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In-house or agency: doing the maths
The comparison is usually made between an agency fee and a salary, which is the wrong comparison and always favours hiring.
Key points
- A marketing hire costs roughly 1.6 times salary once everything is counted.
- One person cannot cover strategy, copy, design, media and analysis.
- The workable answer for most mid-sized firms is a hybrid, not a choice.
The decision is usually framed as £4,500 a month to an agency against a £48,000 salary, and framed that way it answers itself. Both numbers are wrong.
The real cost of a hire
| Item | Annual |
|---|---|
| Gross salary | £48,000 |
| Employer contributions and insurance | £9,500 |
| Workplace, equipment, software licences | £4,000 |
| Recruitment, amortised | £2,500 |
| Training and conferences | £2,000 |
| Management time | £3,000 |
| Total | £69,000, roughly £5,750 a month |
Against a £4,500 agency retainer the comparison reverses. And the agency figure buys a team; the salary buys one person.
The skills problem
Modern advertising needs strategy, copywriting, design, media buying, tracking and analysis. Those are five or six distinct skills, and almost nobody has all of them at a good level.
A single hire will be strong in two and adequate in one. The rest either does not happen or gets bought in anyway, at which point you are paying both.
A generalist marketing manager is excellent at coordinating specialists and mediocre at replacing them. Hire them for the first job, not the second.
What belongs in-house
- Knowledge of the business. Nobody outside will ever know your customers as well.
- Anything daily. Social replies, review responses, content the customer asks for.
- Relationship and coordination. Briefing, approval, keeping the agency honest.
- Photography of your own work, if there is a lot of it.
- The data. Accounts, analytics and customer records should be in your name.
What belongs outside
- Specialisms used occasionally: video production, print artwork, legal review.
- Media buying, unless spend is large enough to justify a dedicated person.
- Design at brand level, as opposed to routine artwork.
- Outside judgement, which is the thing an internal team structurally cannot supply.
The hybrid that works
One internal person who owns the relationship, the data and the daily work. One agency or two freelancers for the specialisms.
That combination costs about the same as either extreme and produces better work than both, because the internal person keeps the external one informed and the external one keeps the internal one challenged.
The signal to change
Bring more in-house when the same task recurs weekly and the agency invoice for it is predictable. Push more out when your internal person is spending time on things they do slowly and reluctantly.
Frequently asked questions
At what budget does in-house pay?
Roughly from £15,000 monthly media spend, and only for the specific tasks that recur weekly.
What should never go in-house?
Anything needed twice a year. Occasional specialisms are always cheaper bought in.
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