Cost Comparison: In-house vs outsourcing to digital marketing agencies

Any business owner like yourself would agree that investing in digital marketing is the best, fastest, and most reliable way to grow your business. 

Whether you choose to go for paid marketing or organic, or a mix of both (recommended), such as running paid ad campaigns along with SEO optimization, content marketing, social media marketing, and email campaigns, you might have felt the overwhelming need for an extra pair of hands to work on the extra inflow of work during certain times of the year like the Holiday season. You may have even considered hiring in-house digital marketing professionals. 

But you know that the workload will not be the same throughout the year, and the hired resources on your team may sit idle during other times. Now, the costs involved get you worried, and you are concerned about parting with an arm or leg or, worse, making the wrong decision for your firm!

With 12+ years of experience catering to the digital marketing needs of 600+ agencies, we at Mavlers have dived deep into almost every aspect of the outsourcing requirements of brands and agencies. 

To offer greater clarity on the costs that you can expect to bear with both options, we got in touch with our digital marketing expert Amardip Raijada, and he was kind enough to share his opinions on the prices that you can expect with both options, the factors affecting the costs, pros, and cons of both options and finally how to choose what’s best for your unique requirements. 

An insight into what you stand to gain from this blog! 

• Costs involved in hiring in-house talent as well as outsourcing to digital marketing agencies
• Factors affecting the costs
• Pros and cons of both models
• Factors influencing decision-making – agency vs. in-house marketing: Which is better?

So, without any further ado, let’s get started!

Costs involved in hiring in-house talent as well as outsourcing to digital marketing agencies

To begin with, outsourcing to offshore agencies can prove to be an inexpensive option compared to hiring and retaining in-house talent. 

Let’s look at the numbers.

As per the findings of Salary.com, the average cost of hiring a new marketing coordinator in the USA will be USD 64,070 as of January 26, 2024 (it can range anywhere from $56,418 to $72,714, depending on education, experience, and skills). You can also factor in USD 22,886 as annual employee benefits. The total annual remuneration package for an in-house marketing coordinator comes to a neat figure of USD 79,304! 

On the other hand, a 16-hour marketing retainer with an agency can cost you USD 5000 a month, which works out to roughly USD 60,000 a year!

According to the findings of Payscale, the average base pay in the US for;

• a web designer is $ 53,342 per year
• a social media manager is $ 54,446 per year
• a project manager is close to $ 77,468 annually

These figures do not account for overheads like retirement benefits, gratuity, paid time off, assets, training, and healthcare.

Suppose you’d like to factor in the time needed to hire the right resources because, hey! Time is money! Then, it’s important to note that according to CNBC and LinkedIn, hiring for a marketing role might take as long as 40 days.

Now that we are clear on the costs of hiring in-house marketing professionals, let’s check out the per-hour costs of digital marketing agencies across locations.

At Mavlers (an Indian offshore digital marketing agency), we charge approximately USD 25 per hour. 

Would you like to know more about the agency costs for different digital marketing services? Then we suggest you read our detailed offering titled “How Do Offshore Digital Marketing Companies Price Their Services?”

You might also want to peruse the costs offered by Mavlers when you hire full-time resources for your different digital marketing requirements.

Additionally, with Mavlers, you can also choose to hire a part-time resource instead of a full-time dedicated resource, and the costs of hiring will decrease accordingly. Want to know more about the engagement models and payment options at Mavlers? Check out our blog here. 

Factors affecting the costs

Since we have gained considerable insights into the prices one can expect to pay for hiring in-house experts and outsourcing to digital marketing agencies, let’s delve into the factors that influence these costs. 

1. Initial Setup Costs

• Outsourcing: The costs incurred in the initial setup include onboarding costs such as agency fees, initial consultation charges if any, campaign management fees, legal expenses, and other contractual fees. This can vary from one agency to another, and you must remember to gain clarity on these before you choose to partner with any shortlisted agency. At Mavlers, we don’t charge any legal or consultation fees. 
• In-house: When you invest in hiring and training an in-house resource or team, there will be substantial costs associated with the process of recruiting the right talent, giving them the right training, and familiarizing them with the internal processes and software or tech stack subscriptions.

2. Ongoing Operational Costs

• Outsourcing:  When you partner with a digital marketing agency, you must pay ongoing monthly fees based on the scope of services provided and the level of engagement. Additionally, campaign management costs will include agency fees, media ad spending, and creative production and optimization expenses. 
• In-house: When you build an in-house team, the major expense will be in the form of monthly employee salaries, along with maintaining software subscriptions such as project management software, analytics tools, CRM, etc. 

3. Hidden Costs

• Outsourcing: If there are changes in the scope of work (scope creep) or adjustments to campaigns after the initial agreement, outsourced agencies may charge additional fees for change requests. Some services, such as data analysis, custom reporting, or strategic consultations, may be billed separately.
• In-house: When you choose to hire an in-house team, you pay not just their monthly salaries but also for perks and benefits such as health insurance, retirement plans, etc. The cost of maintaining a workspace (office rent, utilities, supplies) and physical assets such as laptops must also be accounted for. 

Pros and cons analysis of in-house vs digital marketing agencies

Let’s take a look at the pros and cons, of both models.

If you’d like to get a more detailed insight into the pros and cons of both models, we suggest you read our blog titled, “Should I Outsource Or Insource My Digital Marketing Activities?”

Agency vs. in-house marketing: Which is better?

Taking into consideration the following factors, you will find yourself in a better position to make a more informed decision.

• Budget
• Expected profit margins
• Alignment with the brand tonality and local/target audience
• Size of company
• Short term v/s long-term company goals

If you are a small company with ten people on the team and have short-term digital marketing requirements such as website design, email templates, etc., then outsourcing to a digital marketing agency (whether local or offshore) might be a better option than hiring in-house marketing resources. This will also allow you to experience better profit margins if you choose to partner with an offshore agency in countries like India, the Philippines, etc.

However, if you are a brand owner with hundreds of employees, you might hire an in-house marketing team to meet your long-term business goals. In case of requirements that are not the main offering of your business, for instance, app development, if you usually take up SEO requirements, you can always outsource such non-core requirements during peak season or when your in-house team doesn’t have the bandwidth. 

So, what’s next?

Now that you are clear on the costs of hiring an in-house marketing team vs. outsourcing to digital marketing agencies, you can decide on the path to take for your digital marketing needs. 
You might want to familiarize yourself with the factors involved in choosing the right digital marketing offshore agency.