Marketing is all about arguments where several opinions evolve and eventually disagree. One of the highest debates is the difference between in-house marketing vs agency. While marketing revolves around theoretical and practical ideas, the role of marketing within the organization is becoming the most striking trend about marketing in the present time.
According to research published by MarketingWeek, only 8% of brands are ‘very satisfied’ with their agency partners and more brands are considering taking activities in-house. Eventually, stats from Harvard Business Review, shows that Chief Marketing Officers (CMOs) have the shortest lifespan in the C-Suite. In addition, the issue with in-house marketing is not limited to senior marketing managers, stats from the LinkedIn analysis shows that marketing roles had the highest turnover rate with 17% comparing other functions.
In nutshell, whether the marketing is in-house or outsourced the issue remains the same. Decision-makers are considering marketing as the most unstable department in most organizations.
Analyzing the Problem
In the 15 years, I’ve spent in the marketing industry between full-time jobs and consulting, business owners are always questioning: “Should I hire an in-house marketing team or get an agency?”. In-house marketing vs agency is not just a regular business decision; it is an existential question for business owners.
In one gloomy day at the office in Singapore, the CEO finished a long meeting with our marketing team by shooting the question: “Who can we trust?”. At this moment we had reached the point that he doesn’t believe in the in-house team. At that time, he was afraid that agencies wouldn’t give him what he is looking for. I voluntarily answered him: “trust no one”. Yeah, he got it and a few months later he fired the marketing team and a few months later he stepped down as CEO.
Either way, we agreed that the trust level in marketers is falling down. The marketing and Ad technology didn’t provide a spike in the trust level, in fact, it made everything worse for senior marketing managers. The more the C-Suite are able to see the flood of numbers arriving from MarTech tools, the more they expand their abilities in spotting issues. Therefore, managing marketing remains a myth in most businesses and the question is getting extremely complex.
My aim here is not to convince you what works better. Remember that my motto is “Trust no one”. Let’s start by elaborating on some key pain points. I receive three types of business inquiries as a marketing consultant which can help us in analyzing the case.
1) Companies that are disappointed by their agency or tried several agencies with no effective results.
2) Companies that have an issue with their in-house marketing capabilities or willing to expand their in-house team.
3) Startups who have limited resources to hire an agency or in-house team and wondering what to do.
Attending several meetings and workshops with business managers and senior marketing management, made me realize that in-house marketing vs agency discussion is brutal. On the table there are few ideas:
- What is the best option that fits with our business model, budget and resources?
- What is the best option that is cost-effective and easy to integrate?
- What is the best option for the short-term and long-term?
It is all business decisions, but it is not fully accurate when it comes to marketing playground as there are few tricks and bumps along the way. Marketing is very dynamic due to the ongoing changes in consumer behavior, competition, and technology. What fits your business now might be problematic when you try to scale your business or open new markets. What is costly now can be cheaper with ongoing updates in MarTech and marketing automation.
The First Rule of the Selection Process
So, as an independent consultant, I had to listen carefully and analyze the requirement with one objective strategy in my mind. The only rule you need to keep in mind is what I learned from my conversion with my ex CEO, there is no perfect choice or fully trustworthy.
The only criteria of the choice are all about the business’s ability to manage marketing. It totally managerial decision about what do you poses and your capacity to manage marketing as a business function. Establishing successful marketing starts with the company’s ability to manage and control the expectations.
In-house Marketing vs Agency Comparison
After setting the main rule of establishing marketing, we come to an important part about the comparison of in-house marketing vs agency. After a constructive discussion with my fellow marketing expert JK Baseer, we concluded the main factors you will need in the comparison and what is the pros and cons of each option.
|Accessibility||Accessing the market is relatively slow with the in-house team. Building a team requires time to hire a team and to acquire marketing experiences in the target market.||Faster access to the market due to the availability of local market and knowledge, tactics and consumer habits. The agency’s expertise allows faster access to the market and target consumers.|
|Adaptability||The in-house team is internal which allows a high level of adaptability and ability to rearrange tasks priorities, higher control and faster implementation of strategic adjustment and marketing budget allocation.||Agencies can be much slower to adopt depending on their workload, priorities and internal process. Additionally, the agency is interested in increasing marketing spend. However, the agency can have a valuable perspective of the strategy optimization.|
|Reliability||Reliability in managing the team, monitoring the quality, and controlling the projects from start to finish.||Limited control in terms of process and difficulty in tracking and monitoring the quality.|
|Connectivity||The In-house team is able to communicate with all stakeholders within the organization and have a major ability to access data, analyze, and align responsively.||Tasks and projects coordination could be complex due to communication barriers. In addition, the agency is required to do extra efforts to reach different stakeholders and to access data.|
|Flexibility||The In-house marketing team can adjust their skills to manage the required tasks and manage pressures. The team can expand or scale down based on the company’s needs and financial situation.||The agency is handling several clients and you may have to wait for your turn. In some cases, the agency can provide flexibility in terms of fees and resources reallocation.|
|Pool of Talents||It is rare to find talents who are experienced with all aspects and tools of digital marketing to cover all the marketing needs. Acquiring a successful marketing team requires experienced marketing recruiters and most importantly time.||Agencies work with several clients and they have more skilled individuals on hand. Their talents are diversified and covers wide areas of marketing channels, technology and as well as external resources.|
|Orientation||In-house marketers are paid to live and breathe your brand, product, and industry.||The agencies have their own business objectives, technology partners, structure and profitability targets.|
|Investment||The in-house team is relatively considered as a long-term investment.||In some cases, sustainability in the long-term could be one of the top issues.|
This comparison of in-house vs marketing agencies illustrates the main differences. In contrast, it is important to explore the third path which consists of in-house marketing and digital agencies together.
Hybrid Marketing Team
The hybrid marketing team is considered a highly effective solution. Eventually, this solution is inherited by most of the top brands and big business firms. The main advantage of hybrid marketing is the ability to organize the workflow more effectively and control the results efficiently. Moreover, the in-house marketing team is given the ability to focus on the big picture or tasks they do best while you extract specific channels and researchers to specialized digital agencies.
The main disadvantage of the hybrid marketing team in some cases it is highly expensive which is suitable for big firms. In addition, you are still not protected from all the issues of the agency’s reliability and adaptability. While the hybrid solution could be customized based on the business objectives and budget in some cases, there is substantial heavy work to sustain it.
After exploring the different solutions, it is critical to understand more in-depth the dynamics and science behind managing the marketing outcomes.
How to Measure the Outcomes?
When it comes to the learning outcomes, in-house marketing and hybrid are certainly the best option to inherit. The organization must acquire the knowledge of how to communicate with the consumer. The core function of marketing knowledge is bigger than just data, market insights, and marketing academic disciplines. Marketing knowledge is about gaining accumulated information and increasing overall business performance.
Basically, the fatal mistake for some businesses is that they limited themselves and isolated the marketing knowledge inside the in-house marketing department or digital agencies. Marketing knowledge has a direct impact on all the business functions from improving the product to opening new markets at a lower cost to increasing awareness which has a direct impact on customer support. Building business decisions cannot be extracted just from campaign data and monthly reports of marketing ROI.
Over the years, I developed a high sense of how the company integrates its marketing within the organization. Successful companies tend to create highly effective communications and integrations between departments. I also tend to measure the success of the companies with how much information they have about the customer. Eventually, everyone overuses the term “customer-centric”, yet only so few companies are ahead of the game and managed to get closer to their customers.
Therefore, the management of marketing extremely complex and more intense than monitoring the performance. Fundamentally, I believe there are four major areas to measure the marketing outcomes beyond just the term “marketing performance”.
|Marketing Capabilities||The marketing contribution to the organization||Impact percentage on Product development, Operation, IT, Customer support, HR, R&D|
|Marketing Process||The efficiency of marketing as a function||Internal marketing process (Marketing cost, Productivity, Technology, KPIs)|
|Marketing Performance||The marketing output comparing marketing strategy objectives||Measuring the cost per Channel, Leads, Sales, Acquisition, Retention and CLV|
|Marketing Investment||The marketing status comparing investment objective||The overall impact on Business Finance and ROI|
Take a moment and start to reconsider the whole picture and measure the advantages and disadvantages of in-house marketing vs agency comparison. Marketing has different sides and you cannot limit it to one dashboard of the marketing department which visualizes the cost per acquisition. It is important to measure marketing outcomes as part of the organization’s picture. Now, back to our question: Which can deliver a better impact on the organization? Agency vs In-House?
Rebuild your objectives and expectations based on the four key areas before you make the decision. You will need an internal marketing expert of marketing consultation that can help in setting the measurement in place.
How to Calculate the Cost?
Some would consider that a growing in-house marketing team is more expensive than hiring an agency. You would need to pay full-time salaries, buy the tools, pay for training, and the risk of a long-time process. While an agency contract is a negotiable and less headache in terms of skillset and tools. That’s a mistake since agencies are not generous by any meaning. The agency will give you as much as you pay. They can put heavy pressure on their teams to deliver but at the end of the day, they are looking for more profit out of your account. However, finding a good agency or establishing a hybrid is considered a painful process and costly.
|Agency cost formula: Cost of agency recruiting process + Time spent + Agency fees + Ad and media spending commission + Marketing tools + Communication and project management |
In-House cost formula: Cost of recruiting process + In-House costs (spaces and equipment) + Time spent + Full time salaries + Marketing tools + Training
In-house teams are certainly expensive the same as agencies. Several agencies argue that they are saving the cost of marketing ad tech tools, but this is not true. Top platforms and AdTech require new licenses that you are going to pay for. Most importantly, the top marketing agencies are already partners with the technology providers, and they are highly interested in selling you to their technology providers at a good rate. Keep in mind that the price difference can be massive sometimes for some platforms such as Google 360, Adobe Marketing Cloud, etc.
Fundamentally, the solution is not to conduct a basic comparison of prices but to measure the ROI of each investment. For instance, investing in a marketing platform is better with an in-house team because you are able to embrace this technology and dominate the knowledge of your marketing automation process.
Independent Marketing Consultant vs. Agency or In-house
The marketing function is not limited to generating leads and revenue. At a fundamental level, marketing has a great role in learning customer behavior and the market. If you don’t have an internal marketing professional or marketing consultant, you are potentially exposed to several blind spots in the decision-making process.
Hiring an independent marketing expert is a common option for many Tech and SaaS firms during transformation and strategic evaluation. A marketing consultant role exceeds the auditing and transformation tasks and enables businesses to have an extensive outside perspective.
- The consultant enables the decision-makers to have a trusted advisor who is able to provide unique perspectives, increase the senior management ability of analysis, and continuously train and educate the internal marketing team.
- Professional digital marketing consultants who worked with several agencies in the past can help effectively in the process of shortlisting and hiring an agency and more importantly in developing the framework and managing the expectations.
- The independent consultant works according to the decision-makers’ agenda and helps in connecting the dots and analyzing the gaps in the performance.
- Working directly with a marketing consultant is a more reliable and cost-effective solution than hiring relying on the agency to do all the consulting work.
- A consultant can effectively help in analyzing the marketing strategy and develop the required reporting system and KPIs in order to control the outcomes of internal teams or digital agencies according to business objectives.
- Independent marketing consultants have the freedom to analyze independently, they are expected to align with the organization structure and follow the same workflow such as internal employees.
- An Independent marketing consultant has comprehensive experience than marketing generalists in the job market. Consultants have dominated the experience of the market and work with multiple companies and projects. They are exposed to different marketing strategies, MarTech tools, budgeting methods.
- The marketing consulting model is more flexible to negotiate and contract, unlike hiring multiple internal and external resources.
In summary, the debates about in-house marketing vs agency could be justified to the basic rule of how you can manage the options on short and long-terms. Eventually, marketing consulting professionals can provide a major assist in controlling the marketing spend and help in selecting the right approach. The consultant key expertise is not limited to setting up the marketing strategy only, but it is essential in analyzing the company’s needs, budget and monitoring the performance of the agency or in-house team. The main value of consulting is having an advisor on your side of the table who can answer business questions and help with the investment allocation.