As an agency, we offer and attract talent that many brands are unable to hire. A great designer isn’t going to be happy working full-time for a plastic molding company. They might be up for the challenge, at first, but eventually (if they’re good) they’ll want the diversity and opportunities multiple clients and projects give them.
However, despite the intrinsic reasons agencies attract talent, there’s also an economic value that agencies provide that many clients don’t necessarily do the calculus on, and my goal in this post is to show the monetary benefits of working with an outside agency. Feel free to forward this to your CFO.
The High Costs of Building an In-House Team
Creating an in-house team to manage all aspects of your digital operations involves considerable financial commitment. Let’s break down the average annual salaries for key roles:
- Jr. Designer: $70,000
- Programmer/Developer: $90,000
- SEO Specialist: $60,000
- PPC Manager: $65,000
- Social Media Manager: $55,000
- Content Writer: $65,000
- Project Manager: $75,000
- Strategist: $80,000
Total Annual Salary Cost: $560,000
Beyond salaries, additional expenses include:
- Benefits and Taxes: Approximately 20-30% of salary costs ($112,000 – $168,000)
- Training and Development: Ongoing costs to keep the team updated with industry trends ($15,000 – $25,000)
- Overhead Expenses: Office space, equipment, software licenses, and utilities ($45,000 – $75,000) Estimated
Total Annual Cost for an In-House Team: $732,000+
The Financial Benefits of Agency Partnership
An agency partnership significantly reduces operational costs while maintaining high-quality digital services. Let’s compare the numbers:
- Cost Efficiency: Agency retainers typically range from $130,000 to $150,000 annually for comprehensive services—roughly 20% of the cost of an in-house team. For Solid, this would include our top-tier clients… the ones who get most of our attention.
- Resource Optimization: With an agency, there are no employee benefits, overhead costs, or training expenses to manage. This eliminates hidden costs that often inflate the total expenditure of maintaining an in-house team.
- Flexible Scaling: Agency services can be adjusted based on your business needs, allowing for better budget control and predictability. This flexibility ensures that you are only paying for the services you need when you need them.
- ROI Focus: Lower operational costs mean that more budget can be allocated to actual marketing spend and campaign execution, directly impacting your bottom line and enhancing return on investment.
The Strategic Value of Agency Partnerships
Many of our primary contacts prioritize support and expertise over costs. However, the combination of stakeholders’ budgets and the broader financial landscape compels them to keep expenses top of mind. So, beyond the tangible cost savings, there are some benefits that need to be addressed because they play a part in the economics.
Partnership Benefits
- Proactive Problem Solving: Agencies can bring solutions before problems escalate. This foresight can (and does) save you significant costs associated with emergency fixes and downtime.
- Resource Access: Agencies provide access to enterprise-level tools, technologies, and subscriptions. This means you save on the substantial costs of purchasing and maintaining these resources yourself.
- Risk Management: We keep copious amounts of notes and data to make sure our employees are aware of the history and changes that have been made for each client. Can you be sure that an employee who is leaving is going to be willing to provide the knowledge transfer necessary to keep things running smoothly?
- Growth Support: Agencies can scale services up or down based on your needs without the complexity of hiring or downsizing staff. This flexibility allows for better budget control and ensures you’re only paying for what you need, leading to optimal allocation of resources and improved ROI.
Strategic Advantages
- Innovation Pipeline: Exposure to cross-industry insights/strategies from the work we do with other clients enables us to share proven methods in real time.
- Accountability: By providing clear KPIs and regular reports, we ensure transparency and measurable results. This allows you to make data-driven decisions, such as optimizing campaigns for better performance and maximizing your marketing budget. We understand you have other options, and we want to keep you as a client—our accountability is essential for building a lasting partnership.
- Knowledge Transfer: Your team gains insights and expertise through ongoing collaboration. This upskilling reduces the need for external training programs, saving costs while enhancing your team’s capabilities for future projects.
- Speed to Market: Agencies have established processes and workflows for faster execution. Quicker implementation means you start reaping the benefits sooner, leading to accelerated revenue generation and improved cash flow.
Conclusion
Hiring an agency is a strategic move that offers significant financial advantages, even if you’re using a Spreadsheet to determine the value. By investing roughly 20% of the cost of an in-house team, you gain access to top-tier talent, advanced resources, and scalable services without the burdens of overhead expenses. Beyond this, an agency team’s attitude, accountability, and strategic forethought provide an upside (even if the costs were more equivalent).
On a personal level, this is why I wanted to start an agency. I enjoy bringing value to teams who truly appreciate it. Our challenge from day one has been focused on how we deliver services that you can’t live without in the most affordable way for a win-win partnership. Bottom line: after doing this for 25 years, I firmly hold the belief that the agency offering is one of the best deals you can get!
