Advertising Agency Vs. Hiring In-House: Which is Better?

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Company owners often tend toward recruiting an employee because it has historically been the “go to” method for addressing a pressing need.

Furthermore, business owners may believe that hiring an outside contractor is much more costly than hiring in-house personnel. The problem with this logic is that most owners don’t have a real reference point to work with. 

In many situations, company owners compare a base wage with an hourly rate for a marketing firm, concluding that the hourly rate must be the more expensive choice because it is higher. This is can be a huge blunder.

Calculate all expenses when comparing agency prices vs. in-house costs

Often business owners neglect to consider the true costs of recruiting and maintaining employees. Not only do you have to account for base wages, but you also have to account for costs like payroll taxes, health insurance premiums, retirement plan matches, vacation, and sick days. Hiring a new employee will cost as much as 1.25 to 1.4 times the base salary.  When you factor in such costs (such as the cost of hiring and training), the number rapidly rises.

In addition to the costs of recruiting the right employee, today’s marketing tasks necessitate comprehensive software, which necessitates investment…much of it in the form of upfront purchases and annual subscriptions of graphics programs, pay-per-click management applications, business metrics software, and a slew of other necessities.

There is one more thing to take into account. Finding one person who possesses all of the skills needed to carry out your plan will be extremely difficult. This would almost certainly necessitate the new marketing recruit outsourcing at least some of these activities or hiring additional employees, which completely deflates this analogy.

After considering these factors, it’s clear that recruiting marketing personnel comes with a trade-off.

Investing in a marketing agency can be a smart move

While hiring a marketing firm can appear to save money on an hourly basis as compared to hiring an employee or doing it yourself, it actually adds significant value. This is particularly true if the company uses inbound marketing strategies. The days of nebulous budgets and secret payments, a la “Mad Men,” are long gone.

Many companies are now working on well-defined pricing arrangements and lower-fee marketing retainer agreements as the pricing landscape has changed.

Although there is no industry norm, the average monthly spend for an experienced inbound organization in most markets is between $3,000 and $5,000. Although this can seem to be a large sum, it is a relative bargain as compared to the opportunity cost of DIY or the pure allocation of funds for internal staffing.

Advantages of hiring an advertising agency

Working with a seasoned marketing company has many advantages, including:

  • Expertise in your target niche
  • Execution experience with marketing plans
  • Cost savings by recruiting for your particular requirements
  • There is no need for employee preparation.
  • The marketing campaign is implemented right away; the employee will need time to scale up, while the marketing company is ready to go right away.
  • No extra overhead
  • Tax deductions, not tax liability
  • Efficiency for short-term and urgent projects

This new paradigm encourages business owners to concentrate on running their operations and growing their bottom line, rather than wasting time on Facebook, Twitter, or attempting to create a website.

The real question isn’t whether I can afford an established marketing firm, but how much time, money, and potential am I squandering by trying to do these marketing services in-house.

Time is valuable and it’s better to leave it to professionals in order for you, as a business owner, to keep on doing what you do best.

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Chris is the founder of Adacted.
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