So let’s get something out of the way right now – you’re probably asking yourself, “why should I listen to an agency owner on the benefits of hiring an agency?”
A valid question indeed.
Well, years ago before starting Upgrow, I was sitting on the other side of this blog as an in-house digital marketing manager having to make the same tough decisions about how best to manage digital marketing.
One of my favorite agencies I hired was during my time at Fossil (the global watch and fashion brand). It was pretty much by chance we contracted.
When Fossil acquired the Skagen watch brand, I was looking for some additional firepower to support me in all channels of digital marketing. They were a young, hungry agency based in Portland and eager to win our business.
I gave them a shot with a few campaigns and was impressed immediately.
They brought new ways of thinking, seemed to have already encountered all of the challenges we met already, and could easily scale up or down based on seasonality.
From that point on, I understand the value an agency could bring in conjunction with the in-house marketing team.
In this post, I want to share some of the reasons I deeply value what an agency brings both in the ability to increase revenue but also in running a more efficient, cost-effective marketing program. I hope you find it valuable!
If you’re considering partnering with a digital agency then price and cost-benefit have probably crossed your mind. No one has a limitless budget and we all need to prove ROI.
Today, an effective digital marketing program is crucial to reaching new leads and customers. For most modern brands, online is the leading source of sales opportunities.
But who can you trust for this essential component of your business?
Do it yourself? Hiring an in-house marketing team? Find a consultant or contractor? Bring on a digital marketing agency?
It’s a tough decision.
I know that it’s one I had to make many times over my 12-year career as a digital marketer.
What I discovered is that it really comes down to ROI, just like evaluating any business expense.
I would ask myself, “does this hire/consultant/agency add more value than cost”?
Ultimately, hiring a high-performing agency did deliver returns well beyond their fees and would multiply our bigger investment in the media itself. Usually, an agency would be used in conjunction with an in-house team or consultant but there are many things the agency could bring to the table that more than justified the investment.
Don’t get me wrong, there is still a strong need for in-house marketing managers which can also be highly ROI positive. In fact, a marketing manager’s efficiency is often multiplied by their agency partner.
In this paper, I’d like to lay out for you a summary of the main reasons I believe a digital agency can better make you money as well as save you money.
1. Cheaper than hiring employees
Any business owner or manager knows that hiring and retaining great talent is the most difficult part of growth.
There is the financial cost of setting up a work culture, an HR department, recruiters, managing employer taxes, setting up employee benefits, additional office space, and more.
Then there is the time investment of onboarding, performance reviews, and let’s not forget the legal liability of having employees.
The true cost of bringing on a new digital marketing headcount is much more than their salary alone if you think about it.
By contrast, a digital agency charges a percentage of your media spend with a flat monthly minimum and initial setup cost.
Here is an example of hiring in-house for an experienced digital marketer versus hiring an agency (like Upgrow).
Let’s assume we’re managing Google Ads, Facebook Ads, and LinkedIn Ads with a total budget of $30,000 monthly.
Cost of a marketing hire: $90,000 annually or $7,500 monthly.
Using Glassdoor to estimate the average salary of a digital marketing manager in the US, we find that the average base cost is $69,755 + $7,459, and with recruiting costs, work station, benefits, taxes, and associated costs we’re easily around $90,000 annually or $7,500 monthly.
And note this is for the US, if you’re hiring in a city like San Francisco or New York City you can go ahead and add 30%+ to that.
Cost of a marketing agency
At Upgrow, our annual retainer to manage the same 3 ad platforms is $56,500 or $4,500 monthly with a $2,500 setup.
That’s an annual savings of $33,500!
2. Greater efficiency
Having worked in-house and at an agency, I can tell you that agency work demands greater efficiency. There is simply less time when managing multiple brands and increased urgency to deliver results fast.
An agency also operates with less bureaucracy and internal meetings whereas, at least when I was an in-house marketer, there were hours each day spent in meetings and trying to get buy-in on various projects from stakeholders.
The agency’s ability to contribute as an external contributor frees them up from the corporate day-to-day for greater efficiency.
3. More flexible
Hiring up and laying off a digital marketing team during times of expansion and contraction is anything but flexible.
The time and cost of recruiting and onboarding new hires and the toll of letting them go when pulling back – as well as the expense of unemployment, is taxing.
Alternatively, an agency allows you to onboard within a few days and scale down or terminate with reasonable notice.
4. Cross-client experience
Your digital agency is working with other clients. They are learning from managing those other accounts through optimization, experiments, and challenges. That means they can apply that knowledge to your program as well.
There is a good chance your agency partner has already encountered the obstacles that you face and can execute the solution quickly – resulting in substantial cost savings
If your agency has already done work in your industry then the benefits are even more extreme.
5. Network connections
Most high-performing agencies have a great network made up of clients, complementary consultants, media publishers, and other contacts that could benefit you.
They work with dozens or hundreds of clients and control millions of dollars in ad budget. Google, Facebook, and LinkedIn are giving them a lot more attention than any single brand, I’ll tell you that!
Network connections we’ve been able to facilitate for our clients have included SEO link exchange between clients with similar content, co-marketing giveaway programs with email exchanges, and new customers for enterprise software just to name a few.
Just ask your agency partner for an introduction!
6. Speed for scaling
I already mentioned flexibility on this list but the advantage of scaling faster gives you the opportunity to seize market share when growth happens quickly.
Simply put, an under-staffed marketing program leaves money on the table.
Your digital agency can handle additional channels, larger budgets, and new campaign launches just by adding to your scope of work. An in-house hire would end up taking weeks or months of recruiting and onboarding to handle the increased workload.
Oh, and if you’re a very early-stage company without a dedicated marketing headcount, an agency can help get your business off the ground without the delay of recruiting.
7. Added efficiency for in-house marketing teams
An in-house marketer is still a crucial role in the marketing program even when working with an agency. Knowledge of the program, who the customer audience is, seasonal campaigns, and a dedicated focus to a single brand cannot be outsourced.
A great agency takes the direction of a brand marketer, provides suggestions based on experience, and executes the plan while making adjustments along the way.
You can think of a digital marketing manager as the coach of a professional sports team and their agency as the players. The coach knows the game, the team owner, the plays, and the competition. The agency executes the plan, influences game-time decisions, and allows the coach to focus on the bigger picture.
Image the coach trying to play all the positions alone – it’s very difficult and doesn’t allow for specialization or focus.
8. Leverage agency tools
Other than headcount and the ad budget itself, software subscriptions are the largest cost of running digital marketing. A suite of marketing tools can easily add up to thousands of dollars every month.
When a brand invests in marketing software, they are only using it for their company but an agency can use the same subscription across all of their clients. Utilizing your agency’s plan is included with your monthly retainer.
An agency also saves you the time and energy of researching and testing different software solutions as they will have done the legwork to find then battle test the stack of tools.
9. Avoid the cost of poor hires
Making the wrong hiring decision is extremely costly in dollars, morale, and performance. Terminating an employee who isn’t meeting your needs takes a major toll.
Your other employers will be impacted by seeing one of their colleagues get let go, damaging morale and creating fear they could be next even if that’s not really the case.
Let us also not forget we live in a world of lawsuits for “wrongful terminations”, both real and frivolous but as an employer, it’s still something to consider in the “cost” of hiring.
You might even retain a poor hire just to avoid this which leads to other problems and a negative ROI keeping a poor performer on.
Ending an agency relationship isn’t fun either but is much cleaner and as simple as a call or email notification. Upgrow offers monthly contract terms with as little as 15-days notice for termination.
Additionally, with an agency, if your account manager isn’t working out for you, you can often just ask them to make a change.
You’ve then got a new agency contact without having to terminate anyone or search for a replacement.
10. Media price negotiation leverage
Agencies control a much larger amount of media spend compared to a single brand.
The “volume buyer” status earns agencies better pricing when negotiating media buys and the ability to quickly get refunds for any fraudulent traffic.