The question of how much of your digital marketing to outsource to an agency versus bringing it in-house is a tough one. But it’s one that marketing leaders will ask themselves again and again.
Each model has its benefits, but for most businesses the choice is likely to be unclear at first.
Your decision needs to be the right one for your business, both financially and culturally. It has to drive performance now and in the future.
What’s the right answer for you? In this post, we take a look at the pros and cons of agencies and in-house teams for digital marketing functions to give you a better idea of what each model offers.
Our guide to in-housing and creating a digital centre of excellence gives a much deeper insight into how to weigh up all your options, decide which disciplines to bring in-house, recruit talent and prepare your infrastructure.
Here’s a summary of the benefits and drawbacks of agencies versus in-housing to help you on your way towards making a decision that’s right for your business.
Digital marketing agencies: Benefits and drawbacks
Agencies often have multiple disciplines and experts under the same roof, but they could lack a deep understanding of your brand and inside knowledge of your business operations. Their day rates are also higher than the equivalent day rates for staff on payroll.
Let’s take a closer look at the pros and cons of using a digital marketing agency.
- Scalability. Scale your activity up and down quickly for peak times and quieter times. After all, a key reason why marketing leaders employ agencies is there simply isn’t the requirement for a full-time equivalent (FTE) employee.
- Flexibility. Sickness, annual leave and staff turnover are all seamlessly covered by agencies, who will have other members of their team or vetted freelancers on hand.
- Innovation. Agencies tend to be more innovative, agile and adaptable to changes in the market. Digital marketing is constantly changing, and agencies can help you keep up with new thinking and new technologies.
- Experience. Digital agencies almost always have more than one skill base, like SEO, PPC, design and development, social and content, so they can help across the board according to your needs.
- Partner benefits. Agencies have more buying power than individual clients, based on discounts for large spends. These preferential rates get passed onto clients, as do greater support and earlier access to new product rollouts from partners like Google, Facebook and Bing.
Peer review. Decent agencies have a well-structured, robust internal quality analysis system, with a peer review process to make sure all work meets the same high standard and meets your brief.You can scrutinise your agency’s work at regular client reporting meetings and quarterly business reviews, ensuring they remain accountable and on track.
- Detachment. Agencies can struggle to get access to internal data and key stakeholders, and may not have the depth of understanding an in-house team has. Communication can be less efficient than between internal teams.
- Priority. With a portfolio of clients on their roster, you may not always be your agency’s number one priority. A service level agreement can define expectations and make for a smooth working relationship.
- Multi-agency scenario. If you choose to use more than one agency for your digital marketing, some of them may provide services that overlap which makes it hard for them to be completely transparent with each other - and give businesses an integrated service - while maintaining a competitive advantage.
- Cost. Agencies invest in market leading talent and technology, support teams and research. As a result, they cost more when comparing day rates like-for-like e.g. £108,000 a year pays for 120 days a year at £900 a day, but this could cover wages of £86,400, which is 219 days for one member of staff or 438 for two.
The question at the heart of the agency or in-house dilemma is: how much resource do you really need? It is essential to weigh up potential solutions, by modelling spend scenarios for the resources you require.
In our in-housing guide, we show you an example of tables we used to help a client decide whether hiring technicians was financially viable.
In-house teams: Benefits and drawbacks
Having specialists in-house can mean more time spent on marketing for less cost, but recruiting them can be tough and this approach is less agile. Staff can’t quickly be scaled up and down, or switched out.
Here’s a more in-depth look at the pros and cons of in-housing your marketing disciplines.
- Brand connection. Your in-house team is part of your business; they are (hopefully) culturally invested in your brand and its success, putting the company values at the heart of everything they do.
- Cost. Having in-house staff can have considerable cost benefits; for the same amount of spend, an in-house team can put more time into activity than an agency.
- Intellectual property. In-housing allows you to retain knowledge from your marketing activity and third-party relationships. If you change agencies, the new one will need time to settle in and the old one may take key learnings with them; but in-house staff also move on.
Whichever model you use, it’s important to retain IP within the business. Knowledge should be shared and stored across teams.
- Integration. In-house teams are naturally better-positioned to leverage common interests, goals and objectives. They can also call upon internal escalation methods to get things done.
- Technology costs. The cost of technology can make the difference between successful, profitable activity and failure. Taking out individual contracts for each piece of technology can be prohibitively expensive, while agencies can spread the cost of technology across a client base.
- Staffing. Finding and retaining the right people can be difficult. Key staffing questions to ask yourself include how an in-house team will fit into your business and how will career development be supported?
- Perspective. In-house teams are at risk of losing objectivity. An outside-in approach to marketing can be a valuable asset as digital moves very quickly; this is why marketing leaders may bring activity in-house and then outsource it again to gain fresh thinking.
- Performance. In turbulent times, a business can’t simply replace its entire marketing staff, and the process of improving poor performance can be slow. An agency client can simply look to move to another agency if things don’t go to plan.
What’s right for you: agency, in-house or both?
Which, if any, activities should you move in-house? The answer depends on your ambitions as a business, the availability of talent in your local area, budgets and the scope of regular work undertaken.
To successfully in-house an activity, there should be a sufficient business need for a full-time employee to offset any of the drawbacks. You also need a clear understanding of what this activity entails, and a clear vision of its role for your business.
Download our guide to in-housing to learn how to decide whether in-housing is right for you, what to bring in-house and how to create your own digital centre of excellence, from recruitment to retention.
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