Why bringing marketing in-house is a huge mistake: An unfiltered perspective

Let's get down to business. In a world where everyone is trying to outperform, outperform, and outsmart their competitors, there's a pretty troubling trend I'm observing. More and more companies are bringing marketing operations completely in-house. Now, before you roll your eyes and dismiss this as just another agency CEO rant, take a moment. Let me unpack this (because I believe there are plenty of opportunities for in-house teams to work collaboratively with agencies), but eliminating the agency relationship completely is shooting yourself in the foot before you've even run a marathon. ).

1. Fix what isn't broken

First and foremost, why fix what isn't broken? Digital marketing agencies have been powering the growth of commerce for decades. We were the invisible hand that brought brands into the spotlight and the silent partners that turned startups into unicorns. The digital landscape is constantly changing, and agencies are learning how to navigate the waves.

By bringing marketing in-house, companies are not just reinventing the wheel, they're building a car from the ground up. Why try to build something when you have a marketing Ferrari at your disposal?

2. The illusion of cost effectiveness

Now, let's talk about money. I've seen countless boardrooms where CFOs are proudly laughing about how they saved a ton of money by moving marketing in-house. Sure, on the surface it may seem like you're saving money. But let’s dig deeper?

By the time you factor in hiring costs, training, software subscriptions, and the inevitable trial and error (because let's be honest, you're not an agency), you're already making cash faster than a Silicon Valley startup. I'm running out. Our in-house chef cooks to order.

And then there's the opportunity cost. Every moment you spend building your internal team is a moment wasted, a competitor rises, and a moment of consumer attention slips through your fingers. When you use an agency, you do more than just pay for their services. We've invested in years of accumulated knowledge, tools, and resources that will be effective from day one.

Is it cost effective? Think again.

With an agency partner, you can continue to build your team at your own pace as you grow, without sacrificing revenue. Ultimately, both teams complement each other and improve the overall outcome.

3. The math behind the decision

Now, here's what you've been waiting for. To determine whether an in-house team is a financially sounder choice than hiring an agency, let's crunch the numbers. Remember, you're not just comparing the cost of hiring an agency to the salary of an in-house employee. That's not all.

Industry benchmarks:

• Agency marketing spend efficiency: On average, conservatively, agencies can achieve a 5:1 return on marketing spend. This means that for every $1 he spends on agent fees, he can expect to earn $5 in return.
• Internal team efficiency: With in-house teams, returns are as low as 3:1 due to a variety of factors, including learning curves, limited resources, and narrow expertise.

Internal cost-benefit calculation:

In-house teams must match or exceed this efficiency to eliminate agency overhead. Let's run through a hypothetical scenario.

• Agency cost assumptions: $100,000 per year.
• Expected agency income: Expenditures are 5 times greater, resulting in $500,000.
• In-house team costs: Suppose your salaries, tools, and other expenses amount to $150,000 per year.
• Revenue generation for internal teams: To match agency efficiency, you need to generate at least $750,000 a year (5x your expenses).

This means that your in-house team must not only be as good as your agency, but better than it, to financially justify the switch. To match the agency's return on investment (ROI), he must generate 50% more revenue than his costs. Try this experiment with your own numbers to find your break-even point and truly consider whether it's the right decision.

4. Experience, expertise and benchmarks

If I had a dime for every time a company thought they could imitate an agency's expertise overnight, I'd probably own a small island by now. Agencies are melting pots of talent, with mavericks, thinkers, artists, and analysts. We've seen what works and what crashes and burns. We have data from countless campaigns so we can benchmark and set realistic and ambitious goals.

When you bring marketing in-house, you start from scratch. No matter how good your team is, the experience curve is steep. And in the fast-paced world of digital commerce, how long can you afford to be a learner?

Think twice before jumping on a corporate trend. The world of commerce is a grand orchestra, and agents are the conductors who ensure the music never stops, directing resources to the right places for maximum impact.