that point where a decision must be made regarding hiring an in-house marketing team or outsourcing to a marketing agency? You shouldn’t make a decision based on what you’re “supposed” to do at a certain stage. Instead, carefully measure what’s right for your business. This is an important business decision that will affect the future of your company and needs to be taken seriously.

What Does Hiring an In-House Marketing Team Entail?

Deciding to hire an in-house marketing team means building a team of marketers who will work full-time in your organization, handling marketing and related tasks. Ideally, this means you will hire trained marketers who fill different positions according to their qualifications and experiences. In most instances, finding trained and experienced marketers can be challenging, as some 72.8% of companies have trouble finding skilled candidates. Consequently, you may need to invest in training to make the team effective.

Disclaimer: EcoHome is a hypothetical company created purely for the purposes of this thought experiment.

Example: Imagine a mid-sized e-commerce company, “EcoHome,” looking to expand its marketing efforts. EcoHome decides to build an in-house marketing team. They spend months advertising the positions, screening candidates, and interviewing, but still struggle to find individuals with the necessary expertise. Once hired, the team requires extensive training to align with EcoHome’s brand values and marketing goals.

An in-house team will be fully committed to your organization’s marketing needs. Members of the team will understand your company’s vision and work towards achieving it and communicating it to the outside world. An executive will supervise and monitor this team, similar to other departments in your organization.

As full-time employees, the marketing team will need to be adequately compensated. This includes paying every member according to the market rate for their position on the team, which for a full-service marketing department, can mean upwards of $84,000 a month. This includes not just salaries but also benefits, yearly bonuses, time off, health insurance, and other perks. According to the U.S. Bureau of Labor Statistics, the median salary for a marketing manager alone is around $134,290 per year.

Example: To keep their in-house team, EcoHome needs to offer competitive salaries and benefits. The total monthly expense for a marketing department of 10 people easily exceeds $100,000, impacting the company’s budget significantly.

The Recruitment Process

Recruiting the right talent is a rigorous and time-consuming process. It involves creating detailed job descriptions, advertising on multiple platforms, screening resumes, conducting several rounds of interviews, and possibly working with recruitment agencies. Each of these steps requires time and financial resources.

Example: EcoHome’s HR department spends significant hours drafting job descriptions and posting them on various job boards. They also engage a recruitment agency to widen their search, incurring additional costs. Despite these efforts, it takes three months to fill a critical marketing role.

Benefits of Hiring an In-House Team

Hiring an in-house marketing team comes with several benefits:

Full control over who handles marketing and how they go about it. This control allows for tailored strategies that are closely aligned with the company’s vision and goals.
Familiarity with your business culture, ensuring compliance and ease of communication. An in-house team can develop a deep understanding of your brand and its unique selling points.
Direct collaboration with other departments, such as sales, under the same roof. This proximity can facilitate better coordination and faster decision-making processes.

Example: EcoHome’s in-house team can quickly meet with the product development team to discuss new product features, enabling them to create timely and cohesive marketing campaigns that accurately reflect the product’s unique benefits.

Downsides of Hiring an In-House Marketing Team

While there are benefits, there are also significant drawbacks:

Time and resources required for advertising, interviewing, and hiring the right candidates. This process can be lengthy and resource-intensive, diverting attention from other critical business areas.
High overhead costs, including office space, salaries, benefits, equipment, and other intangibles. These costs can add up quickly and impact the company’s bottom line.
Management burden on existing staff who already have substantial responsibilities. Supervising a marketing team requires time and expertise, adding pressure to your leadership.
Limited expertise and scalability, as in-house teams might lack the breadth of skills and experience found in an agency. This limitation can hinder the execution of comprehensive marketing strategies.
Impact of turnover, as losing a team member can be costly and time-consuming to replace. According to the Center for American Progress, the cost of replacing an employee can be up to 33% of their salary.

Example: When EcoHome’s digital marketing specialist resigns, it takes over a month to find a replacement. During this time, their online ad campaigns falter, leading to a noticeable drop in sales and online engagement.

Additional Costs and Considerations

Beyond salaries, there are other costs to consider, such as the need for continuous professional development, attendance at industry conferences, and the purchase of marketing tools and software. According to the U.S. Small Business Administration, small businesses spend between 7% and 8% of their revenue on marketing, and this percentage can be higher for larger companies.

Example: EcoHome budgets for annual marketing conferences and certifications for their team to stay current with industry trends. This adds several thousand dollars to their annual expenses but is necessary to maintain a competitive edge.

What Outsourcing Marketing to an Agency or Consultancy Looks Like

Outsourcing marketing to an agency is an alternative approach used by many organizations, from small businesses to large brands. This practice involves hiring an agency to handle your marketing needs for a fee, which can be paid monthly, annually, or through other arrangements.

Marketing agencies are staffed by professionally trained and experienced marketers who specialize in various fields and work together to meet clients’ marketing needs. When you outsource marketing, you enter into an agreement with an agency to handle your needs according to their terms of service.

Example: EcoHome decides to partner with a marketing agency. The agency quickly assembles a team of specialists, including SEO experts, content creators, and PPC managers. They start working on EcoHome’s campaigns within a week, using advanced tools and proven strategies.

Benefits of Outsourcing to an Agency

Outsourcing marketing to an agency offers several advantages:

Expertise and experience: Agencies employ teams of experts who have worked on numerous and varied projects. They bring a wealth of knowledge and can offer tactics that yield better results. According to HubSpot, 82% of marketers who work with agencies rate their agency’s knowledge and expertise as excellent or very good.
Cost-effectiveness: You pay for the marketing package you need, without the overhead of full-time salaries and benefits. This model can be more budget-friendly, especially for small to medium-sized businesses.
Access to the latest tools and techniques: Agencies stay updated with the latest marketing trends and tools, ensuring your marketing strategy is cutting-edge. They invest in advanced software and technologies that might be too costly for a single business to purchase.
Scalability and flexibility: Agencies can quickly adapt to your changing needs without the delays of hiring and training new staff. This flexibility is crucial for businesses looking to scale their marketing efforts rapidly.
Diverse perspectives: An agency team brings together different techniques and approaches from various industries, enriching your marketing strategy. This diversity can lead to innovative solutions and creative campaigns.
Established partnerships: Agencies often have partnerships with platform providers, offering you access to premium services and tools. These partnerships can give your marketing efforts a competitive edge.

Example: The agency EcoHome partners with has established relationships with major advertising platforms like Google and Facebook. This allows EcoHome to benefit from premium support and early access to new features, enhancing their marketing efforts.

Rapid Deployment and Implementation

Agencies are equipped to hit the ground running with established processes and experienced staff. This enables rapid deployment of marketing strategies, ensuring that campaigns can start quickly and effectively.

Example: EcoHome needs to launch a holiday marketing campaign within a short time frame. The agency leverages its existing resources and expertise to develop and deploy the campaign swiftly, something that would have taken the in-house team much longer to accomplish.

Downsides of Outsourcing Marketing to an Agency

Despite the benefits, there are some potential drawbacks:

Less control: You may need to relinquish some control over marketing activities. This lack of control can be challenging for companies used to closely managing all aspects of their operations.
Potential for feeling like a lower priority: Agencies manage multiple clients, which might sometimes make your company feel less prioritized. It’s essential to choose an agency that aligns with your business values and demonstrates a commitment to your success.

Example: EcoHome occasionally feels that their smaller budget makes them less of a priority compared to the agency’s larger clients. However, they mitigate this by maintaining regular communication and setting clear expectations.

Decision Time: What Is Best for Your Business?

Both options have their upsides and downsides. If you take marketing seriously, the decision should not be made in haste. Before deciding to hire an in-house marketing team or outsource to an agency, carefully consider your organization’s marketing objectives and the major benefits and drawbacks of each option. While short-term benefits are important, also consider the long-term impact.

Comparing the Two Options on Key Factors

Tools and Techniques

Marketing keeps evolving with new techniques and tools. It can be very difficult for an in-house team to keep up with these trends. In contrast, marketing agencies typically have their fingers on the pulse of the market, with access to the latest tools and techniques. They can implement these for their clients without additional cost.

Example: EcoHome’s in-house team struggles to justify the expense of a high-end marketing automation tool. By outsourcing to an agency, they gain access to the tool as part of their service package, enhancing their marketing automation efforts without the hefty price tag.

Extended Example: Imagine EcoHome wants to implement a sophisticated customer relationship management (CRM) system to better track customer interactions and improve their marketing strategy. The in-house team would need to undergo extensive training and possibly hire a specialist to manage the CRM. In contrast, the agency already has trained staff and the latest CRM tools ready to deploy, enabling EcoHome to see immediate benefits.

Skillset

Executing integrated marketing plans often requires a variety of specialists. It’s unlikely an in-house team will have all the necessary expertise without hiring freelancers or external consultants. Agencies, however, have diverse skill sets within their teams, making it easier to implement effective marketing plans.

Example: EcoHome needs to launch a comprehensive digital marketing campaign that includes SEO, PPC, and social media. Their in-house team has expertise in social media but lacks the skills for SEO and PPC. By outsourcing, they gain access to specialists in all these areas, ensuring a cohesive and effective campaign.

Extended Example: Consider that EcoHome decides to expand into content marketing to improve organic traffic. The in-house team might need to hire a content strategist, a writer, and an SEO specialist. This process could take months and increase costs significantly. On the other hand, the agency already has a full team of content marketing experts who can start immediately, offering a seamless integration of content strategy with existing marketing efforts.

Cost

While agency services might seem pricey, they often represent a better value. Hiring an in-house team involves significant costs, including salaries, benefits, and overheads. Agencies offer more predictable costs aligned with specific marketing packages.

Example: EcoHome compares the cost of an in-house team to that of an agency. They find that while the upfront cost of the agency seems higher, the overall expense, including salaries, benefits, and tools, makes the in-house team significantly more expensive.

Extended Example: EcoHome conducts a detailed cost analysis and finds that, in addition to the base salaries, the hidden costs of recruiting, onboarding, and training new hires add a substantial financial burden. Conversely, the agency’s fees cover all these aspects, providing a more predictable and often lower total expenditure.

Return on Investment (ROI)

You’re looking for a team that can get the job done efficiently and cost-effectively. Agencies typically offer a better ROI because of their expertise and ability to scale efforts quickly. Regularly audit the cost and performance of each marketing channel to ensure you’re getting the best value.

Example: EcoHome tracks the performance of their marketing campaigns and finds that the agency’s campaigns deliver a higher ROI due to their expertise and access to advanced tools. This performance reassures EcoHome that outsourcing was the right decision.

Extended Example: EcoHome measures the success of their marketing efforts by tracking key performance indicators (KPIs) such as customer acquisition cost (CAC) and lifetime value (LTV). They notice that the agency’s ability to quickly adjust strategies based on data leads to a lower CAC and higher LTV compared to the in-house team’s efforts. This reinforces the decision to outsource as the more profitable option.

Platform and Service Partnerships

Agencies often have established relationships with marketing platforms and service providers, giving clients access to resources and information that might be hard to obtain otherwise. This can give your marketing efforts a competitive edge.

Example: EcoHome benefits from their agency’s partnerships with major email marketing platforms. These partnerships provide EcoHome with enhanced features and dedicated support, which they wouldn’t have access to with an in-house team.

Extended Example: EcoHome learns that their agency is a certified partner with several industry-leading marketing platforms, such as Google AdWords and HubSpot. This partnership status not only ensures better support and access to advanced features but also often comes with discounts or exclusive opportunities that would not be available to EcoHome independently.

Key Takeaways

Building an in-house marketing team involves significant effort and cost in recruiting, training, and maintaining staff.
The biggest benefit of an in-house team is their familiarity with your company’s culture and values.
Outsourcing to a marketing agency offers cost-effectiveness, expert marketers, and access to premium services.
Carefully consider your organization’s needs and the long-term impact before deciding on the best approach.

Summary

Marketing is an aspect of your business you should never take for granted. While having an in-house marketing team has some advantages, most businesses will benefit more from outsourcing marketing to agencies. Consider all the factors discussed here before making your decision.