Is it better to outsource or inhouse marketing when you have a small business?
Small business owners need to be experts in everything. From tax compliance to customer service with a smattering of IT help desk thrown in, we’re stretched outside our main area of expertise to keep our business running smoothly.
When you’re running a microbusiness, it’s not usually viable to pay anyone else to do these jobs when you’re first getting established.
As your business grows, and with it cash-flow and demands on your time, there comes a tipping point. You need to share the load and stop trying to do everything yourself if you don’t want to hold your business back.
One of the biggest challenges at this stage is to decide how to delegate your non-core tasks, such as marketing if you are not a marketer. The main choices are outsourcing or employing someone to get the expertise you need.
When it comes to marketing – the area that actually grows your business – will you get the best return on investment by hiring an in-house marketing manager, or by outsourcing your needs to a creative agency?
In this article we look at the pros and cons of both models, and ask is it better to outsource or inhouse marketing depending on your situation.
Business Marketing Needs
A businesses’ tactical marketing needs can change periodically. Web design may be needed at launch and then every few years as the business grows and technology changes. Customer communication and content development is an ongoing requirement for businesses that are aiming to grow. Digital advertising campaigns may be needed at specific times of the year to stimulate business. Overarching these tactics should be an ongoing marketing strategy that ensures the all these different elements are driving your business in the same direction.
In order to carry out all their marketing requirements, businesses often have to weigh up whether it would be more effective to hire a full-time marketing manager, or to outsource these tasks to a specialist marketing agency or a range of different suppliers.
In-housing – getting a specialist staff member on board
The time-honoured way of building capacity in your business is to recruit staff and grow the in-house skill to propel your business forward. Here are the pros and cons of bringing a marketing staff member on board:
Pros of hiring an in house marketer
- You have someone dedicated to your business, full-time. The right person should have a personal sense of pride invested in your company’s success, as it also reflects on them.
An in-house marketing manager becomes an expert on your business and target market. If they are experienced, they should be able to judge which marketing campaigns will get the best results, quickly.
- An in house marketing manager will be able to develop a long term marketing strategy to keep the business on track.
- If they are employed on a full time basis, you’ll know the costs you are up for all year. For instance, you won’t be paying more for their work if a project runs over time.
- If you have urgent needs in another part of your organization or you don’t have quite enough marketing requirements to full a whole week for your marketer, you can deploy them to other tasks.
- A trusted marketing manager can act as an extension of your business, representing it at networking events, presentations and sales meetings. As the owner you can’t be everywhere at once – a marketing manager can be your ‘de facto’ in many situations that help promote your company.
Cons of hiring an in house marketer
- Marketing is a wide remit and few people are expert in everything that falls under this area. If you are expecting a marketing manager to be able to undertake all the tactical tasks related to marketing as well as overseeing the strategy, this could be challenging. A new graduate may have up to the minute graphic design training and great social media knowledge but lack the real world experience in developing marketing strategy that works. A Senior marketing manager may be great at strategy, networking and presentations but not know their way around website CMS. If you hire a full time resource who can’t do everything you need, you’ll still be up for the cost of outsourcing or recruiting for specific marketing skill sets.
- If you are hiring in house to save time on explaining your needs to an external agency, you may be surprised at how much time you’ll actually need to invest in your team member to get the result you want. Any full time staff member needs a certain amount of oversight, no matter how senior they are.
- Although the hourly cost of a staff member is generally less than an external provider, there are additional costs such as super, payroll tax, holiday and sick leave, training, mobile phone and computer equipment to take into account. These may increase the annual cost of an in-house resource by a significant percentage. There is also the cost of recruitment, which is not necessarily ‘one off’, if your selected staff member leaves within a short time for any number of reasons. Specialised computer programs, cameras, software licencing, stock images and font licences are additional costs for a business to produce their marketing in-house.
- Your marketing manager may not be happy to be assigned other tasks that don’t fall within their skill set, whether or not you think their time can be used elsewhere. After all, they may have invested in a specialised degree and gained many years of industry experience with a goal of progressing in their career path. Making coffee for meetings or stuffing envelopes may not be on their dream job list.
Outsourcing – sending your business elsewhere
The alternate model is to hire specialists externally to undertake marketing tasks on your behalf. The models for this range from securing the services of one or several freelancers for different tasks, to going through a creative marketing agency who can source and put to work the right people on your behalf.
Pros of outsourcing your marketing
- If your outsourcing choice is an agency or several freelancers, you’ll be able to access a range of specialised skills to meet your business’ needs, without expecting them all to be embodied by the one super-marketer. For instance, you may only require a day of website maintenance a month, but daily social media marketing and quarterly event management. You could have access to different specialists just for the time you need them. Although the hourly rate is higher, this can be more cost effectively than paying for in-house skills you don’t need.
- Speed – if you hire a web designer to design your website rather than expect your marketing manager to do it, you’re likely to get a faster, better result because this is all a web designer does and they will have a highly refined skill set. They are also more likely to be across the latest standards for web development.
- Outsourcing allows you to accessing expert skills that you couldn’t afford to (and wouldn’t need to) hire on a full-time basis, such as a branding specialist.
- With external experts you don’t need to worry about finding a space or purchasing special equipment and software packages– a professional agency will have what they need to get your work done, and won’t need to come in house except for meetings.
- People from outside your business and industry can bring a fresh perspective to freshen up your marketing and reach new customers.
Cons of outsourcing your business marketing
- The costs of outsourcing can mount up, particularly with large agencies with multiple levels of account management and directors.
- If you are using multiple suppliers or changing agencies frequently, who is keeping an eye on the long term marketing strategy? Without a strategy you could find your marketing efforts don’t yield consistent results.
- A marketing agency may lack the expertise in your particular sector and require time to ‘onboard’ in much the same way as a new employee.
- You may not be able to access your agency exactly when you want them, particularly for urgent, short notice jobs as they are likely to have other demanding clients to serve.
- There can be a ‘trust’ issue between businesses and agencies, particularly to do with billable hours. Because an agencies workers are offsite, it’s hard to judge whether hours on a job are accurate.
So what’s the answer?
The answer is – it depends on your business needs and size, company culture and your budget.
The current median salary for an Australian marketing manager is $76,462, while a Senior Marketing Manager averages $116,457. Taking into account holidays and leave, that equates to an hourly rate of around $38-$58.
Compared to an hourly rate between $100 -$200 for a small marketing agency (much higher for top tier full service agencies), hiring an in-house marketer can look cheaper at first glance. However, in addition to the staff member’s salary, there are office overheads, training and tax, plus the costs of producing marketing materials such as printing and specialist equipment and licences. There may still be the requirement to outsource technical requirements such as web development depending on the marketing manager’s skill set.
How much marketing do you need?
In the end, the amount of resourcing you require could be the deciding factor when considering is it better to outsource or inhouse marketing. Joshua Steimle, a Digital Marketing Agency CEO says on Forbes.com
“It’s also important to note that hiring a single employee will likely not be enough. Running a successful online marketing program usually requires a team of 2-3 individuals, and thus the cost of recruiting a quality in-house team can easily run from $200,000 per year on the low end, to more than $300,000 per year for a more expert team. Thus until the fees you would pay an agency exceed $15,000 per month, it doesn’t make sense to even consider building an in-house team, although there are certain to be exceptions.”
For Small Businesses, outsourcing could be the most cost effective option
Small businesses with fewer than 20 staff may find outsourcing their specialist marketing requirements to an agency provides the most cost effective result – despite the higher hourly fees. Outsourcing marketing means they can access an expert skill set (or multiple skill sets) for less than the cost of a full-time staff member with equivalent experience.
For the equivalent salary cost of a junior marketing manager (at $65,000pa), agency fees of $5,500 a month could buy a small business significant marketing expertise and assistance from a boutique size marketing agency. This could be used to pay for website development, content marketing and lead generation, social media management, digital advertising campaigns or graphic design and printing. Should business requirements change, it’s also far easier to reduce or expand the amount of input you require from an agency.
Once businesses reach a certain size, for example up to 50 staff, the continuity of having a senior marketing manager overseeing your business marketing strategy is likely to become more critical. When outsourcing to an agency, you need to have a firm grasp of who is overseeing your marketing strategy – you or them – to ensure your marketing expenditure has the best chance of paying off.
Need to outsource your website development, content and design needs to help your business grow?
Call Hook and Loop for a chat on 0404 086 140 or drop us a line. We can help
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