Every business of every size needs to consider their marketing spend and how it’s best used. When it comes to digital marketing, the big question is, do you hire in? Or outsource to an agency?
In the case of small business and sole operators, it is often the business owner/operator who ends up handling marketing strategy and implementation, in an attempt to “save” money. But this can take away precious time and headspace from other vital functions that need to be considered by such a person, and even produce less than stellar results in digital strategies as a consequence.
For a larger company, there are many factors to consider including the type of marketing you are looking at doing, maybe there is more value in developing inhouse capability (depending if you have the requisite technologies!) and of course, your budget.
Let’s dive in and examine the pros and cons of this quandary for both Small Business and Big!
Small Business – Big Plans
Say you are a sole operator or run a small enterprise with less than 20 employees (this accounts for about 98% of all businesses in Australia). Or by turnover, your business is bringing in less that 200k each financial year. Did you know that more than half of Australian businesses have a turnover of less than $200,000? That’s a lot of hard working, creative Aussie small businesses.
For sure, you know that you need to market and/or advertise your business and so you’re probably doing most of this yourself when you have the time to do so. But is this really the most effective way to handle this crucial part of your business?
If you were to count out the time you spent planning and executing them – plus whatever you spend to actually market the business, you start to see the picture of how much of your business’s budget that you’re putting on marketing. For most business 6.5% to 10% of revenue is the sweet spot. For a company turning over $200,000 per year, this means around $1300 dollarydoos.
Chances are that you are already investing this much, and more, in marketing activities every week without even realizing or even having the benefits of being able to draw on the skills of digital experts and freeing up your time to focus on your core business!
For an investment as little as $500 per month you could outsource your digital marketing activities to an agency, providing a consistent service that delivers agreed objectives with confidence. Through this process you will be able to see and measure results, but also formalise your marketing efforts, integrate them into your overall business strategy, and set short, medium and long-term marketing goals. Talk about getting organized!
If you’re curious what your return on investment could be? Check out some of these handy free online calculators. In particular, WebStrategies’ Digital Marketing Budget Calculator can provide a digital marketing budget recommendation customised to your company and a breakdown of where to spend your digital marketing budget. How greats that!
Tips on sorting out the priorities
When it comes to discovering marketing priorities, it’s useful to look at every piece of closed business you had in the last year. If you make a list of every client/customer you have and what avenues brought them in, as well as the top two to three sources/influence points, it will indicate where to concentrate your efforts for the greatest return.
Characterising your customer journey and enhancing their experience will also inform your digital marketing strategy and this can be performed by inhouse teams or with the help of an experienced agency. It’s one of most fun parts of getting involved and figuring out exactly who your audience is and making your business the apple of their eye.
So, In House or Fun House?
The decision to insource or outsource will come down to whether you want a generalist or a specialist for the job and your budget constraints. Thinking bigger will make it a bit clearer to understand the full financial scope of the decision!
When you hire an in-house marketing employee, they will need to be a generalist, or a jack-of-all-trades. However, these employees can be hard to find and salaries can range from $55,000 for a digital marketing co-ordinator up to $90-130,000 for a digital marketing manager! That’s a lot of mula for a small to mid-size business.
On the flip side, working with an agency enables you to delegate tasks across an entire digital marketing team of experts. With vast experience in their given departments, these specialists will be up-to-date on everything from search engine algorithm changes to advancements in technology.
Let’s now take the case of a company generating annual revenue of $2 million. They might spend $200k on marketing – half of that could be print, events, billboards and other old-school methods. The other half would be spent on digital channels!
That hypothetical digital marketing budget of $100k could in fact cover a wide range of costs including staff/labour, website development, SEO/SEM, paid advertising, social media, software/tools, content creation, analytics/market research and training! Wowza!
While a company of this size may consider employing a full-time digital marketing specialist within their inhouse team, it can be more affordable and easier to outsource this function.
Typical salaries in 2020 for a range of inhouse digital marketing roles include: digital marketing executive ($65k-80k); SEM specialist ($60k-110k); social media manager ($75k-120k); digital performance manager/optimisation manager ($90k-110k); and chief digital officer ($130k-200k).
A typical retainer with a digital advertising and design agency from $4,000 per month would include a all the bells and whistles including SEO/SEM, PPC, paid and organics social media, content, backlinks, analytics and some marketing automation (typically email marketing). Over the course of a year, this is significantly less than an average inhouse salary of $80,000.
With agencies, you also avoid costs like recruiting fees, onboarding and training costs and expenses due to bad hires – who hasn’t felt the burn of a bad hire?
But maybe you need the best of both worlds. Research conducted with 500 large companies found that they use a variety of resources for help with their digital marketing efforts including a mix of inhouse staff, software, a digital marketing agency and a freelancer/consultant.
Clearly there are cases where a foot in both camps is the optimal move. In addition, one-third of businesses (32%) that didn’t use a digital marketing agency and/or a freelancer, said they planned to outsource their digital marketing efforts in the next year. Can’t beat them, join them!
At the end of the day, it’s all about seriously considering your strengths in house and looking to find the best answer to the stuff you’re not so confident at, or have the headspace for. Your team might have a killer product photographer that can produce great content for your social media, but you’re still going to need a keen eye for SEO if you’re going to hit the top of page 1 on Google. Reach out, talk to your local reputable agency and make your next year of business, your best yet.