“That’s why I love agencies…”, said the Head of Digital of a large, well-known online brand. “I don’t have to worry about sickness or holidays, hiring and firing; they just take care of all that for me.”
This is just one of many rationales I’ve heard for making the agency versus in-house decision.
It’s a question that befuddles the best entrepreneurs, directors and digital marketing managers across the world.
I ran my own business before joining agency life eight years ago, so see the problem from both sides. Here’s my perspective on some of the key questions you should be asking yourself in order to make this decision. Bear in mind that this piece is designed to give you an informed starting point, but it is an oversimplification. Every business is different.
I’ve also made you a lovely spreadsheet (download it if you want to edit) where you can calculate the approximate cost of an in-house team and answer the below questions in quiz form, giving you a score at the end to help your decision-making process.
If you have any questions, drop us an email and we’ll get back to you.
So… on to the questions!
Often, the decision of whether to build an in-house team is driven by budgetary constraints. If you need to cover several different channels, such as PPC, SEO, Analytics and CRO but don’t have the budget to pay for individuals to fill those roles permanently, an agency or freelancer could be a good choice. This way, you could get a suitable (and potentially flexible) percentage of a full time employee, bringing the overall cost down whilst still delivering across each channel.
In the spreadsheet, you can calculate these costs, including the several hidden/unobvious costs with hiring an in-house team beyond their salary, such as employers national insurance contributions (currently at 13.8%), employers pension contributions (currently a minimum of 3%) and other overheads such as IT equipment, energy/utility costs, rent/desk space and all those extra tea bags being consumed etc. The sheet calculates these for you complete with a link where you can find some industry benchmarks for salaries at different levels.
Download it, and make it your own (you won’t be able to edit the sheet online). Then decide if your in-house team is within budget or not.
Does having an in-house team come in on budget?
Contact some agencies with a digital marketing brief detailing what you’re trying to achieve. You can keep it top-line. Ask them for some ballpark costs (they might come back to you with some questions or ask to meet you to get some information and check that you’re serious) in which case you should oblige unless you’re not serious. You can spend anything from £5k-£100k per month for a decent agency, so always worth asking first!
You can now weigh these costs against your budget, and against the cost of hiring your own team.
So, is an agency within budget?
Repeat the process for agencies with freelancers and compare costs. This is likely to be the cheapest option, but will require the most co-ordination and leadership on your side.
One with a track record of building successful digital marketing teams?
You’ll either need to run your new, in-house team yourself, or have someone in-house who is capable of running it. Ideally, that person will have experience building and running high performance digital marketing teams. You’re looking at ‘Head of’ level of seniority i.e. someone who is likely to have over 10 years’ experience (or a very talented individual with less experience).
If you have one, or if you can hire one, great! An in-house team could be for you. If not, you might be better off going with an agency who will have such a person already in place to make sure the team delivers the goods.
Some businesses operate in an environment of relative stability. They know, for instance, that PPC and SEO will be important to them on an ongoing basis, so can hire someone to fill each of those roles.
Other businesses are different. Smaller businesses and startups often need more flexibility, with PPC being the priority one month before realising that they have a conversion problem, so CRO (conversion rate optimisation) becomes the main priority the next month etc.
If you need flexibility, it could be best to choose an agency or freelance/contract workers. An agency can chop and change their services to meet your needs and you can always change freelance/contract workers with relative simplicity yourself if needs be.
If stability is more prevalent, hiring full-time resource to cover your needs could work well too.
So, do you need flexibility or not?
Take a look at what you’ve learned from calculating your own team costs, what the agencies have told you and your correspondence with freelancers. Do you think you need an entire person to do the work across each channel?
Here, you’re essentially calculating the number of hours that need dedicating to each channel every month. If you only need, say, 20 hours per month dedicated to PPC, you don’t need a full-time person doing that activity. If you need 120 hours dedicated to it, then you do indeed need a full-time person (depending on your working hours, a full-timer will provide about 170 hours per month, but use about 75% of this as ‘useful’ time to account for illness, meetings, tea breaks and wee breaks).
So, do you need full-time individuals for each channel, or can the budget for a ‘person’ be split across several channels?
This is a tricky one for most businesses. Have you seen photos of Google’s offices and read about their company culture? Agencies and startups work hard to mimic what Google offer in terms of culture as they’re fishing in the same talent pool. They have trendy offices in a cool location with a great culture and plenty of perks. It’s becoming almost expected nowadays.
Can you offer that? If not, is there anything else you could offer to attract the best candidates to your role instead of that of an agency? Shares? Higher salaries? Flexible hours? Free beer?
It’s a competitive market, so you’ll need to be able to make a compelling offer to steal the best candidates away from agencies. Can you offer this?
One reason why recruitment candidates want to work for agencies is to get experience from a broad range of different clients and industries, which helps them stay on the cutting edge of the latest developments in each field. This is much harder if you work client-side, where opportunities to learn from other companies is limited to articles they might read online, or the conferences that you might pay for them to attend.
The opportunity to actually test out techniques in a real life scenario accelerates the learning and iteration process more than anything else I’ve ever come across. As a business who works with an agency, you could be benefitting from the insight gained from the successes and failures of the latest digital techniques for their other clients. Is this important for you?
It is also worth remembering that if you poach someone from an agency, they’ll bring the latest skills with them. But, you might need to consider bringing fresh blood in on a regular basis to keep their knowledge up to date.
The flipside of benefitting from employees who get experience from other clients and using it on your business is that they will not be focussed on you as a client. You might not even be their favourite client! With an in-house team, you will get people who will be dedicated to what you do (assuming you hire well!).
This level of focus could be invaluable as your business grows. Is this important for you?
One of our clients once said that she loved agencies because she didn’t want to have the headache of managing all the HR issues that come with an in-house team. If they didn’t perform well, she could get rid of them and hire a new agency. If they were off sick, the agency would draft someone else in to cover. It was a massive time-saver for her.
On the other hand, it may be preferable for you to have that direct management of your team. With an agency, you’ll never have that level of control.
What would suit you best?
If you hire an agency (this applies to some well-heeled freelancers too) they will already be spending thousands of pounds every month on the tools they need to do their job. At atom42, we use Moz, Searchmetrics, Similarweb, Screaming Frog, Deep Crawl, Hotjar and much more. All of our clients get access to these tools, via us, included in our pricing.
If you hire an in-house team, they will need their own tools and software to do their job. Does your budget allow for this on top of the cost of hiring them?
How long does it typically take you to recruit someone? How long do you therefore think it will take to hire your in-house team? Take that timeline, then add on several weeks or months for them to gel as a team. Does that timeline work for you?
You may decide that, in the long-run, the short-term wait to build a team and get it functioning properly is worth the wait. If so, that’s an extra tick in the ‘pro’ column for building your own team.
If not, an agency might be better. They will have a ready-made team with an existing working relationship and existing systems and processes to get you off to a faster start.
Which is best for you?
Freelancers and contract workers often prefer the flexibility to set their own hours and commitments, which is why they work for themselves. Securing them for the long term is often difficult.
Agencies are usually interested in longer term relationships. The costs of acquiring a new client are high, so it only really makes sense for them if the relationship lasts a number of years. But, the individuals within the agency may come and go as their own careers progress and evolve.
If you want to secure a specific set of individuals and have the greatest level of influence over whether they’re in it for the long haul, hiring your own people will be best. Especially if you offer them share options!
Hopefully this has been helpful! Often, our clients end up settling for a combination of one or more of an in-house team working with an agency, occasionally scaled up at busy times with the odd freelancer. You need to decide what will work for you.
Take a look at the spreadsheet and quiz if you haven’t already done so and see if it provokes any thoughts.
But just remember, you’re ultimately hiring a group of people with different abilities, aptitudes, personalities and emotional tendencies. All other things aside, make sure you get a good fit.
If you need any help with this, get in touch!