Survey: Cost of doing in-house marketing vs. agency for SMBs
Published on: 07 Sep 2022 | Author: Jorge Uceda
Sortlist recently published a 2021 Marketing Survey on budgets, trends, and inspiration for SMBs. We asked almost 500 owners and general managers of small and medium-sized businesses across five European countries for their marketing strategies in 2021. Our goal in this article is to evaluate these trends and whether the intended budgets would benefit from an in-housing strategy or to seek help from an outside marketing agency, like a digital marketing agency.
Every year, businesses analyse their marketing needs and allocate a budget in hopes that it will cover all costs. In 2021, many businesses have had to plan their budgets differently to deal with potential financial burdens caused by the Covid-19 pandemic.
A year into the epidemic, only 23.7% of small and medium-sized businesses (SMBs) in Sortlist’s core market – Belgium, Netherlands, Germany, France, and Spain – stated that the budgets for marketing services would increase in 2021. With 19.7% stating that no final budget had yet been decided, and 7.4% their budgets would remain unchanged, this revealed that 47% of SMBs surveyed were forced to decrease their spending.
Although the Covid-19 pandemic has shaped marketing investments relatively differently in each country (read more about it here), the mode answer of each country was a decrease in budget.
Across each of these countries, at least 60% of SMBs are looking to spend between 1001 – 100,000 euros in 2021 with the exception of Belgium (55%) and France (58%).
Between only 4 and 14% of the surveyed SMBs are willing or able to invest over 100,000 euros.
With an average of only 7.75% of businesses sticking to the same ad spend and same marketing budget as the previous year, the majority of SMBs surveyed will have to restructure their marketing tactics to optimise their revenue.
Businesses will have to make decisions on whether certain projects will be in-housed or, better yet, taken care of by a digital marketing agency as part of their financial restructuring.
In France, results of their marketing investments for 2021 are directly correlated with the results of the Covid-19 impact. With 60% of French SMBs revealing they were going to decrease their marketing budget, only 4% have a budget higher than 100,000 euros. Additionally, they are the market with the most amount of SMBs looking to spend below 1000 euros with 31% on a digital marketing agency.
The Netherlands observed the same statistics but in the opposite direction. As the country with the highest percentage of SMBs increasing their digital marketing budget in 2021 (30%), they are the country with the most amount of businesses budgeting over 100,000 euros (14%) this year. They are also the country with a fewer amount of SMBs looking to spend less than 1000 euros (12%).
In today’s market, when a business develops a marketing project based on an idea, they have to consider the members of the in-house team that will undertake it. They may already have the necessary human and technological resources at hand within their company, but that is not always the case. If they don’t, they can either build/expand their department or look into outsourcing the project to an outside agency with all the necessary marketing tools. Nevertheless, having adequate human and technological resources does not guarantee a successful marketing in-house team.
Let’s look at the relative costs of having an in-house marketing team vs. hiring a marketing agency.
*estimation of benefits and taxes come from REQ
On top of their base salaries, the internal team of a marketing agency requires resources such as office space, stationery, adapted technology, and software.
Within a marketing agency, a team is usually comprised of the following members, many related to digital marketing services:
With a marketing agency, businesses can develop singular projects, or have a working annual contract to work together on a regular basis. They can also pick and choose the various services they wish to hire help for e.g. paid advertising and content creation but not brand awareness.
According to the Business website Sisu, these are the average costs for agency services within a marketing agency in most markets. Rather than hourly rates, they’re calculated per month:
The total average cost in a year, if a company were to require each of these services (one-time marketing strategy, graphic design, and website build): $258,700.
The pricing in some marketing companies depends also on add additional costs such as a monthly retainer contract, company size, and additional tools required for research, however, these prices are usually included in the overall service package and marketing agency costs.
The average number of surveyed SMBs with more than 5 full-time marketers within their in-house marketing department was at 14.85% with as low as 11% in Belgium.
The most common number of employees working in marketing was three, with yet again the exception of Belgium with 26% of surveyed SMBs responding with only one full-time marketer.
Additionally, to the number of full-time marketers working in-house, we asked our SMBs where the human resources for their marketing come from.
Less than 50% of all countries responded that their marketing projects come from in-house employees, with the lowest being the Netherlands with 36.5%.
An average of 30% of SMBs use the help of marketing agencies.
With only 14.85% on average of SMBs having the ideal number of employees (5+) working in their marketing department, and only 30% of them requesting help from an outside agency, this means that at least 50% of SMBs are losing some potential on their marketing strategy.
Cons of working with marketing agencies
If we take a look at the pros and cons of both these marketing strategies, we can say that money can buy you exclusivity and control.
If a business has the necessary funds to afford in-housing a team of marketers, they may feel more in control of their projects and finish them faster. However, the end result is at risk of not reaching its full potential due to a lack of experience, tools, and innovation.
Hiring a marketing agency may seem like throwing a project to strangers and praying for a safe return, but it’s almost guaranteed to be in good (and even better) hands.
The Covid-19 pandemic has left a huge mark in the business world. A portion of SMBs have been able to make it through this difficult time, but almost all of them are facing financial hardships. Businesses are having to restructure their marketing budgets and look to different options to ensure results. A digital marketing agency could be the solution to their problems, with lower cost, and higher work efficiency.
If you are looking for a marketing agency, take a look at the variety of Sortlist partners who are ready to help. We are located in over 80 countries around the world including the USA, and the United Kingdom.
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