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Starting a new job soon and will have to make a case FOR an agency or FOR an internal resource. What should I weigh to help decide?
As the title says, I’m about to start a new job. I’ve been around PPC since 2007 and found it easier and more efficient to always outsource it to an agency. My last agency handled over 1,100 individual locations with ease. I found that whatever I needed, they were there. If I needed a report, they would make it. If I needed market research, they could get it. Now, however, my new boss is talking a lot about hiring an internal resource, and I know I’ll need to make a case for or against fairly quickly after I start. It’ll be a franchise organization of about 115 locations in a fairly competitive vertical so I’m sure the load will be lower than the 1,100 location business but, here’s the question for anyone who can help weigh in: **Is there any rubric or crude formula where you can figure out if the money I spend on a human being to manage this internally isn’t worth the modest margin an agency would take to handle everything**? It just seems that the margin would help pay for the agency’s resources, intelligence, and multiple people’s perspectives on anything that comes up.
Genuinely appreciate any insight or articles on this that can help guide me through this.
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1 Reply
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I work in an agency and our experience is that it’s much more expensive for them to hire an outside person even if we charge larger fees than other agencies (in our area). You need to factor in all the taxes and social securities, insurances and whatnot. Considering that, the agency is just cheaper, usually.
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A person good with paid media, maybe 3-4 years of experience, will require a salary of $75-100k/year. Add on top of that benefits, taxes, etc you’re looking at expenses between $100-125k per year that employee will also likely take a vacation for 2 weeks leaving campaigns unattended unless you have a 2nd backup resource.
On the flip side, an agency will take typically 8% of marketing spend on the low end and 15% on the high end. Let’s take the midway point and call it 12%. If your annual marketing spend is $1M per year, your agency fees will be $120k per year, equivalent to a max level employee. The advantages going with an agency are that the agency will likely have more experienced resources, backup resources, supervisors you can hold accountable for errors, a company to hold responsible for financially negligent errors, and turnover won’t be a problem if someone leaves the agency as likely backs are in place. If the agency sucks you can also easily fire them and move on to the next, whereas it’s harder to fire an employee.
So if marketing spend is under $1M/year, it’s a no brainer to hire an agency. If it’s over $1M in spend you will likely need a 2nd employee to help manage campaigns, so you will probably still be better off going with an agency.
Hope this helps workout the math for you.
Source I work in a hiring capacity at an agency and have done this calculation for many clients.
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Can you afford to hire someone in-house? A good idea about salaries is with our [2023 salary survey](https://www.reddit.com/r/PPC/comments/11xi72k/ppc_salary_survey_2023_final_report/).
Without knowing what gains you would get with an internal hire vs an agency, hard to know which is better. You should write out what work you need done. Then see which might be a better fit for your needs….taking into account your budget to paid either. There are pros and cons to hiring in-house as much as hiring an agency.
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