Outsource vs. Insource Marketing

Modern Marketing Realities
Marketing has changed rapidly, evolving to a digital marketing mix, and often employing marketing technology, or MarTech. The skill sets for managing a multitude of disparate marketing activities typically requires multiple individuals; skills rarely possessed by a single person.

Consider such marketing activities as copy writing, graphic design, website design and search engine optimization (SEO), email, event marketing, publicity, social media, paid search and traditional advertising, branding, and more. Also consider that depending on your organization marketing requirements and size, some skills might be required frequently, and other skills infrequently. Finally, consider that effective marketing has become mission critical, and the key differentiator to brands that achieve category leadership.

Organizations are realizing that in today’s competitive environment, marketing can the difference between success and failure. These realities have driven marketing salaries and outsource marketing fees to high and increasing levels.

Outsource and Insource Marketing Definitions
Outsource marketing or outsourcing is the practice of contracting an organization’s marketing functions to an outside firm, agency or consultant. Depending on organization size and frequency of a marketing requirement, firms might outsource projects, all marketing, or a combination thereof. Outsourcing is widely accepted for many business functions including accounting, customer service, programming/development, and yes, marketing.

Insource marketing or Insourcing refers to the process of having an employee of your organization complete a marketing project, or hiring staff for an ongoing marketing function. Insourcing or staffing is common for such business functions as product management, sales, engineering, and administration.

Please consider some key pros and cons for each.

• Outsource Marketing Pros:
  Access advanced marketing skills and expertise that can be cost prohibitive or difficult to recruit
• Access specialized marketing skills and expertise for infrequent marketing requirements or singular projects (Ex. websites, branding)
• Outsourcing allows management to focus on core business requirements
• Speed: implement quickly without recruiting, training, supervision, etc.
• Outsourcing potentially more cost efficient than staffing with multiple discipline skills, lower overhead including salary, benefits, equipment, etc.
• More cost efficient and effective for small and startup organizations

Outsource Marketing Cons:

• Lack of market or technical knowledge in certain categories vs. internal experts
• Potentially less responsive than staff marketing for frequent marketing requirements
• Potentially cost prohibitive with some marketing agencies
• Complete or high percentage outsourcing not practical for large, complex enterprises
  
   

Insource Marketing Pros:

• Potentially more cost efficient for frequent marketing requirements and functions
• Potentially deeper technical knowledge and market expertise
• Marketing staff required for large, complex enterprises
• Some (larger) marketing agencies potentially cost prohibitive

Insource Marketing Cons:

• Potentially cost prohibitive compared to outsourcing due to multi-discipline skills requiring multiple staff; higher overhead including salary, benefits, equipment, etc.
• Cost inefficient for infrequent marketing requirements or singular projects
• Speed: slower implementation with recruiting, training, supervision, etc.
• Not cost efficient or effective for small and startup organizations
  
  
   

Typical Marketing Organization Structures
As mentioned, there are many considerations and variables when comparing the costs of Outsource vs. Insource Marketing including the frequency of marketing requirements, and whether the organization is small/startup, or a large and complex enterprise.

For small and startup, a typical, effective and cost-efficient organization structure is a single marketing executive (CMO/VP Marketing/Marketing Director), supervising outsourced agencies and consultants. Small organizations can sometimes bypass a staff marketing executive if another executive has the skill and interest to supervise an outsourced agency.

For large and complex enterprises, it is often more effective and cost efficient to have one or more marketing executives, and multiple marketing staff for frequent, ongoing marketing functions. Outsource marketing is used for infrequent projects, or for advanced expertise and complex marketing requirements. That said, the majority of large organizations employ a combination of staff while retaining agencies for creative development, media, digital, and new ideas. 

Outsource vs. Insource Cost/Benefit Analysis
To determine the Cost/Benefits of Outsourcing vs. Insourcing, marketing salaries and agency fees must be considered. Regarding marketing salaries, these will vary by title and experience, company size, geographic region, and industry category. Marketing salaries are typically much higher on the east and west coasts, and major cities (salaries lower in smaller cities and rural areas), and much higher in large companies. Following are average salary ranges by title/experience based on analysis from Salary.com. The lower range representing smaller cities and/or organizations, to higher range for larger cities and/or organizations.

Marketing Salaries by Title/Experience
CMO/VP Marketing (7+ years): $150,000 – $300,000
Marketing Director (5+ years): $110,000 – $200,000
Marketing Manager (3-5 years):  $75,000 – $110,000
Marketing Coordinator (1-3 years): $45,000 – $75,000
As you can see marketing staff salaries are very competitive, with corresponding employee benefits typically adding another 30% or more. In addition, specialized marketing investments in software and marketing technology must be considered for a total identification of Insource overhead.

In comparison, marketing agency and consultant fees are typically based on an hourly rate, and often a monthly retainer which varies greatly by agency size, geographic location, and industry specialization. Following are typical hourly rates based on geographic location and size.

Typical Marketing Agency Hourly Rates
East/West Coast/Other Large Cities/Small Agency (<20 staff):  $125 – $200/hour
East/West Coast/Other Large Cities/Mid-Size Agency (20-100 staff):  $150 – $250/hour
East/West Coast/Other Large Cities/Large Agency (100+ staff):  $250 – $500/hour
Small City/Small Agency (<20 staff):  $75 – $100/hour
Small City/Mid-Size Agency (20-100 staff):  $100 – $200/hour
Small City/Large Agency (100+ staff):  $150 – $250/hour
The other opportunity for organizations outsourcing to agencies are retainers, where a number of marketing activities and functions can be outsourced for a fixed monthly fee. Similar to hourly rates, such retainers vary widely by geographic location and agency size. Following are typical retainers for 100 hours of work in a month.

Typical Marketing Agency Retainer Fees (100 hours/month)
East/West Coast/Other Large Cities/Small Agency (<20 staff):  $10,000 – $15,000
East/West Coast/Other Large Cities/Mid-Size Agency (20-100 staff):  $20,000 – $30,000
East/West Coast/Other Large Cities/Large Agency (100+ staff):  $40,000 – $60,000
Small City/Small Agency (<20 staff):  $7,500 – $12,500
Small City/Mid-Size Agency (20-100 staff):  $15,000 – $25,000
Small City/Large Agency (100+ staff):  $25,000 – $35,000
Marketing Number Crunching
With average salaries for marketing talent at significant levels and rising, simple math identifies a 100-hour retainer with a small agency at $10,000 – 15,000 is equivalent to 2-3 marketing staff depending on level. Again, more detailed Cost/Benefit Analysis will be specific to each organization.

Outsource vs. Insource Marketing: A Mission Critical Decision
The decision to insource or outsource marketing is unique to every organization, and is based on company size, industry, marketing budget and objectives, and other factors. Often, a combination of staff and outsource is required.

Outsource Marketing Pros include access to advanced marketing skills and expertise that are cost prohibitive or difficult to recruit, and likely more cost efficient and effective for small and startup organizations. Outsource Marketing Cons include lack of market or technical knowledge in certain categories vs. internal experts. And a high percentage of outsourcing is not practical for large, complex enterprises

Insource Marketing Pros include potentially more cost efficient for frequent marketing requirements and functions, while large and complex enterprises will require some level of marketing staff. Insource Marketing Cons include potentially cost prohibitive compared to outsourcing due to multi-discipline skills requiring multiple staff. Also, Insourcing is by definition, higher overhead including salary, benefit, equipment, etc. Finally, Insource marketing may not be cost efficient or effective for small and startup organizations.

Whether Outsource or Insource, recruiting marketing talent or selecting effective marketing service providers can be difficult. References will assist either scenario. Industry experience should be considered. Thorough and extensive interviewing will be required. We recommend using a marketing expert to assess Insource and Outsource talent. In either case, the wrong decision can be costly.