The SaaS Marketing Blog

Marketing Agency vs In-House: The Biggest Difference That No One Talks About

by 

Dev Basu

Last updated: July 31, 2020

When companies are trying to decide whether to hire an in-house marketer (or in-house marketing team) versus an agency, they often struggle with the decision. The process of hiring people in-house takes significant time and resources, but also results in full-time employees that are under their roof, aligned with their interests, and entirely dedicated to working on their company’s marketing efforts. 

On the other hand, hiring an agency can allow companies to move faster with the expertise of marketers for whom, marketing is the world they live in. They’re surrounded by it; they’re engulfed in it. And as a result, good agencies are on the leading edge of marketing strategy and execution. 

But a lot of companies have had bad previous experiences with agencies, and going the agency route requires: 

• Relinquishing some control
• Having to trust people outside of their company with intellectual property and the outcome of getting them a return on their investment
• Often a higher upfront (perceived) cost 

Why a perceived cost?

A common scenario we see in B2B SaaS is when a company is deciding between hiring one new full-time marketer or hiring an agency. But these aren’t really equivalent, because the varied skill sets needed to do digital marketing require different people to execute. And while an agency will have several people with different areas of expertise working on your marketing (albeit, part-time), one full-time employee very rarely possesses that entire range of skills needed. So the more accurate comparison when it comes to cost is hiring a demand generation team (of say, 3 in-house hires) versus an agency, in which case agencies often work out to be less upfront cost. 

With that said, the biggest difference we see in weighing the two options that often isn’t taken into account is: if you think about the number of data points that they can access when evaluating an agency versus an in-house candidate, there is typically a lot more information to base decisions off of when evaluating an agency — for whom having a website, a blog, a newsletter, webinar content, and case studies, among other things, are commonplace. So in the same way that marketing works better when you have more data, we think this applies to hiring marketers as well.

In this article, we’ll expand on this idea and discuss how companies should think about the costs associated with each option, as well as share specific recommendations for how they should evaluate agencies to find ones they can actually trust and who can actually deliver.

Note: We acknowledge that, yes, we’re biased in that we’re a marketing agency. And we’re going to assert in this article the ways in which we see choosing an agency over building an in-house team can be advantageous for companies making this decision. But throughout this article we’ll do our best to also acknowledge the counter-arguments that relate to the points we make. And by all means, we encourage you to go read Google’s top 10 articles on this topic. You’ll see the trends and the trade-offs that you should be considering, some of which we’ll cover below. 

If you’re a B2B SaaS company that’s already considering going the agency route and you want to learn more about our digital marketing services, here are some resources for you to check out:

• Article: Why We Chose to Be a B2B SaaS Marketing Agency
• Case Study: How Structure Studios Grew Their Revenue from $8 Million to More Than $12 Million in 2 Years By Learning How to Communicate with Their Ideal Customers
• Agency Methodology: The Predictable Growth Methodology

How to Think About the Cost of In-House vs Agency Hires

The following is food for thought on how to weigh the two options when it comes to investment and returns. It’s a model that’s meant to be useful, not in any way absolute or foolproof.

And frankly, just because one option is more or less affordable or expensive shouldn’t entirely dictate your decision. Depending on what your company values and what your marketing budget is, there are a lot of factors outside of cost alone that warrant influencing the direction you choose to go in.

With that said, let’s jump into our (read: purposely over-simplified) example.

Above we mentioned a common scenario: a company is deciding between hiring one new full-time marketer or hiring an agency. So let’s say there is a hypothetical company in this situation and in particular they’ve decided to hire a marketing manager. 

Here’s some additional context:

• Their goal is to increase annual recurring revenue by $500k.
• They have narrowed their search down to an in-house candidate and an agency candidate, both with equivalent capabilities (eg. years of experience, channel expertise, industry expertise, etc.). 
• The in-house SEO hire will cost $6K/mo and the agency will cost $10k/mo. 

If they go with the in-house hire, because of the nature of the onboarding process and the systems the new hire will need to create in order to get up and running, they’ll hit their stride and really begin getting into the work 3 months in. (You might think, not at my company. Or, we’d move faster than that! If that’s true, ignore this point.)

But because they’re only one person, it takes them to the end of the year to hit that target. The company paid them $72k in salary, so they made $428k in profit on their investment by the end of that year. 

Note: With the in-house hire, in addition to the time spent onboarding and creating systems for execution, the time it takes to hire — often a period of several months from search, screening, interviewing, selecting, and actually beginning — should also be taken into account. Granted, as we’ll discuss below, you should put ample effort and time into hiring an agency, but typically it can be done much faster than hiring the full time employee (as agencies are usually ready and willing to begin new client engagements).

If they went with an agency, because agencies have their operating systems in place already, access to the most sophisticated marketing tools, and several marketers involved with doing the work, they hit the ground running almost immediately, and are able to move faster to hit their revenue goal in the first six months. Again, they have equal capabilities to the in-house marketer, but systems take a long time to create, and already having those in place gives them a huge advantage on speed.

If they kept that pace going, by the end of the year, the company would have spent $120k on their fees, but they would have made them $1mil in revenue (or a profit of $880k when you minus their fees). The agency would have made the company more than twice as much as the in-house hire — again, solely based on them being one person, and having to set up their own systems to get things up and running. 

At a 12% rate of overhead cost at the end of the year for the agency, and the in-house rate at 14.4%, the agency both works out to be more affordable, more profitable, and faster, all at the same time. 

Again, we acknowledge there are many variables we’re leaving out here, but this type of scenario is something that plays out in the real world and it’s worth using as one of your models when thinking through this decision.

All of this, though, depends on finding the right candidates, which we’ll discuss in the following sections.

The Difference in Evaluating Agencies vs. In-House Hires

Consider the qualities in the absolute best candidates for an in-house marketing hire — people at the top of their field. 

These are people who have proven themselves and done so publicly — developing an audience of their own through content marketing, publishing work that demonstrates their expertise, earning a great reputation, showing up on the first page of Google, and having displayed proven results tied to the bottom line. 

Typically, these thought leader types will have a website, a blog, a form of email marketing, case studies, and other assets for you to evaluate before you ever even speak to them. There is a limited number of these individuals, and they’re the marketers companies compete for and poach. They’re difficult to come by. 

If you go one “rung” down to your pool of solid, experienced marketers, immediately the amount of assets that you can evaluate to really understand this person’s experience level is likely significantly less. For example, if they aren’t a freelancer or consultant-type who has needed to keep up an online presence and portfolio, there’s a good chance they’ve been doing marketing professionally for the companies they’ve worked for, and not needed to actually market themselves. You likely do not have a website, a blog, case studies, or anything along these lines to look at.

What you have is a LinkedIn profile, a resume, a cover letter or completed application, a few rounds of interviews, and some conversations with their references. These are useful to an extent, but it can often still be difficult in this process to have certainty that this hire’s skill sets will meet your needs and expectations.

This is why we think that companies should take into consideration the advantage of being able to evaluate agencies — for whom things like websites, blogs, and case studies demonstrating past results are commonplace — based on more criteria and evidence than most individual job candidates.

How to Choose a Digital Marketing Agency You Can Trust

You can think about the process of selecting a digital agency as a series of stages:

1. Reviewing their online presence
2. Talking to their current or past clients
3. Having talks with the agency
4. Reviewing their proposal

What follows are our recommendations for each stage.

1. Review Their Online Presence

As we mentioned in the last section, the ability to go deep into an agency team’s online presence to evaluate their level of expertise, their taste (whether or not you think they’d mesh well with your company culture), and their history of work is a huge advantage. 

So reviewing their website, blog articles, and social media profiles — in addition to any online reviews that may be available — is a great place to start when evaluating an agency. In particular, things to look at include:

• Is their overall presence tight and consistent?
• Do they have case studies that demonstrate how they’ve achieved specific and impactful results for clients?
• What is the level of detail and thoughtfulness in their content?
• Do many people reference their work?

Digging into these questions and finding convincing answers is a great way to establish an initial pool of agencies to consider.

2. Talk to Their Current or Past Clients

The ability to talk to past and current clients is another advantage of going the agency route when seeking to hire a marketer. 

It’s true that if you’re looking at hiring a freelancer or consultant into a full-time position, they may also have past clients you can talk to. And if you’re evaluating an individual who’s coming from a different company, you’d have their references to talk to. But these things aren’t necessarily a given. Any solid agency is going to have a “who we’ve worked with” section on their site for you to identify their clients.

So our recommendation for this step is to look at their “who we’ve worked with” section, and reach out to their clients. See if they’ll hop on a short call with you to learn about what their experience has been like. If they’re happy with the agency, they’re likely to want to support them and will often be happy to talk with you.

Alternatively, if they didn’t have a good experience with the agency, they may also be willing to share about that. And that’s useful information to know, too.

Note: There are certain engagements that don’t work out for reasons outside of an agency’s control, so if you see or hear a sub-par review or two, take them seriously — but perhaps also take them within the context of the rest of what you can see about them in your research.

3. Speak with the Agency

We think you can learn a lot about an agency from their sales process. Like the other areas of their business, if it’s tight and structured, that’s likely a reflection of the attention to detail that they bring to their client engagements. If it’s loosey-goosey, that might be a red flag.

When you speak with their internal team members, it’s also useful to gauge their active listening skills. For example, when you describe the problems you’ve been facing in an active marketing campaign — the ones you’re hoping they can help solve — are they actively framing that problem back to you and explaining potential solutions? (And later, do those show up in their proposals?)

The agencies that are most likely to meet your marketing needs are the ones who handle their sales process with care and an intention to deeply understand your company’s problems and goals.

4. Review Their Proposal

A final distinct advantage of evaluating agencies versus individual in-house hires is that they deliver actual plans — in the form of proposals — for meeting your marketing goals. Whereas it is very rare for an interviewee to come in with a full-on marketing plan. 

The following are elements we recommend taking into account when reviewing agency proposals:

• Does it reflect the problems and goals you discussed? (ie. how well were they listening?) 
• Are the objectives, KPIs, and marketing channels through which they’ll deliver clearly stated? 
• Are there clear descriptions of how you’ll work together?
• Are their incentives aligned with yours? (ie. do their objectives connect to ROI and your bottom line?)

This ability to see a detailed path forward before you hire someone is invaluable when it comes to evaluating whether or not a marketing hire will take you in the direction you want to go. 

Conclusion

When business owners and senior marketing leaders are debating whether to invest in an agency or add another in-house employee to their marketing department, there are many considerations worth taking into account. 

But typically, trusting who they hire and feeling a sense of confidence that they can deliver — based on their past experience — is the core of what companies making this decision care about most.

From our standpoint, the agency route provides the most data for evaluation when weighing candidates against each other, and is often the safest route to finding the best party for the job.

If you’re a B2B SaaS company that’s already considering going the agency route and you want to learn more about our PPC and SEO services, here are some resources for you to check out:

• Article: Why We Chose to Be a B2B SaaS Marketing Agency
• Case Study: How Structure Studios Grew Their Revenue from $8 Million to More Than $12 Million in 2 Years By Learning How to Communicate with Their Ideal Customers
• Agency Methodology: The Predictable Growth Methodology