Roshni is the CMO of Foxquilt Insurance and Founder of Prosh Marketing, specializing in Go-To-Market strategies for technology startups.
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Different parts of marketing have been traditional areas for companies to outsource work to. I have had the opportunity to work at both multinational corporations as well as startups that have outsourced their marketing to freelancers and boutique and full-service agencies.
Large companies usually have the best of both worlds. While they hire talented professionals to lead marketing projects, they also contract large agencies that bring in a team and network of specialized services to deliver results. Given that many large organizations spend millions in marketing dollars, they can afford to do so.
While larger companies often have the luxury of larger budgets, small and medium-sized businesses (SMBs) and startups must tightly manage the balance and trade-offs between having an in-house team and contracting a marketing agency to help achieve their marketing aspirations. Here are three considerations that smaller companies need to think about when making that decision:
Staffing Capacity And Continuity
Larger companies with significant budgets have enough marketing work to support full-time marketing staff. However, SMBs and startups may have limited resources and marketing options, and arguably not enough work for a full-time marketing employee. Marketing can also be seasonal, and having an in-house team can lead to idle time and wasted resources. In these situations, hiring a part-time freelancer or partner to help with your marketing is usually more cost-effective than hiring a full-time employee.
At the same time, an internal employee can use the extra time to come up with new ideas, tackle ad hoc deliverables, implement new processes and perform value-added activities that may fall outside the scope of agency work but help you expand faster. Also, a small business or startup can always use more help when growing. Hiring an employee provides access to more hours to get things done, and marketing staff can often help out in different areas of the company.
Employee turnover can also be a concern, especially at startups where key employees are vital to operations and business continuity may be jeopardized if they leave. Marketing positions are one of the highest areas of turnover, according to a study done by LinkedIn. Even though agency turnover can be as high, agencies usually have other staff that can backfill roles should someone on your account leave, and the agency would bear the costs of recruiting and onboarding.
Expertise And Industry Specialization
Marketing is ever-changing and has transformed significantly in recent years with changing customer behaviors and innovations in technology. Upskilling an in-house marketing team and keeping them updated on things like new tools and industry standards is a time-consuming and expensive task.
Agencies hire experts in their domain and as specialists. Part of the value that they provide to their clients is bringing in best practices and new and innovative ideas. This means that they have to continually learn and keep abreast of what’s going on in the industry from a marketing perspective. Conversely, though the agency may have specific industry experience, it may lack organizational knowledge and still have lower levels of specific industry knowledge than in-house staff.
Especially with a smaller marketing team, having specialists in every marketing function required is not possible. In these situations, having in-house generalists who can manage and oversee the marketing process can be helpful. Supplementing with a boutique agency that specializes and has the marketing expertise you need can provide you with in-depth knowledge and expertise to create marketing programs that deliver results.
The Cost Factor
When deciding between in-house staff and an agency, cost is often one of the biggest comparisons. Hiring a marketing employee full time can seem expensive for smaller companies, especially when you consider hidden costs such as recruiting, onboarding, training and benefits packages. However, hiring an employee gives you full cost transparency and budget control, with a fixed salary or limited hours per week, and it is an investment in your marketing team’s future.
Agency retainers are monthly fixed costs and can also provide companies with the ability to forecast and control marketing costs. Retainers can be based on a number of models, such as actual hours spent plus hard costs, or scope of work and project fees. While only paying for time used can be a great way to access part-time help, it can also add up if projects are not tightly handled or revisions get out of control. On the other hand, paying for a scope of work or project can ensure you get the job you need completed on a fixed budget, which may be more costly per hour if, for instance, the agency rushes the job, or less costly per hour if there’s scope creep. Overall, outsourcing allows smaller companies to access high-level, specialized talent fractionally and, therefore, at a fraction of the cost of having that person on the payroll.
Buying power is another factor that’s often overlooked when working with an agency. Often, the agency has other clients that need access to similar services. They may have relationships with partner agencies that offer special rates for their clients or buy media or swag for many clients and can pool their budgets together to hit volume discounts.
When deciding to hire or work with freelancers, boutique agencies and even larger marketing companies, the pros and cons of outsourcing marketing functions are numerous. Increasingly, I’ve seen companies adopting hybrid models that blend in-house marketing generalists with agency specialists. The rise of the fractional CMO is just one example of how startups and small businesses have taken advantage of such models to maximize value within limited budgets.
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