Should Brands Use Agencies or In-house Teams?

by Luca Senatore Genie Goals

Successful marketing strategies are built from complex elements which come together harmoniously to form solid campaigns. Building and executing a successful digital marketing strategy for eCommerce brands isn’t black or white. It isn’t a matter of choosing binarily between any two rigid options.

The exact same thing can be said when trying to answer the question: “Should brands work with agencies or build an in-house team?”

They should use both. A better question is: “how much and for what should they use each?”

The degree to which brands should rely on agencies or in-house teams depends on several factors, including the stage of their business. Large, established brands might be better off hiring most of the digital marketing functions in-house, and use agencies for strategy and consultancy (more on this below), whereas smaller businesses might be better off outsourcing even the execution and operational functions for better leverage and less commitment to fixed costs.

It is vital that marketing strategies and campaigns are built collaboratively by in-house staff and agency members together. In-house teams have skills and knowledge of the business that agencies don’t, and agencies have skills, tools, and knowledge of the landscape that in-house teams don’t.

Limiting yourself to choosing one or the other is in effect choosing to give your business a handicap.

Some of the more useful questions for brands are:

  1. What should your in-house team do and what should the agency do?
  2. What should brands never lose control and ownership of when working with agencies?
  3. How much should you pay agencies?
  4. How worthwhile is it to use an agency?
  5. What does the ideal set-up look like?

In this article, I aim to provide unbiased answers to these questions using information I collated by researching and interviewing global eCommerce brands and top agencies.

So, let’s start from the beginning:

What should your in-house team do and what should the agency do?

Brands should aim to insource the leadership of the digital marketing strategy. This is the function that looks at all the different channels and keeps a healthy pressure on agencies, freelancers, the in-house team, and all parties involved in running the digital marketing operations, from paid media to organic social, UX/CRO, analytics, content etc. The larger each of these channels gets, the more resource and attention it’ll require.

The titles typically tasked with this function are:

  • Head of Ecommerce
  • Digital Marketing Manager
  • Head of Online
  • CMO (for smaller businesses)

This person is your growth hacker, always T-shaped, and always data-driven whilst also creative, curious, and inquisitive.

Let’s call this the Brand Guardian for the purpose of this article. Their role typically includes (or should include):

1. Leverage of tools and data

Managing agencies and partners to maximise the benefits of working with such partners and leverage tools, experience, and data that agencies can offer. Agencies might have access to tools which they use across several accounts and you might be able to tap into these. Be it a reporting tool, an auto bidder, a feed-manager etc, you might be able to take advantage of these tools without having to purchase expensive licenses and figure out how they work. Agencies might have done both of those things and can provide both access at low or no cost and the relevant training.

Agencies might also work across a large number of customers in similar verticals or industries as you. While they’ll never share information about any specific account, they will be able to give you benchmarks, trends, and a more informed idea of what’s going on in the market.

2. Reports and reviews

Requesting meaningful reports which focus on what’s important for the brand, not for the agency. Agencies will most likely come into review meetings with the main objective being to impress you – not all and not always but most agencies most of the time. This is driven by fear of losing the contract which results in the number one objective being to convince you that you should keep them.

Instead, agencies and brands should work together as part of the same team. It starts from the moment they pitch. If the pitch is conducted well by both parties, then both parties should have a pretty good idea of the expectations – what’s possible, what’s realistic, what the KPIs are and, very importantly, what the activity KPIs are. Activity KPIs are the things that form the roadmap. What is the agency agreeing to do? An experienced and talented in-house manager will be able to guide (push/force) the agency to come up with a sensible, realistic and concrete plan. Then, as well as performance, agencies must report on what they have done, and what results this activity produced.

If this happens at the start, and continues throughout the relationship, then you are more likely to form a truly collaborative relationship, where you and the agency become part of the same team – you become very effective, and, at times, unstoppable. Brands who successfully collaborate with agencies in this manner tend to kick their competition’s butts.

Pssst: if you are an agency reading this, working in such a manner keeps customers happy and engaged. Happy and engaged customers don’t tend to leave.

The agency at that stage, knowing that they haven’t over-promised and that the expectations are clear, might be able to take the pressure of impressing you with flashy slides and vanity metrics out of the business reviews. “Likes”, “followers”, “impressions”, “clicks”… there’s a place for these and they can be vital. But they need to always link to the main KPIs at some point: sales, brand uplift, newsletter signups, messages, leads etc. Unless those are the main KPIs – in which case it’d be agreed in advance.

Agencies should be comfortable enough that they can lead their business review presentations with the mistakes and the tests that didn’t work. The wins and celebrations are important but a balance must be achieved. A bit on what worked, a bit on what didn’t, and a lot on next steps, solutions, and future plans. Whenever they seem to over-emphasise the vanity metrics and minor wins, you should be alerted. You should also be confident and reassured, perhaps through weekly checks and reports, that your agency is in control of budget management.

The magic formula: 20 per cent on what worked – 20 per cent on what didn’t – 60 per cent on the future.

If the weekly reports are meaningful and include good commentary and narrative, then there’s no reason to spend excessive amounts of time talking about the past.

3. Keep the excitement and tests going

Agencies, as well as in-house teams, can become blinded by the everyday nuances and might lose that initial excitement that drives people to test everything. It’s like anything: 80 per cent of the energy goes in at the start, in the first 10 to 20 per cent, 80 per cent of the compliments couples exchange happen within the first 20 per cent of their relationship; when the honeymoon period is over, then it slowly becomes routine… sadly.

We have built an entire team to overcome this: the Account Excellence team. The AX team is in charge of ensuring that all aspects of running an account are satisfied, from the basics to advanced tests.

A good in-house manager will be able to apply healthy pressure on the agency to try tests and propose new ones, frequently and relentlessly  – all designed to achieve the brand’s objective.

4. Alignment

The Brand Guardian should also coordinate all agencies working on different channels, PPC, CRO, SEO, Analytics, Social, etc, to collaborate periodically to achieve maximum alignment and leverage cross-learnings. There are massive opportunities and quick wins in doing this.

SEO can inform the PPC strategy, PPC and SEO can inform the CRO team as to where to focus their energy, Social can help Youtube and Display with ideas on creatives that resonate more, and so on.

The Brand Guardian is the best person to ensure this happens and get all agencies to build a collaborative relationship. S/He must ensure that they meet regularly and get behind the brand as an army of busy ants, bringing a collective force, rather than a few lonely ants who lose their way. If you have a Brand Guardian that does this, without you having to tell them… hold on to that person with all that you have because it’s likely that s/he is responsible for much of your success online.

Your Brand Guardian will also get busy leveraging the network of each agency by:

  • Requesting intros to other brands, customers of the agencies, for peer feedback and mastermind-type meetings. The benefits of doing this are both obvious and many. One person’s challenge is often another person’s experience. And people are happy to help, especially peers.
  • Enquiring about new tools, strategies, trends which are believed to be worth exploring.
  • Getting invited to the platforms’ HQs to explore possible strategies for the future. As a brand, you might or might not be ready to invest heavily in top-of-the-funnel activity, or more experimental projects. Your budget might be too small to get the full VIP experience that platform providers offer to large spenders. Your agency, thanks to its collective higher spend, can often arrange a trip to Google, Facebook, etc, where the respective representatives would happily show you what’s possible and what your larger competitors might be doing. This is invaluable as it illustrates the scope, the map of possibilities, which shape your ambitions and trajectory. Agencies might get access to these sessions more easily as they collectively are responsible for large revenue numbers for the platforms.

What should brands never lose control and ownership of when working with agencies?

Accounts and Data: data should always remain in the control and property of the brand – you. We have seen several incidents of agencies opening accounts (Google Ads, Facebook Ads etc) on behalf of their customers and set them up in such a way that they belonged to the agency. This is something brands must absolutely avoid.

All accounts must belong to you (the brand) and you will then provide adequate access to agencies for them to operate on such accounts. Even if your agencies pay the platform on your behalf, the account must belong to you and you must be in control. Failure to ensure this happens can, and has done, end up in you being locked out of your own accounts should things get bitter. All data associated with these accounts must remain in the control of the brand. The agency will act as a processor.

To recap all that we have said thus far (there’s more) in a visual way, here’s a diagram that shows some of the elements in the “Ownership” category and where they belong, and the “Knowledge and Insights” and how these interact with the parties involved:

How much should brands pay agencies?

Many agencies will calculate their fee by looking at the hours required to work on your account. On average, agencies in the UK tend to calculate their fees by looking at these hourly rates for each seniority level:

  • Director – £130 per hour
  • Senior – £100 per hour
  • Mid Level – £94 per hour
  • Junior – £85 per hour

So if your account requires a junior two days per week, a mid-level one day per week and a senior one day per month, based on six billable hours per day, you’d be looking at £4,420 for the junior (52 hours/month x £85), £2,444 for the mid-level (26 hours/month x £94), and £600 for the senior (six hours/month).

This would total £7,464 per month and would get 3.25-ish days per week.

This doesn’t answer the question above but offers some insights, especially considering that the net margins of the same group of agencies included in the above sample ranges from 10 per cent to 25 per cent. So there isn’t an incredible amount to play with. What this tells you is that if an agency charges a lot less than they should do, using the data above as benchmark, then the compromise is probably made in one of two areas:

  • The agency might be cutting their margins thinner.
  • The account doesn’t get as much resource as required or forecasted.

Neither are good.

As a brand, if an agency offers a lower fee than its competitors, you should work to understand exactly where and how this is achieved. There might be solid explanations outside the two options above, it is your right and duty to find out what these might be.

How worthwhile is it to use an agency?

Only you can make that call. Bear in mind that what (good) agencies bring goes beyond what they do. There are benefits that compound such as the ones mentioned earlier in the article. These allow your Brand Guardian to dedicate their attention and energy to maximising the results by being the leader, steering the ship in the direction only the Brand Guardian is able to judge as the best. S/he has the best knowledge of both the brand and the channels.

Building a complete digital team in-house which replaces the agency in full presents costs, often much larger than the direct wage bills: recruitment fees and time, dealing with holidays, management layers, dealing with leavers, office space etc. These are obviously not reasons to not hire people – just factors to be aware of when comparing the cost of agencies versus in-house teams.

If things change and a project needs to be parked, agencies can be downsized and even stopped or paused. It’s harder to do this with in-house teams.

So the answer is yes, it is worth paying for agencies if, as we said above, brands:

  • Use agencies strategically;
  • Retain ownership of accounts and data;
  • Receive meaningful reports which inform future decisions, not just past successes;
  • Leverage agencies’ network, tools, and knowledge of the industry benchmarks;
  • Establish truly transparent and collaborative relationships – give agencies constructive feedback frequently, and request they do the same.

To do this, brands need a good Brand Guardian.

What does the ideal set-up look like?

A few scenarios:

Full agency

There are scenarios where a brand might be better off choosing to use agencies and have them manage all of the activity. The Brand Guardian would always be vital in managing the agencies as we looked at above, but agencies would in effect carry out all the execution of the strategy and management of the campaigns.

In-house

The Brand Guardian would manage the in-house team who would be responsible for the execution of the strategy and management of the campaigns.

In this scenario, agencies could be extremely useful to:

  • Provide training to the in-house team.
  • Provide periodic account audits with actionable roadmaps for improvement.
  • Bring industry/channel news through events and talks.
  • Consultancy and feed-management.

Hybrid (in-house with agency support)

The in-house team, managed by the Brand Guardian, would be responsible for the planning and execution of the strategy and management of the campaigns, but agencies would be used for either ad-hoc or planned support in all areas. For example:

  • Partaking in the strategy meeting to provide advice and guidance which shape the strategy;
  • Some support in building and managing campaigns;
  • Training and consultancy;
  • Tech and feed-management;
  • Localisation of campaigns in foreign languages.

And, if you find a flexible enough agency, any combination of the above.

Conclusion

There are a few key take-aways from this article and they can easily be summarised:

  • Whatever you do, look to implement the function/role of the Brand Guardian. Don’t take shortcuts here, don’t compromise. Find a smart, keen, and eager person who either loves or can learn to love your brand, and give them the tools to be motivated, and own their role.
  • Don’t be limited by the traditional “agency or in-house” team argument. Anything in between is not only possible but most likely where the magic happens.
  • When comparing costs of either option, don’t stop at the direct costs, look deeper.
  • Always guide third parties to be transparent, comfortable in admitting mistakes, and to work truly collaboratively.