Why It’s a Grave Mistake to Bring Marketing In-House: An Unfiltered Perspective

Published on January 19, 2024

Let’s cut to the chase. In a world where everyone is trying to out-innovate, out-perform, and out-maneuver their competition, there’s a rather troubling trend I’ve been observing – companies are increasingly bringing their marketing operations completely in-house. Now, before you roll your eyes and dismiss this as just another agency CEO’s rant, give me a moment to unpack this (because I believe that there is so much opportunity for an in-house team to work hand-in-hand with an agency, but eliminating the agency relationship altogether would be shooting yourself in the foot before running a marathon).

1. Fixing What Isn’t Broken

First and foremost, why are we trying to fix what isn’t broken? Digital marketing agencies have been the backbone of commerce growth for decades. We’ve been the unseen hand that has propelled brands into the limelight, the silent partners who’ve turned startups into unicorns. The digital landscape is constantly shifting, and agencies have mastered the art of surfing these waves. 

By bringing marketing in-house, companies are not just reinventing the wheel, but they’re also trying to build a car from scratch. Why attempt to construct something when you can have the Ferrari of marketing at your disposal?

2. The Illusion of Cost-effectiveness

Now, let’s talk money. I’ve seen countless boardrooms where CFOs beam with pride, saying they’ve saved a fortune by moving marketing in-house. Sure, on the surface, it might seem like you’re saving. But let’s dive deeper, shall we?

By the time you factor in hiring costs, training, software subscriptions, and the inevitable trial and error (because, let’s face it, you’re not an agency), you’re already burning through cash faster than a Silicon Valley startup with an in-house chef preparing made-to-order meals. 

And then there’s the opportunity cost. Every moment you spend building an in-house team is a moment lost, a competitor gaining ground, a consumer’s fleeting attention slipping through your fingers. With an agency, you’re not just paying for services; you’re investing in years of accumulated knowledge, tools, and resources that are activated from day one. 

Cost-effective? Think again.

With an agency partner, you can continue to build out that team at your own pace to match your growth without sacrificing revenue. Eventually, both teams will complement each other and enhance your overall output.

3. The Math Behind the Decision

Now, here’s what you’ve been waiting for. To decide whether your in-house team is a more financially sound choice than hiring an agency, let’s break down the numbers. Remember, it’s not just about comparing the cost of hiring an agency with the salaries of in-house employees. There’s more to it.

Industry Benchmarks:

  • Agency Marketing Spend Efficiency: On average, conservatively, agencies can deliver a return of 5:1 on marketing spend. That means for every dollar spent on agency fees, you can expect $5 in revenue.
  • In-House Team Efficiency: In-house teams often see a lower return, around 3:1, due to various factors, including learning curves, limited resources, and narrower expertise.

Calculating In-House Cost-to-Benefit:

To make the expense of an agency obsolete, your in-house team needs to match or exceed this efficiency. Let’s run through a hypothetical scenario:

  • Assuming Agency Cost: $100,000 annually.
  • Expected Agency Revenue Generation: 5 times the spend, so $500,000.
  • In-House Team Cost: Let’s say salaries, tools, and other expenses amount to $150,000 annually.
  • In-House Team Required Revenue Generation: To match agency efficiency, they need to generate at least $750,000 annually (5 times the spend).

This means your in-house team needs to be not just as good as, but better than, an agency to justify the switch financially. They need to generate 50% more revenue than their cost to match the agency’s return on investment (ROI). Try this experiment with your own numbers to find your breakeven and truly examine whether it’s the right decision.

4. Experience, Expertise, and Benchmarking

If I had a dime for every time a company thought they could emulate an agency’s expertise overnight, I’d probably own a small island by now. Agencies are a melting pot of talent – we have the mavericks, the thinkers, the artists, and the analysts. We’ve seen what works and what crashes and burns. We have data from countless campaigns, which allows us to benchmark and set realistic, yet ambitious, goals.

When you bring marketing in-house, you’re starting from ground zero. No matter how brilliant your team is, there’s a steep experience curve. And in the fast-paced world of digital commerce, how long can you afford to be a learner?

Think long and hard before you jump on the in-house bandwagon. The world of commerce is a grand orchestra, and agencies are the conductors who can ensure the music never stops, directing resources to the right places for the most impact.

CEO & Founder Erik Huberman is a member of Grit Daily's Leadership Network. He launched Hawke Media in 2014, which is now valued at over $150 million. As a serial entrepreneur and marketing expert, Erik has been recognized by his industry peers through honors and awards including, Forbes Magazine’s 30Under30, CSQ’s 40Under40, and Inc. Magazine’s Top 25 Marketing Influencers.

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