- In the current economic scenario, companies feel the need to cut costs which puts a lot of pressure on marketing teams to reallocate their agency expenses
- It is important for ecommerce companies to make the choice that is the best fit for the company, among in-house talent, generalist, and specialist ecommerce agencies
- ClickZ thought leader, Jamie Bolton, discusses the long-standing debate of the old agency model against the new in-house, and the benefits and pitfalls that both comprise
I caught up with my friend Luke Jonas, Chief Commercial Officer of Nest Commerce, and we got into one of the most debated topics in marketing, “what works best in-house talent or outsourcing?” Here are some pros and cons that came from our discussion that can help leaders make some wise marketing decisions.
It seems like there’s been a lot of discussions lately about whether businesses should use an agency or in-house resources for their marketing strategies. I’ve noticed that in recent years, companies have been leaning towards using agencies. This is because it is increasingly challenging to achieve good performance due to issues like data loss from consumer privacy concerns, high media costs, and the importance of creative execution.
However, there are also some negative factors at play that are causing businesses to rethink their strategies and consider costs more carefully. Many companies are feeling the pressure to cut costs, which can make it tough for marketing teams to justify their agency expenses. It’s important for marketers to be prepared to advocate for the value that agencies can bring, even in the face of budget cuts.
At the end of the day, the key is to find a strategy that works best for your business and its unique needs.
Understanding the gravity of marketing’s decisions on cost
Let’s look at what’s at stake when it comes to evaluating marketing options for your business. To help illustrate this, let’s consider an example: say you run an ecommerce business with an annual performance marketing budget of £3 million. In 2022, your marketing efforts drove £12 million in revenue – that’s a return on investment of four times what you spent.
As you can see, that £12 million in revenue is a significant amount of money, and it should be at the forefront of your mind when deciding how to allocate your £3 million budget. Even a small slip in ROI, such as a 5% decrease, could cost your business £600,000 in revenue.
It’s clear that your marketing team plays a critical role in driving revenue for your business. It’s important to make sure you get your marketing resources right, as the upside can be huge – but it’s also crucial to keep in mind that getting it wrong could have serious consequences.
Understanding your options and comparing them from a marketing viewpoint
When it comes to deciding on a marketing strategy, there are generally three options to choose from: an in-house team, a generalist agency, or a specialist agency. It’s important to keep in mind that the best option for your business will depend on factors like its size and stage of development. For the sake of this discussion, let’s use the example above of an annual ad spend of £3 million.
It’s also worth noting that each option has its own set of pros and cons, and there are many variations and combinations that can work well, such as using a mix of in-house and agency resources.
Ultimately, the key is to find the strategy that works best for your business and its unique needs. With the right team and approach in place, you can drive great results and achieve the ROI that your business needs to thrive.
The case for an in-house marketing team
One obvious advantage is cost – with the agency fee that you would be paying out you can hire one or even several new persons to join your marketing team. Moreover, by using the cash you saved on agency costs, you can invest more into your marketing budget. This can help you gain more customers.
Other benefits of an in-house team include the ability to work closely with other stakeholders and develop a deep understanding of your business and its products. However, with the rise of remote work culture, this has become less true, collaborations between virtual teams often becoming more complex and less effective.
One obvious key benefit of having an in-house team is that it allows you to grow your team’s skills and develop your own intellectual property, which could be valuable in the long term. However, again, in-house teams make businesses more exposed to issues like sick days or resignations, without immediate backups available.
Another challenge with an in-house team is that they may have a narrower perspective and less access to data and resources than a specialist or generalist agency. They may also not have access to dedicated teams for areas like strategy, analytics, or creative, which can make it more difficult for them to get things done from A to Z.
Ultimately, the best option for your business will depend on your unique needs and goals. It’s important to carefully consider the pros and cons of each option before deciding.
Advantages of a generalist agency
When considering a generalist agency, you’re not just paying for one or two team members’ salaries. You’re investing in a team with multiple roles and levels of seniority. This team will provide backup to ensure your campaigns run smoothly even when someone is away. You’re also paying for the resources, processes, education, and growth opportunities that come with working with a dedicated agency.
Working with a generalist agency gives you access to a wealth of knowledge, data, and experience that the agency has gained from working with a variety of clients and budgets across various industries. This can be a great advantage, especially for businesses that are still growing and developing their marketing strategies.
Advantages of a specialist ecommerce agency for your marketing team
The benefits of hiring a specialist ecommerce agency are vast. You get all the perks of a generalist agency, but with a focus specifically on ecommerce that drives optimal results for online businesses like yours.
With an ecommerce specialist, you can tap into a network effect of information and data as they learn fast and cross-pollinate success or failure among multiple other brands like yours. This unique view of the ecommerce advertising world can help them consult with you more adeptly and in a broader context than just marketing.
You’ll get benchmarking data that is invaluable for internal presentations, and you can see how your brand stacks up against the market. Additionally, ecommerce specialist agencies recognize the importance of specialist creative services for ecommerce businesses and, as a consequence, have been working to build in such capabilities to help drive best possible results for their clients.
Considering the amount of revenue at stake, it’s vital to choose an option that guarantees the best results. An ecommerce specialist agency might just be the best fit for you. While in-house teams and generalist agencies have their advantages, a specialist ecommerce agency provides a unique view of the world that allows for adept consultation and benchmarking data that is invaluable for presenting to stakeholders. Ultimately, the decision between in-house and agency resources depends on your business size, stage, and goals. However, marketers must recognize the value an ecommerce specialist agency such as Nest Commerce can bring to their business to maximize their ROI in a highly competitive ecommerce landscape.
Jamie Bolton is a ClickZ Advisory Board Member and head of Growth at Fospha, a leading marketing measurement platform for ecommerce.
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