For some businesses, it makes sense to hire an internal team for marketing functions. For others, hiring an external agency is their best bet. This guide can help you choose which path is right for you.
It happens all the time. A young startup looking for growth hires a capable marketing agency, and after a few good years, the company has grown to become a small or mid-sized business. With the additional marketing budget, company leadership decides it's time to hire an in-house marketing team.
An in-house team, the thinking goes, can accomplish more with less because the company has more direct control over marketing efforts and fewer dollars are swallowed by agency fees. It sounds good on paper, and sometimes it's the way to go. But it doesn't always work out well.
Research from Forrester and the In-House Agency Forum suggests that in the past decade, there’s been a clear shift from external agencies toward in-house marketing. Just 10 years ago, in-house teams were found among 42 percent of advertisers, but that number has risen to 64 percent. Advertisers say that in-house teams have a deeper understanding of their brands and businesses. Also, they say that in-house teams are faster and more cost-efficient.
These are all good reasons to create in-house teams, but there are still some benefits to keeping an external agency.
The reality is that creating an in-house team is challenging, so small and mid-sized businesses might find that hiring an external marketing agency is the best bet. Here are some things to consider while making this decision:
1. Make sure your marketing professionals have the training they need.
To get results, it takes a team of marketers with various disciplines. That means a social media marketer, an email marketer, a content strategist and more. Of course, finding the talent necessary to get results isn't going to be easy. More than 70 percent of creative leaders of in-house teams report that they lack the time to develop new hires, so businesses that go with in-house teams need to ensure their teams have enough support to succeed.
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Businesses can keep their employees on the cutting edge of their specialties with professional development, which should be a key part of the budget. When leaders at Hopper, a flight-booking app, elected to build its own Facebook ad-buying tool, the costs of performing necessary maintenance negated any benefit the tool provided. Other in-house teams might experience a similar skills gap at some point, and 75 percent of marketers feel their lack of expertise is having a negative effect on revenue.
2. Build flexibility into your marketing budget.
Marketing budgets are rising. According to a survey of CMOs, budget increases in the past year were 7.1 percent, on average, while the leaders predict 8.9 percent of additional growth in the coming 12 months. Salaries, of course, take up a large portion of the budget. In-house teams can cost almost $600,000 for a full team of marketers. In-house agencies need to build in a cushion in order to respond to unforeseen problems.
Companies that hire external agencies can sometimes operate on a month-to-month basis and purchase individual services as they’re needed, which can be dialed up or down to respond to budget demands. An external agency can also give an organization the flexibility to run various campaigns and experiment with outside-the-box marketing methods. Also, there’s no need for layoffs or new hires with an outside agency.
3. Keep a fresh perspective, and be open to new ideas.
In-house teams bring their own notions of how the business operates. They know what it has taken to get the business to where it is, and they’re more familiar with the company’s target audience than a group of outside marketers. That can be valuable and provide shortcuts to get where you want to go.
But sometimes an outside perspective is just what a company needs. In fact, you can have the best of both worlds. It’s common for companies that have in-house teams to still work with an outside agency. The aforementioned CMO survey illustrates that more than 75 percent of in-house teams rely on partnerships with external agencies. A business owner might imagine that an in-house team will be completely self-sufficient, but they might need outside help to do their best work.
For small or mid-sized businesses that haven’t seen great results with an external agency, bringing marketing functions in-house is an investment that could be worth it in the long run. But for businesses that have seen success with an outside agency, it might be better for them to stick to their specialties and hire an external agency to do the same.