For many enterprises, hiring a marketing agency is the fastest and most effective way to bring vision, strategy, and execution together under one roof. Best-in-class marketing requires constant adaptation, and a marketing agency delivers it while minimizing overhead.
A marketing agency partnership allows you to streamline your approach to marketing, eliminating the need to manage inputs like hiring, training, software, and industry events. You can stay focused on what matters most. Done right, it offers the best of both worlds: A high degree of creative control without the micromanagement.
Not all marketing agencies are created equal, and some are only pretenders to the title full-service agency. But the fact remains: The right agency is worth its weight in gold. Of course, that doesn’t mean you should pay that much. A clear-eyed look at your marketing financials is key to making the right move.
Believe it or not, most business owners and leaders aren’t asking this key question enough:
“How much should I be paying my marketing agency?”
Ask These Three Questions Before You Ask How Much You Should Be Paying
If you ask marketing agencies directly, you’ll find a wide range of answers on cost. Many smaller agencies do not clearly link what you pay to the output you get. All of the 14,000+ marketing agencies in the U.S. have their own way of justifying their expenses. In many cases, their rationale won’t align with your interests.
You can get down to the root of the issue with three simple questions:
1. “What does our marketing budget look like?”
Understanding your marketing financials is essential to narrowing your search and finding the right marketing agency. This can be a challenge. Many marketing budgets are bloated with line items that have nothing to do with marketing. That includes items rightfully attributed to sales, IT, and other areas.
The right amount to spend on a marketing agency will vary based on your size, industry, and growth plans. At Andrew & West, our clients typically spend 5% to 7% of their gross revenue on their marketing budget. About 1% to 2% of gross revenue, in turn, supports their partnership with a full-service marketing agency.
This works as a starting point that can be adjusted based on your specific needs. One way to zero in on a more accurate figure for your business is to connect with a fractional CMO for a short-term engagement focused on marketing financials. That gives you the strong foundation you need to pursue healthy marketing partnerships.
With greater clarity into your current marketing spend, you can cut expenses that aren’t moving the needle and reallocate them toward larger expense categories. That enables you to invest in larger strategic expenses, like a marketing agency partnership, without having to boost your marketing budget.
2. “How much would it cost to do this internally?”
A good full-service marketing agency can replace the workload of anywhere from one to ten internal staff.
If you’re looking for a marketing agency to assist you with video marketing, social media management, and design, that workload alone may need to be shouldered by two employees. On average, that would lead to spending six figures annually to “keep things in house.”
Plus, you’ll accrue additional expenses related to keeping your employees aligned with digital marketing best practices. Software licensing fees, training, and events all represent recurring costs. They are hard to unwind and only likely to grow in the future. A marketing agency keeps this overhead off your balance sheet.
If you plan to regularly deliver top quality marketing content that communicates your brand and deepens your customer relationships, you may need to consider other marketing avenues like email marketing, search engine optimization, and brand development. Hiring specialists in these areas will raise your expenditures further.
After taking a hard look at the true costs of in-sourcing the marketing function, many business leaders conclude a marketing agency partnership is the right move for them. Pivoting to a marketing agency partnership can look like a major cost, but it represents savings and efficiencies in the long run.
As a leader, bringing a marketing agency into the fold stands to save you dozens or hundreds of hours a year. An experienced, full-service marketing agency should never need to be micromanaged. As your agency team grows more familiar with your brand’s voice and objectives, you can achieve a true “done for you” experience.
By contrast, the work created by an in-house approach multiplies with time.
3. “How will this factor into our business growth plans?”
As you strive to scale your business, your marketing investment should be a key part of your strategy.
If you have big plans to increase revenue, expand locations, and develop a brand identity that resists growth-related dilution, a reputable marketing agency is a valuable resource. It can help you achieve all of this and more, often on a greatly accelerated timeframe. And, in the end, time is your most valuable resource.
Leaders need to prioritize relentlessly and value every moment of their time. This is even more crucial when you are in a growth phase. Supplementing your internal team with a strong marketing agency partnership is effectively putting more person-hours in the day and creating more opportunities for leaders to delegate.
Far from taking the spotlight off your internal marketing team, a marketing agency increases their efficiency and empowers them to stay focused on the goal. That leads to higher employee engagement and better end results.
Andrew & West gets you on track with marketing insight from executive-level leaders who understand your business. Our consultants enable you to articulate your goals and plans so you can select not only the best agency, but the one that offers the most value in your unique situation.
Contact us to apply and see if we’re a good fit for you.
