In-House vs. Outsourced Marketing

Before You Build an In-House Marketing Team, Do the Two-Year Math

Hiring another employee can feel like the natural next step when a company decides it needs better marketing.

You need a stronger website. Social media needs attention. Someone should be creating content consistently. Leads need to be generated. Video would help sales and recruiting. The website needs ongoing maintenance. Maybe someone should finally take ownership of all of it.

So the obvious thought is:

“We should hire a marketing person.”

Maybe.

But before adding another salary to payroll, it is worth asking two questions:

What will that employee actually cost over the next two years?

And just as importantly:

Can one employee realistically provide all of the marketing capabilities the company needs?

For many small and mid-sized B2B companies, particularly manufacturers, contractors, engineering firms and other technical businesses, those two questions can lead to very different conclusions.

Salary Is Only the Beginning

A salary is easy to understand because it appears right there in the job posting.

The actual cost of an employee does not.

Payroll taxes, benefits, insurance, paid time off, recruiting, onboarding, equipment, software, training and management time all contribute to the real cost of bringing someone onto the team.

We recently modeled this decision for an Arizona client considering its long-term marketing needs.

Using Phoenix-area marketing-specialist wage data, the benchmark salary for a junior marketing hire was approximately $79,720 per year.

Over two years, salary alone would total $159,440.

But salary isn’t the appropriate comparison.

Using Bureau of Labor Statistics employer-compensation data to estimate the fully loaded employment cost, that employee could cost the company approximately $114,000 per year — or about $228,000 over two years.

And that assumes the hire works out.

There is also recruiting and onboarding. SHRM data used in our analysis showed a median 39 days to fill a nonexecutive position, before accounting for the additional time required for that employee to learn the company, industry, products, customers and internal processes.

That creates another cost that’s difficult to put on a spreadsheet:

Time.

But What If a Junior Marketer Isn’t Enough?

That’s exactly the question a company should ask.

If you’re looking at your marketing needs and thinking:

“We wouldn’t hire a junior person to do all of this.”

You’re probably right.

We intentionally used a junior marketing specialist as the benchmark because it represents a relatively conservative starting point for building an internal marketing function.

But consider what many growing companies actually need:

Website strategy and development. Social media. Content creation. Graphic design. Photography. Professional video production and editing. SEO. Digital advertising. Lead generation. Analytics. Email marketing. Branding. Marketing strategy. Technical website maintenance.

That’s not really one job.

It’s an entire collection of specialties.

A talented junior marketer may be able to perform several of those functions reasonably well. It is unrealistic, however, to expect one relatively inexperienced employee to possess deep expertise across all of them.

And if the company needs more sophisticated capabilities, the alternative may no longer be a junior marketer.

It may be an experienced marketing manager or director.

It may be a marketing employee plus outside video, web, SEO or advertising specialists.

Or it may eventually require several employees.

That changes the comparison considerably.

How Many People Would You Actually Need?

This is where the economics become much more interesting.

One marketing generalist may be perfectly capable of handling social posting, basic content creation, email marketing, coordination and routine analytics.

But specialized needs frequently require specialized skills.

Professional video production requires cameras, lighting, audio, editing and storytelling expertise.

Website development requires design, development, hosting, security and technical maintenance.

SEO and digital advertising require entirely different skills.

Lead generation requires strategy, targeting, systems, testing and optimization.

And technical B2B companies introduce another challenge.

Someone has to understand the business well enough to translate complicated products, equipment, services and capabilities into content that customers actually understand.

A single employee can certainly learn multiple disciplines.

But at some point, the question becomes:

Are we comparing an outsourced marketing team with one employee — or with the internal team and outside vendors we would actually need to accomplish the same work?

Compare the Capability, Not Just the Cost

For the client analysis that inspired this article, we modeled a phased two-year marketing program using Fire For Effect Marketing.

The first year included two professional websites, social media setup and planning, ongoing social media management, website maintenance and a focused lead-generation campaign.

The second year continued social media management and website maintenance.

The total modeled FFEM investment over two years was $89,000.

Compare that with our conservative junior marketing benchmark:

Two-year salary alone: $159,440

Estimated two-year full employer cost: approximately $228,000

That represents a potential difference of approximately $70,440 compared with salary alone and approximately $139,000 compared with estimated total employment cost.

But remember:

We’re comparing FFEM with the lower-cost hiring scenario.

If the company’s actual needs require a more experienced marketer, multiple employees or additional outside specialists, the true cost of building equivalent capabilities internally could be considerably higher.

This Isn’t an Argument Against Hiring Employees

There are absolutely situations where an internal marketing hire makes sense.

A larger organization may need someone embedded within the company every day. Marketing volume may justify several full-time specialists. An internal marketing leader can also be extremely valuable for coordinating agencies, vendors, sales teams and company leadership.

The mistake is assuming that hiring must automatically be the first step.

For many growing businesses, an outsourced marketing resource can provide significantly broader capabilities while the organization is still developing.

And unlike permanent headcount, outsourced marketing can usually expand, contract or change direction as business priorities change.

Fixed Cost Versus Flexible Capability

This may be the most important distinction.

An employee represents relatively fixed overhead.

Once hired, salary, taxes and benefits remain whether the company needs 20 hours of website development that month or none.

An outside marketing team can allocate resources differently.

One month may be heavily weighted toward video production.

Another may focus on website development.

The next may emphasize social media, SEO or lead generation.

The company isn’t hiring a specialist for every discipline. It is accessing the appropriate capabilities when they are needed.

For smaller and mid-sized organizations, that can be a much more efficient way to build a marketing operation.

Marketing Should Be Evaluated Like Any Other Business Investment

The real question isn’t:

“Should we hire someone or hire an agency?”

The better question is:

“What combination of people and resources gives us the capabilities we need at the best return on investment?”

Sometimes the answer will be an employee.

Sometimes it will be an outsourced team.

And sometimes the best solution will be a hybrid: an internal marketing leader working with outside specialists in video, digital advertising, SEO, web development or other areas.

What matters is doing the math before making the decision.

Because a $79,720 employee isn’t really a $79,720 decision.

Over two years, even our conservative junior marketing benchmark may represent approximately $228,000 in total employment cost.

And if one junior employee can’t provide everything the company needs, that’s not the end of the comparison.

That’s where the real comparison begins.

The Bottom Line

Before adding marketing headcount, calculate three things:

What will the employee really cost?

What capabilities does the company actually need?

How many people or outside specialists would it take to obtain those capabilities internally?

You may still decide to hire.

You may decide to outsource.

Or you may discover that combining internal leadership with outside specialists makes the most sense.

The important thing is to compare the actual capability and actual cost — not simply an agency fee against somebody’s salary.