• Should You Choose In House or Agency For Your Marketing Efforts?

    inhouse vs external agency for marketing effort

    According to a report by Grand View Research, the global e-commerce market size was valued at USD 9.09 trillion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 14.7% from 2020 to 2027. 

    So what does this mean to you as an eCommerce business owner or marketer?

    Well, if your website is optimized for conversions, you can have a piece of the pie. But if it’s not yet optimized, you will miss out on the moola. 

    Suppose that you’ve made up your mind and don’t want to miss out. There are two things you can do:  

    1. Build an in-house team for all your marketing efforts. 
    2. Outsource some marketing skills from an agency. 

    So, which option are you picking? 

    If you are still not sure, don’t worry. You will have a good idea after reading this article. 

    In this article, we’ll show you: 

    • the difference between an in-house team vs. a marketing agency, 
    • the pros and cons of an in-house team vs. a marketing agency, 
    • we’ll also look at the hybrid model to see if it’s a good solution,
    • and how to measure the success of your marketing team.

    With that said, let’s get started.

    What is the difference between In-house vs Agency?

    In-house marketing is the marketing initiative where a company relies on an internal marketing team (its employees) to market its business and oversee related operations. 

    On the other hand, agency marketing is when a business outsources all or some of its marketing needs to a third party.

    Sometimes, companies with an internal marketing team decide to build their team with the agency template. This results in in-house ad agencies.

    What Are In-House Ad Agencies?

    In-house ad agencies are designed like traditional agencies, but they have only one client – their mother company.

    This doesn’t mean this is the only agency the mother company works with; they could outsource certain services to specialist agencies.

    BBC’s BBC Creative is an excellent example of an in-house ad agency focused on its mother company.

    Pros and Cons Of In-house and Marketing Agency (table format).

    Here’s a quick overview of the pros and cons of in-house marketing departments and agency marketing.

    Pros of In-house Marketing.

    1. Focus. Companies that have their marketing teams internally and not outsourced enjoy a deeper focus on their brand and marketing than when that’s outsourced. 

    There’s no divided attention. The marketing team’s day-to-day operations and internal departments are all about the brand and its marketing.

    1. A deeper understanding of brand and product: Internal marketing teams have a deeper and better understanding of the brand they’re working for and the product they’ve got. 

    Unlike external agencies who will do all they can to learn about your brand, you can’t compare an internal team with a brand for five years to an external agency that’s just coming onboard.

    1. Faster communication: working with an internal marketing team means when something comes up, maybe a new campaign or an idea that management wants to run by the team, the communication/meeting can happen almost instantly. 

    This is not the case with external marketing agencies. The fact that they’ve got multiple clients means it could take some time to set up a meeting, and if the idea is time-sensitive, it could be missed out on.

    1. Strong bond: working every day on the same set of projects with the same individuals fosters a strong bond within the team.

    The team spirit that is developed by working together closely is good for marketing results because everyone wants to see the business succeed.

    1. Harnessing data: when you hire an external marketing agency to work on your business, you’re not the one in direct contact with certain of your audience’s data all the time. 

    This is especially true if the external agency is the one that handles the technologies and tools, unlike instances where you’re the one giving them access.

    The path between data and working with the data becomes unnecessarily twisted when too many players are involved. 

    With an internal marketing team in place, you own all of your marketing data.

    This is because all the lead generation and retention tools are in-house. This makes it possible for you to govern all conversion funnel stages.

    Cons Of In-House Marketing.

    1. Hiring and Onboarding take time: getting the right fit for the job isn’t always smooth.

    The hiring process in many companies takes about three stages, and when the right candidate is selected, it takes another three months to onboard properly. 

    Now, when an employee decides to leave your internal marketing team, this can set your marketing efforts backward by months because this puts pressure on the remaining team members to perform.

    2. Same old stale perspective: it’s challenging to get new ideas from an internal marketing team.

    This is because their perspective is only about their brand and all the work they’re doing.

    This is where external agencies shine. They work with many clients cut across several industries. They’ve seen it all and often experiment with cross-pollinating ideas—something you can rarely find in an internal marketing team.

    3. Acquisition cost: when compared to hiring an external marketing agency building an internal marketing team is expensive.

    Look at it this way. Every member of an internal marketing team has to be paid competitive salaries, bonuses, and more. 

    An external marketing agency doesn’t work that way. You’re not paying everyone in the external marketing team but a flat rate retainer fee which saves you a lot of money.

    Here’s an illustration to drive home the point:

    4. Tunnel vision: working the same routine every day, in the beginning, could be exciting.

    After a while, the internal marketing team members get into a rhythm that leads to tunnel vision.

    This means members of the internal marketing team fail to see the big picture, leading them to focus on one perspective.

    Another consequence of tunnel vision is that the monotony of work leads to lesser productivity which negatively impacts marketing results.

    5. Talent retention: finding fantastic talent is difficult. Retaining said talent is uphill battle organizations face.

    When setting up your internal marketing team, have this at the top of your mind that one of your fantastic staff could just up and leave because another company has poached them.

    Pros of Hiring A Marketing Agency.

    1. Greater skill diverse set: when you choose to go with an external agency, you instantly have access to a trained team of specialists. Usually, most marketing agencies have a larger team than in-house departments. 

    Many external teams work with specialists who bring their best, which improves their performance for your business.

    Here’s an example from us at Invesp. On a project per client basis, we have a project manager who constantly communicates with the client. We have a CRO strategist who studies our client’s business and develops ideas for testing and implementation. We have the designer who designs the variations, and we’ve got the developers who build out this variation to be tested.

    Notice that there’s an expert for every step of our CRO process. Nobody is filling two roles. 

    This will be unlike an internal team that’s just starting or has been established for a while, but the constraint of resources means some team members fill in for different roles.

    2. Fresh perspective: this is one area external marketing teams excel at. Because they’re working with a diverse set of clients, they know what’s working, they’ve got an idea of what might work, and all this fresh perspective may be what a brand needs to increase awareness, positive customer engagement, and retention.

    3. Technical Expertise: when a company outsources its marketing to an agency, they’re paying a retainer to have them work for them.

    These agencies, at this time, have already paid for tons of technologies and, for some, are already partners.

    This saves the brand from paying for technology that will help their business.

    If this was for internal marketing teams, the case would be different. Paying staff salaries, taxes, bonuses, and getting them equipments to work with already make the internal marketing team a cost-intensive affair. 

    Adding tools and technologies and paying subscriptions is an added cost, but external teams already bear this cost. All they want to do is work for you and make you money. 

    P.s: Some external agencies own their software which they could use for their marketing efforts. A case in point is Figpii, our sister company. It’s a SaaS company with a tool for conversion rate optimization. When we onboard clients, we suggest to them that we want to use this tool. For those who accept, it comes at no cost to them. 

    4. Scalability: as a business owner, there comes a time you want to scale your marketing efforts. Let’s say it’s the black Friday season, and you want to optimize your website and landing pages to increase conversions because you’re expecting more traffic.

    FigPii Heatmaps

    With an internal team, this is almost not possible, and that’s because your marketing team is already swamped with work, and getting them to break out of that rut will impact ongoing work.

    With a specialized external marketing team, you avoid all that trouble of not being able to be ready almost instantly.

    You’ve got a team of experts at your beck and call who could move in the direction you want them going.

    5. Affordable: there is a misconception that outsourcing marketing to an agency costs the company more. 

    This is not true.

    An in-house marketing team is made up of at least a CMO or VP of marketing, strategists, designers, and any other skilled personnel that’s required.

    According to comparably, a CMO’s base salary is $198,951. This is just the CMO, and we’re yet to talk about the different strategists, designers, and other team members.

    This puts an in-house marketing team at roughly $400,000 a year in salaries.

    An agency, on the other hand, depending on the specialized service you’re looking for, typically has a payment range.

    At Invesp, Our typical engagements continue for 12 months and start at $15,000/month.

    Compared to building an internal team of experts, you’ll pay much more in salaries.  

    Cons Of In-House Marketing.

    1. Agencies have other clients: external marketing agencies have multiple clients. This is a known fact.

    This means as a business, you won’t enjoy their 100% attention and focus. 

    Many external agencies have project managers that liaise with their clients and keep them updated on their projects, but it’s not the same as having an in-house team.

    2. Lesser control over the agency’s processes: every external agency is outside the purview of the brands they do marketing for. As a business owner or decision-maker, when you employ the services of a marketing agency, how they run their business is not within your control.

    You can’t dictate to them how to handle their business to yours. This is where internal marketing teams shine. You’ve got that relationship and oversight over every process and decision-making.

    3. Different visions: Regarding your strategy, an external agency might have an idea different from what you had in mind.

    Of course, the final say rests with you, but the back and forth between you and the agency could lead to a conflict and slow down the whole process.

    Hybrid Marketing.

    The hybrid marketing team is a solution that’s a perfect fit between owning an internal marketing team and outsourcing to an agency.

    How this works is the brand in question has its internal team that handles the operations and specific tasks, then outsources specific marketing operations to specialist agencies, freelancers, or consultants.

    This way, the internal marketing team does not handle everything marketing leading to work overload and a stretch of team abilities.

    The main advantage of the hybrid marketing team is it allows the business to organize the workflow more efficiently and get better results.

    The main drawback to working with hybrid marketing teams is that they’re expensive to maintain. 

    Another drawback highlighted here is that hybrid marketing doesn’t automatically solve the reliability problems many businesses face with external agencies.

    Big firms can afford this, but smaller businesses can’t go this route.

    Finding the right agency 

    If you decide to hire an external marketing agency or form a hybrid team, you must understand that not all agencies will be the right fit.

    You can find a dozen or more agencies that provide the service(s) you need, but evaluate them based on these criteria to pick the right fit.

    1. Industry expertise: the agency you decide to work with will never be experts at your level, but they must understand your industry.

    This way, you’re able to flow, and they might provide a fresh set of eyes that will help you stand out from the competition.

    2. Research depth: all it takes to start an agency these days is to set up a website and change your LinkedIn bio to agency CEO.

    These are not the individuals you want to be working with. Most marketing challenges go below the surface, and you need an agency willing to dig into it to find out what works for your brand, your customers, and how to get you those required conversions.

    Another critical point to note is this. A good agency listens. They find out what you want to do with your business beyond marketing and help you achieve that.

    3. Case studies: You want to look for relevant case studies from past clients they’ve worked with. Any agency that doesn’t have proofs of expertise and satisfied clients (past or on retainer), that’s a massive red flag.

    4. The sales pitch: If an agency sends you a pitch or hops on a call with you and they’re running down their competition, trying to get you to sign up immediately with limited-offer sales tactics and all that drama, that’s a sign of desperation for work.

    An agency that’s good at what they do doesn’t act desperate and make life inconveniencing for prospective clients

    How To Measure The Outcomes.

    We can all agree that having an internal marketing team or outsourcing marketing to an agency is to grow the business, generate leads, and increase revenue.

    Suppose you ask many business owners how they measure the success of their marketing department. In that case, you’ll probably hear something about the revenue generated or how much it costs to acquire a lead.

    If this is all there’s to how you measure the success of your marketing endeavors, that’s a siloed measurement perspective, and you’ll find this section helpful.

    Before firing your internal team or external agency, evaluate them across these areas.

    AreasDescriptionMetrics
    Marketing capabilitiesHow marketing contributes to the organizationThe impact of marketing on product development, customer support channel, team operations, etc
    Marketing performanceHow  marketing strategies help with organization’s outputMeasuring the cost per channel, which channel sends the most qualified leads, CLV, retention, etc
    Marketing processThe efficiency of marketing as a functionThe impact of marketing on team KPIs, productivity, cost, etc
    Marketing InvestmentHow marketing impacts the bottomlineThe impact on the business bottom line such as the finances and ROI.

    These four areas are a good way to evaluate if your marketing team (internal, outsourced, or hybrid team) has helped your business succeed.

    Professional tip: When choosing to go the agency way, internal team, or the hybrid model, build your objectives and expectations using these areas.

    In-House or Marketing Agency: Questions to ask before you decide 

    You’ve seen the pros and cons of building an internal team and hiring an external agency.

    Before you decide on what to do, here are some questions you need to answer:

    1. Is my Industry broad or niche, and will I need specialists? The industry your company plays in is a significant factor that helps you decide if you should build an internal marketing team or hire an external agency.

    Niche industries work best with specialists. This way, you can make the most bang for your buck. If you decide to build an internal team of specialists, it will be costly. If you choose to hire an agency, you’re paying a flat retainer, but you’ll be getting experienced specialists for a fraction of building an in-house marketing team.

    If your industry is broad, generalists work well. It all boils down to whether you’re willing to pay to build your team or hire a generalist agency that provides your business’s services and saves some cash.

    2. What tools do I need to get the work done? Every marketing channel and type has tools specific to them. 

    What CRO specialists use is different from what search engine experts use.

    Some tools require years of experience to maximize their effectiveness. If you build an internal team and no one on your team has the years of experience to use the tools, your marketing efforts won’t be functioning at their best.

    Marketing agencies are made up of generalists and specialists with years of experience using several marketing tools.

    So the question remains. Are you willing to hire in-house the required help with the years of experience to use certain technologies, or you’d rather pay an external marketing agency?

    3. How much of a budget do I have for marketing efforts? Digital marketing and offline marketing all require money to work.

    If the budget for marketing isn’t large, hiring an external agency to handle your marketing efforts might be the best option.

    This way, you’re paying a flat retainer fee, which fits your budget. 

    If you decide to go ahead and build an internal team on a lean budget, you won’t be hiring the best hands, and your marketing will suffer for it.

    4. The kind of results you’re expecting in the next 6 to 12 months? Not all marketing actions provide the same results.

    Marketing actions like PPC provide almost immediate results. On the other hand, conversion rate optimization takes time for you to see improvements.

    Deciding between going in-house or hiring an agency depends on your marketing goals.

    If you’ve got the long-term in mind, you could go with an in-house team and have them see it through. The advantage here is they’re gathering the necessary experience on the job. 

    You could also decide to go with an external agency and save the cost of paying every individual member of your internal team monthly.

    If you need instant results, there’s no need to wait around to build an internal team, hire a specialist agency, and get those results. No need for a long-term commitment.

    Should CRO be in-house or outsourced?

    Before deciding if to build an internal CRO team or go with an agency like Invesp, there are three areas you need to consider.

    1. The makeup of a CRO team.

    2. The budget of a CRO team.

    3. The tools of a CRO team.

    There are three types of traditional structures for a CRO team;

    1. The centralized structure: this structure enables the CRO team to be responsible for all the conversion optimization for the company.

    A significant drawback to this team structure is that the CRO team may be distant from the individual challenges faced by departments.

    2. The decentralized team structure: here, in each department, there are individuals in charge of departmental CRO needs(strategy and execution).

    A major advantage here is the team is closer to each department’s needs.

    3. Hybrid team structure: this is a coming together of the centralized and decentralized structures. This structure combines the strength of each approach resulting in an optimization strategy that moves the company forward.

    If you want to set up an internal CRO team, the best team structure for your organization depends on your organization’s traits.

    Hiring a CRO agency removes the hassle of team structure because almost every time, external CRO agencies are aware of the performance of the entire website and business (centralized structure).  

    One reason why businesses shy away from setting up their internal CRO team structure or outsourcing is that they think it’s expensive.

    You have to remember; that you need money to make money.

    There are five areas to consider when it comes to the budget for a CRO team.

    – Human Capital (your internal team or the external CRO experts working on your projects).

    – Duration of the program (typically 12 months).

    – Cost of tools used on the program.

    – Costs of implementing the A/B tests.

    – Cost of hardcoding A/B test winners on the site.

    These are the factors that make the budget of a CRO program expensive. 

    As a business owner or decision-maker, you’ll bear all these costs if you decide to set up an internal CRO team. If you choose to hire an external agency, all you do is pay a retainer fee that covers human capital, tools, implementation, etc.

    As with every other marketing type, CRO has its tools. CRO tools collect data about your website and its visitors to help you understand how people use your site and identify and test potential changes to increase conversion rates.

    The tools that conversion rate experts use are broad and diverse but can be categorized into these three areas.

    Web Analytics 

    User Behavior tools

    AB testing platforms

    With these details, it’s easier for you to make up your mind if you want to go with setting up your internal CRO team or outsourcing to a CRO agency

    If you decide to hire an external agency, Invesp has a proven track record, 16 years of experience, and conversion experts who handle the different technical areas of a CRO program.

    Marketing Services You Can Outsource

    1. Search Engine Optimization: if you want to rank more on Google and other search engines without stretching your internal marketing team thin, consider outsourcing to an agency that specializes in SEO.

    This way, you’re getting the best service possible for your company. If you were to do this in-house, you’d need different SEO specialists to handle several details, and that’s more expenses on your end.

    2. Conversion Rate Optimization: CRO doesn’t promise you more traffic, but conversion rate optimization will use existing assets on your website and increase conversions.

    Making CRO work for your business involves having a team of experts handling different CRO areas. 

    If your internal marketing team doesn’t have the experience, you won’t be able to get the best of CRO.

    You can outsource to an agency like Invesp and have our team of experts work on building out your experimentation program using our conversion framework and SHIP process.

    3. PPC: driving more traffic to your website means more people get to see your offerings (services/products), which could lead to more sales for your business.

    If you want to maximize your media buying budget and get the best leads with less ad spend, you should hire an agency specializing in PPC and media buying.

    4. Email marketing: this marketing channel helps you consistently engage with your customers so that they can have your brand top of mind.

    Email marketing is not a run-over-the-mill service you can throw at someone on your internal marketing team to handle.

    Suppose customer retention is a big deal to your business, and it should be, and your internal marketing team can’t handle this channel properly. In that case, you can outsource this to an agency that specializes in it.

    The Services You Shouldn’t Outsource As A Business.

    There’s hardly a limit to what can’t be outsourced online these days.

    The real question should be ‘what services should a business not outsource and why?’

    FigPii Heatmaps

    You shouldn’t outsource your business vision and strategy as a business. This you should own fully.

    You need to think about your business strategy and how it helps you reach your business needs. 

    When thoroughly thought out, you can break this into systems like marketing strategy, customer service strategy, design, and email marketing and begin building teams around these systems or outsourcing to agencies that specialize in these systems.

    When You Should Build An In-house Marketing Team.

    1. You want to build a powerful marketing team: building an in-house marketing team can be seen as an investment that will pay off in the long run. The way to go about this structure is to make sure your internal marketing team members are covering the important marketing roles that impact your business the most.

    2. You want to save time in communication: one of the main advantages of having an internal team is the communication that happens and the responses. Outsourcing your marketing to an agency means there will be some communication delays, which can be very costly to the business’s bottom line.

    When You Should Hire An Agency.

    1. You need fresh perspectives: it makes sense to hire an external agency if you want a stream of new ideas for innovation.

    Your internal marketing team is tied up in daily monotonous tasks, and it’s almost impossible to come up with new ideas.

    External marketing agencies work with different clients across several verticals, and they are always full of new ideas to test.

    2. You’re working with a small budget: starting an internal marketing team and hiring an external marketing agency command different expenses when you think about it.

    With building your team, you need to pay several individuals. Hiring an external agency only costs you a flat retainer fee. In the long run, this is the cheaper option.

    When You Should Use A Hybrid Marketing Team.

    1. You don’t have the budget for a complete team yet: if you’re considering building an entire internal marketing team, but you don’t have the budget for it, you can get one or two members into your internal team and hire an external agency.

    This way, the external marketing team substitutes for the incompetencies of your internal marketing team. 

    2. Flexibility: when you’re undecided about what to do, having a mix of an internal team and hiring an external marketing agency is the way to go. 

    If your workload increases, you can decide to book more agency services. If you want to take your marketing services in-house fully, you already have the structure.

    Wrapping Up

    At this point, it should be clearer to you which marketing option fits your need (in-house, marketing agency, or hybrid).

    Whichever decision you make is good enough as long as you’re getting a good piece of trillion-dollar eCommerce marketing value that increases every year.

     

Kobiruo Otebele

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