Digital Marketing Agency vs. In-House Marketing: Pros, Cons & Costs
Which is more cost-effective: building an in-house digital marketing team or hiring a digital marketing agency? Speaking as the CEO of a digital marketing agency, I’ve seen clients that are a perfect fit for the agency model and others for whom in-house marketing made way more sense. The answer lies mainly in what has the best ROI—but not just in terms of financial return. You need to think about time, resources and culture just as much.
For my business, it wouldn’t make sense to hire an outside organic marketing agency—I already have an entire company of dedicated marketing specialists. But chances are your company doesn’t have the same resources. To decide, you’ll need to understand the pros and cons of in-house marketing teams vs. outside agencies. For this article, I will be focusing specifically on organic marketing efforts, not advertising.
How Much Does an Internal Digital Marketing Team Cost?
Regardless of whether you choose to go in-house or hire out, a successful digital marketing strategy is a long-term commitment. While the price tag for an outside agency may seem steep at first, it compares favorably to the cost of hiring an experienced organic marketing team in-house. Here’s how much an in-house marketing team typically costs in salaries per team member:
|In-House Digital Marketing Team
|Team Member (3-5 years experience)||Yearly Average Base Cost*|
Figures above taken from Creative and Marketing Salary Guide 2019 The Creative Group (A Robert Half Company) *Figures do not include benefits, taxes, office space, tools.
Now that you’re familiar with the cost of an in-house marketing team, let’s compare it to the prices of external digital marketing agencies. I use an SEO/content marketing firm as our example since that is an area where I have direct experience, and include two common service models for comparison.
|SEO/Content Marketing Agency
Average Yearly Cost
|Annual Savings vs In-House SEO Team
(compared to average cost of $261,500 for an in-house team)
|Option 1: Thought Leadership Marketing Agency
Full-service technical SEO, research, content strategy, and writing.
|$120,000 – $150,000||$111,500 – $141,500||Provides full-service from one company, so all efforts are coordinated and consistent.|
|Option 2: Content Marketing Agency + SEO Agency
Content strategy and writing only. No technical support.
|$50,000-$80,000 for Content Marketing Agency;
$20,000-$30,000 for SEO Agency
Total: $70,000 – $110,000
|$191,500 – $151,500||Both agencies will have expertise in their fields, but efforts will not be coordinated causing more work for the inhouse team.|
Hiring a full digital marketing team costs hundreds of thousands of dollars a year, on average. That’s in salary only, before providing benefits, finding extra office space, paying for advertising, or purchasing tools and services marketers need. In contrast, a typical 12-month contract for a full-service thought leadership content marketing agency costs between $120,000-$150,000 a year.
Of course, there’s more to it than that. In-house digital marketing teams and outside agencies both come with pros and cons that must be weighed. Making the right choice isn’t just about numbers—you should also carefully consider the size of your company and your marketing goals.
Pros and Cons of Digital Marketing Agency vs. In-House
To give you an idea of how they compare, here are some pros and cons of each:
|Outside Digital Marketing Agency||
|In-House Digital Marketing Team||
Deciding which option is best for your company depends on the characteristics of your business and your marketing goals. Small businesses between $5 million and $50 million in revenue should be able to dedicate enough of their budget to marketing to expand their in-house marketing team or hire an external contractor. Especially on the low end of this scale, any extra revenue earmarked for marketing will be dear and difficult to replace—it absolutely must pay off in increased leads and business growth.
While hiring an outside agency may seem pricey to a business in this range, having institutional experience, access to software and tools, and a fast time to market is incredibly valuable. With the rest of the company focused on making products or providing services, hiring a team of professionals to introduce your business to the digital world ensures dedicated attention to growing your customer base.
Medium and large businesses, with revenue ranging from $50 million well into the billions, get to have their cake and eat it, too. These companies will hire internal marketing teams de rigueur while also farming out specific or lead generation responsibilities to outside agencies.
For these larger companies, internal teams ensure messaging consistency, while outside agencies work with certain divisions or towards specific goals, like a new product launch. Some hire large outside agencies to handle most, if not all, of their organic marketing. These outside agencies, in turn, hire smaller subcontractors to handle niche aspects of large marketing plans. This affords these companies both consistency in tone and the flexibility to adjust their marketing spend as needed.
While most companies above a certain size employ both internal and external marketing teams, smaller companies have to think hard about the best way to deploy their resources. Often, if digital marketing expertise doesn’t already exist within the company, it’s simpler, less time-consuming, and more cost-effective to turn to an outside agency.