In-House Marketing vs. Agency: How To Stay Cost Efficient Without Losing Revenue

Layoffs are hitting companies hard as profit margins tighten and companies cut costs to stay competitive. In the tech sector alone, over 21,000 workers have been laid off halfway through 2022. A challenge many companies are facing during slow quarters is evaluating the cost of large marketing teams vs. the value they produce.


Marketing heads are taking closer looks at their in-house teams and often making the difficult decision to cut budgets, even if this will lose money in the long run. The hard truth is that in-house marketing teams are expensive and even if they produce results, the soaring costs may not be justified.


The risk of cutting these costs is dropping your revenue when you need it most. A lower marketing budget may appease the finance team, but is not sustainable for growth.

In fact, while many companies face layoffs and decrease spend, there is an opportunity to scale up marketing efforts and take market share. What are the critical pieces you need to keep on your team to do this while staying cost efficient?

Results in Marketing Require Specialization

Having specialists on your team is more critical than ever for getting results due to new factors:

  • Frequent updates to iOS requiring updated strategies
  • Complex marketing data with hundreds of metrics from dozens of platforms
  • User privacy guidelines making it harder to target audiences
  • Greater competition and difficulty challenging established brands

To succeed, full in-house teams have to put apply tremendous talent, which comes at a high cost. However, this is where marketing agencies offer a more cost efficient solution.

Consider media buying.

With changing guidelines around data privacy making targeting more difficult, marketing teams need experienced media buyers who can identify niche audiences and target them effectively. To attempt audience targeting without deep experience is all but marketing guesswork.

Agencies employ a variety of specialists to capitalize on these types of opportunities across all marketing sectors. To access this talent with an in-house team you are paying for each of those salaries. With an agency, your company gets access for a fraction of that annual cost.

If your company has a $200K annual marketing budget, you may be able to have $1M worth of talent in the form of specialists working on your campaign if you choose to work with an agency, which leads to more data, more insight, better creative work, established processes and far stronger overall marketing strategies.

A lack of specialization doesn’t just affect the obvious facets of a marketing campaign, either. 

Suppose your in-house team makes an update that breaks your website or ignores conversion rate best practices and decimates your conversions and website traffic.

You scramble and hire a UI/UX & CRO specialist, but as that specialist is getting up to speed with your website infrastructure and eventually making the required fixes, you could potentially lose the Google rankings you’ve worked so hard to achieve or your hard earned revenue.

While in-house teams struggle with quick fixes to unique problems, agencies have the broad experience and specialization to resolve them quickly, without losing revenue and brand value.

Hiring Employees That Can Execute Well

If you decide to build an in-house team, you now need to navigate the actual hiring process.

According to LinkedIn, it takes an average of 36 days for an organization to fill a marketing position. This does not include time spent creating the job description, interviewing candidates, creating hiring processes and internal onboarding resources, or conducting company training, so expect there to be some delays before your internal team is up and running. 

Perhaps you prefer the hands-off approach of outsourcing to a recruitment agency. This option saves you time, but you’ll pay handsomely for that convenience.

For busy organizations, the average fee for a recruitment agency is 25% of a candidate’s annual salary. And it’s not always easy to find good candidates, even with the help of an agency–according to a Recruiter Sentiment Study by MRINetwork, 63% of recruiters say talent shortage is their biggest problem.

Upgrade Your Talent Without Employee Costs

Employee costs can quickly skyrocket when you’re building a team.. Do you live in a major city with high average salaries? Perhaps you should expect to offer above-average salaries if you want to be competitive in attracting high-quality and effective talent.

Employee costs don’t end at their salary figures, either. According to the U.S. Small Business Administration, once benefits and other variables are factored in, you usually end up paying between 1.25 to 1.4x of the employee’s salary to retain the employee.

There are also challenges of hiring employees including:

  • Additional tax liability for the company
  • Time spent with HR to get everything in order
  • Employees taking paid leave
  • Performing background checks on employees and making sure they are adhering to your brand values
  • Significant training required for each employee
  • Might not pass the 90 days period

Consider how new hires impact your existing team infrastructure. 

The amount of time and energy it takes to manage an internal marketing team impacts a company’s bandwidth, and ultimately, its ROI.

Ask yourself: Which current team members and company processes will be affected or disrupted by the inclusion of the new marketing hires? Who will train these new employees so that they can start generating value for your company quickly? 

Perhaps the greatest challenge is that someone at your company needs to know how to hire for every position you need to fill in the first place, too.

Are you really able to intelligently hire a content marketing strategist when you yourself have very limited knowledge of content marketing? References and past experience are both fantastic, but hiring solely based on resumes is a gamble.

Agencies are far more aggressive in the acquisition and management of qualified marketing talent. This allows for more adept individuals working your campaigns to make them as effective and profitable as possible.

Additionally, hiring an agency can further improve your bottom line with tax-deductible costs.

Cost Efficiency of Agencies

Compared to the complicated logistics of an in-house team, agency costs are more straightforward. You’ll usually pay a fixed monthly retainer in addition to your ad spend.

Agencies are able to offer transparent pricing because they have a perspective of the true cost of digital marketing campaigns and what it takes to have them succeed. Think of the agency’s job as partnering with their clients and helping unblock them at every turn.

Whether it’s getting Facebook ads approved through a Facebook partner rep or analyzing market data from all the clients the agency manages to identify macro and micro strategies in the aggregate, agencies find where marginal changes can be made to improve the client’s margin at a fraction of the cost of a full-time team.

The ability to efficiently automate and streamline tasks, while also identifying areas for improvement and ultimately growth at every step of the way, is unique to an agency. 

Agencies have extensive talent pool of experts from dev & analytics to seasoned media buyers managing millions of dollars in monthly ad spend across all advertising platforms and mediums. Usually, in-house hires specialize in only one channel, so you have to hire three different people to achieve the omnichannel presence needed for your business to succeed.

The Challenge of Too Much Work Today, Too Little Work Tomorrow

A dry spell in incoming projects and your marketing employees are sitting around burning a hole in your pocket.

Too much work and your team may not be able to keep up and deliver. As a result, tracking and scaling campaigns becomes an issue. If you can’t strike when the iron is hot, you potentially miss out on opportunities to generate revenue. 

Employees can also quit at any time, which means that even if there isn’t an overabundance of work, your internal team may suddenly become overwhelmed. Again, the impact of this sudden change in variability may be felt in the form of missed opportunities.

Hiring an agency allows you to manage variability without nearly as much risk. Agencies seamlessly adapt to the ebb and flow of your company and its growth initiatives. With specialists on standby, agencies are able to easily allocate more resources to your campaigns as needed.

This is a WIN-WIN situation with hiring performance agencies since they are incentivized to scale your business and make you more money since they would be making more money as well.

Agencies Fight for You in a Unique Way

Because agencies need to stay competitive, they are continuously fighting to adapt and learn new methods. 

  • They must be up to date on the current state of today’s key marketing algorithms that will impact a client’s bottom line
  • They must be utilizing the latest and greatest technological components of marketing
  • They must understand the nuances between local, national, and international campaigns

In summary, the agency operates as a large and bustling neural network of ideas and innovation. A smaller in-house team will still be able to do some collaboration between themselves, but the differences in creative potential between the two is often staggering. 

During execution, the agency has a strong sense of urgency and advanced project management capabilities that allow for speedy campaign setup and optimization during key windows of opportunity. 

Let’s say you have several successful campaigns and you want to capitalize on them and expand to other channels. To do this you need:

  • Specalized skillsets to execute new channels (TikTok, Google, YouTube etc.)
  • Experience with a similar project so you don’t waste spend
  • Bandwidth from your team to have the time you need without rushing campaigns

Without these elements you are facing huge risks of wasteful spending, violating platform guidelines, and failing to capitalize on huge growth.

In an agency, each task is assigned to a dedicated specialist who is able to complete the work quickly and effectively due to niche experience. If non-specialists are executing campaigns, things take longer, and the end result, even if passable, all too often lacks the crucial “it” factor that’s necessary to succeed in today’s competitive marketing environment.

Overall, agencies have more creative power than small non-specialized teams do, allowing them to come up with better ideas before work begins. During execution, agencies are able to quickly transform superior ideation into successful campaigns through specialists who perform at a high level in their respective fields.

Grow Your Marketing Without Adding Costs

So how do you create the perfect team of marketing powerhouses that take you to new heights at efficient costs? Fortunately, agencies are an agile, efficient marketing solution that don’t sacrifice impact for cost.

Here are some ways we see agencies surpass in-house teams:

1. Agencies can give a fresh perspective on your marketing obstacles compared to in-house employees that have been with the company for years.

2. Agencies offer more diversity in skills and talent since a team is hired rather than a single person.

3. Agencies are more results driven as they have to regularly deliver key metrics to clients to continue their partnership.(a lot harder to fire an employee than to part ways with an agency)

4. Agencies are more scalable as talent already exists within the team when you want to increase budgets. You don’t need to hire and train a person to start scaling.

5. Agencies usually don’t require the training that in-house employees do.

6. Agencies offer the same services to a variety of clients, so they become experts in their many fields. There are chances that the agency might have worked with a similar client before.

Get More Confidence in Your Marketing Strategy and Performance

Agencies are far easier to vet than employees are thanks to an abundance of public feedback. Previous employers may tiptoe around an employee’s mediocre performance due to legal concerns, but an unhappy client of a marketing agency will not be afraid to vent on public platforms like Yelp and GlassDoor.

Business owners are sometimes hesitant to work with agencies because they already have a team and they aren’t ready to go all in on an agency. 

Fortunately, good agencies have the capability to work with existing teams and handle part of the work. This has several advantages such as:

  • Immediate start supporting your efforts without need for employee training
  • More time for you to handle other aspects of your business
  • Ability to take on 100% of marketing efforts

Having an agency handle your marketing allows you to be more growth-oriented with your business. Greater success for your business brings more business to the agency, giving the agency a greater vested interest than an in-house team.

Whether it’s long-term results or a short-term deployment, a marketing agency is an agile solution for growth.

Transparency is Key

The agencies you want to work with understand that business owners may not be well-versed in every aspect of their marketing campaigns. They will take the time to be completely transparent so that clients have a clear understanding of how their campaign will play out before any actual work is done on it.

This transparency is achieved through a variety of tools, from project management software to custom built data dashboards and beyond. 

Once you decide on an agency, this same transparency will allow you to quickly assess the results the agency is getting for you and ensure you are maximizing your success.

Takeaway

Faced with a need to cut marketing costs, there is a way forward that can actually grow your revenue. onsidering the costs, uncertainty, and sheer scope of hiring an in-house marketing team, many companies will be better served working with a well-reviewed marketing agency. 

Retainers are often lower than salaries are, understanding campaign ROI is more straightforward, less stress is put on your existing team members, and thanks to the bustling neural network of talent inside of agencies, your ROAS–the ultimate final judge of any marketing campaign–is often significantly higher.

If you would like to further discuss the advantages of marketing agencies vs. in-house marketers, get in touch with a marketing expert today.

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