Founder & CEO, Keynote Speaker, Entrepreneur, Recipient of Comparably’s Best CEO ’17
June 12th, 2015
I was reviewing our sales pipeline with Tom the other day and asked him why a certain deal might not close.
He said it was because the prospect is deciding between three options: to hire an independent marketing contractor, to hire an internal marketing team, or to hire a marketing agency.
When companies make the decision to invest in their growth, this becomes a very common question.
I thought it would be helpful to walk through the pros and cons of these three popular options along my thoughts on how IMPACT's rethinking our services and delivery to match the benefits of these three options.
Option 1: Independent Marketing Contractor
About independent marketing contractors
Hiring an independent marketing contractor is a very popular option for many business leaders. They’re often hired for their expertise in a particular vertical or industry and typically provide a very consultative relationship. They’re also frequently hired for their ability to execute particular marketing activities.
Pros of hiring an independent marketing contractor
As mentioned above, independent contractors have a wealth of knowledge. Many of them have left successful careers to start their own one-person operations and have a lot of talent.
Really good independent contractors provide a very personal level of service that's valued by their clients. They become trusted advisor that provides unique perspectives, challenge their clients, help to avoid missed opportunities or potential disasters, and educate. Great independent contractors are often invited to participate in their clients strategic business decisions.
Independent contractors are not treated as employees, therefore, they are not subject to payroll taxes or state and federal employment laws, which is a benefit over hiring an internal team but not over hiring an agency.
It’s typically easy to get out of an independent contractor agreement if need be.
Cons of hiring an independent marketing contractor
An independent contractor can be limited in their ability to provide a full array of service offerings. For example, they may have great ideas and a vision for how to help you reach your marketing objectives, but they may lack the technical expertise to execute it. This may cause you to need multiple independent contractors (strategists, content creators, designers, developers) to really get the job done.
Independent contractors are limited by their own capacities. Should they be unable to work for a period of time, or other agreements they’ve made demand their time, it may slow down the progress of reaching your marketing objectives.
You may think that hiring an independent contractor is your least expensive option, but that’s often not the case. Someone that has the a high-level of expertise that you need could run you around $200 / hour. If they’re providing you with 15 hours of service a week, that’s around $13,000 / month which is more than a typical agency would cost you. And unfortunately, some of that time will go to activities that probably don’t warrant $200 / hour.
Internal Marketing Teams
About internal marketing teams
The larger your company becomes, the more it warrants an internal marketing team. I share most of these pros and cons from my own experience of managing an internal marketing team and having a company with over 50 employees (as of May 2018).
Pros of building an internal marketing team
Mindshare. When you have an internal marketing team, you're "their only client" and they'll be focused solely on the performance of your company's marketing.
Speed of getting things done. When you have a team of marketing employees 100% dedicated to working on your company’s marketing, things should get done faster.
Cons of building an internal marketing team
It's almost impossible to bring on one hire that has all the skills you need to run a high performing digital marketing program. To do this, you need (at a bare minimum) someone with 2-3 years of proven digital marketing success, can create effective persuasive copy and educational content, understands a variety of digital channels, is strong with analytics and can turn data > insights > action. They'll also most likely need to know how to design and code a bit. These people are extremely hard to find, and will cost at least $75,000 / year plus taxes and benefits (depending on your market). And of course, these types of people are very desirable and will need significant salary increases, promising career opportunities, and an investment in their continuous learning if you're going to retain them, or else they will be poached.
More likely, you can find someone with most of the skills you need for around a $65,000 / year salary plus taxes and benefits and they can utilize a $10,000 - $20,000 or so freelancer budget to meet all the requirements.
If you really want to build a high performing team completely in-house, you most likely have to make several hires. One director-level hire that has the knowledge and experience to strategically lead your internal marketing team will cost between $80,000 and $150,000 / year (again, depending on your market), plus taxes and benefits. And it’s likely they will need an associate some other support to complete the activities that they either don’t specialize in or it doesn't make sense for them to do, like social media and content creation. That’ll run you at least another $40,000 / year, plus taxes and benefits. And even with two people, it’s still not likely that you’ll have all the skills you need to run the entire program and may still look to outsource design and development work to an independent contractor or an agency. All in, this is clearly your most expensive option.
You take on the responsibility of having employees, which includes paperwork, on-boarding, one on ones, up-to-date job descriptions, performance reviews, raises, career-path conversations, supplies / tools, and so much more. You also have to manage employee issues, including hiring mistakes, personnel conflicts, employee turnover, unplanned time-off, and so on and so on and so on, adding costs to your already most expensive option.
It takes much longer to find and hire the right people than it does to startup with an independent marketing contractor or marketing agency. Recruiting may take 2 weeks. Then running interviews will take another two weeks. Then you have to make a job offer and hope they accept, if they do, they need to give notice to their other job which takes 2-4 weeks. Then they need to get acclimated to your organization which takes another 2-4 weeks, and here you are 8 weeks (conservatively) into the process and you haven’t even done anything yet. An agency or an independent contractor can get started within a week or two. By week 8, they’ll probably already have your plan for the year completed and will have started executing on that plan.
Of the three options, having to make a change is the hardest when dealing with an internal team. If there are performance issues, this means that instead of requesting that work stop for a period of time or stating that “the project has ended,” you actually have to fire people. And if you make hiring mistakes, it takes a lot more time, effort, and resources to make a change.
About hiring a marketing agency
Many companies have had great success working with agencies, even in collaboration with an internal marketing team, while others have struggled to make an agency work for them. I completed this section trying not to be biased, but to provide helpful insight I believe will help you make the right decision for your agency.
Pros of hiring a marketing agency
Agencies tend to be very good at managing their capacities. Should a few people working on your account have vacation at the same time, an agency can typically adapt to make sure all of the activities required don’t skip a beat.
Agencies have the ability to provide you with a holistic array of talent, including strategy, tactical implementation, software expertise, content creation, graphic design, web development, and integration capabilities.
Agencies also typically have a great amount of recent experience working with companies like yours, meaning that they’ll able to quickly execute the right activities with less trial and error.
More advanced agencies have sophisticated ways of managing their costs. So unlike the independent marketing contractor that has one cost, say $200 / hour, for all of the activities they perform, agencies will estimate their work charging the right amount and placing the right people on activities in order to provide the optimal value for clients.
If you’re not happy with the style or performance of the work being produced, agencies can typically switch out people on your account quickly and without the need to cancel an agreement, fire someone, or tons of time and paperwork.
Cons of hiring a marketing agency
It’s typically harder to get out of an agency agreement opposed to an agreement with an independent contractor. Many agencies like to lock you in for a 12-month agreement since that’s when they typically start producing inbound marketing results. Many agencies I know also like to front-load the work (setup, development, content creation) and spread the payments out over 12-months, therefore, they really won’t let you cancel your agreement.
For an agency to be successful, the company still has to have someone that dedicates part of their time working with them to ensure alignment to the organization’s goals, especially in the beginning of the relationship during a very common discovery and audit period. As the relationship with the agency matures, they’ll still need 10 hours or so of your week. This could be said for working with a independent marketing contractor and internal marketing team as well.
A common complaint of agencies is that they can be slow to respond and get things done, a client will request a website change, a revision, or for an email to be sent and have to wait a week for a response.
Positioning IMPACT and creating a unique agency that’s a hybrid of all three.
By actively seeking feedback from our clients and listening to what prospects want and value during the sales process, we’ve made some fundamental decisions of how we want to position our agency into something that makes us truly unique for our clients.
Ensuring that our clients don’t feel locked into long term agreements.
If our clients need to get out of the agreement for any reason, we let them. In order for this to make business sense for us, we have to create accurate cost estimates.
Instead of estimating what we think you’re going to need over the course of 12-months and invoice with even monthly payments, we look at what you need in the next 90 days and provide a very accurate 90-day plan and pricing to execute that plan.
To ensure that we retain our clients, we simply have to do a good job. That means setting and agreeing on clear expectations in no uncertain terms before the work starts, and consistently delivering on those expectations month after month.
We believe if we do a good job, our clients will want continue with the program, possibly even grow it, and refer us to their peers.
If we’re not doing a good job helping our clients, it’s against everything we the client has every right to fire us. Being a buyer of services myself, that's what I want for my company.
Implementing a collaborative approach. Unlike many other inbound marketing agencies that really want to run your program for you with minimum involvement from the client (and for some clients, there is definitely a place for this), we strive to be a lot more consultative and collaborative.
We want our clients to see us as an indispensable part of their team.
Providing a high-level of knowledge and expertise in our service offering. To provide the benefits that you would receive with an independent contractor, we made a conscious effort to add that more senior level strategists and specialists, many of which owned their own practices before joining IMPACT.
And our subject matter experts aren't in management roles hidden from the client only to be accessed once a quarter.
Maintaining speed of response and getting things done. One of the things I can say IMPACT has always done right was our remarkable responsiveness and speed of completing activities.
Our client service teams are agile which attributes to our ability to get things done quickly.
Are there any key pros or cons that I missed? Please let me know in a comment below.
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