Marketing Director vs. Marketing Agency
One question I often get is whether or not a company should hire a full-time marketing director instead of a marketing agency (like Lightyear Marketing Group). The easiest and most self-serving answer would be that, no, you don’t need a marketing director when you can outsource your marketing efforts to a full-service marketing agency. However, there really are some justifiable reasons why a company should hire a full-time director of marketing. So my real answer is a less self-serving and more-vague it depends. And then I’ll follow up that with an even more frustrating answer: you may need both.
What’s Your Overall Marketing Budget?
So what does it depend on? To determine whether your company needs to hire a director of marketing full-time, you need to answer one primary question and a couple secondary ones. The primary question is: what is the company’s overall marketing budget? Usually, the larger the marketing budget is, the more time-intensive it is to coordinate the marketing plan. You have to look at the expense of a marketing expert vs. the fees that a marketing agency would charge to execute the plan.
In my experience, if your company’s annual marketing budget is around $500 thousand dollars or more, then hiring a marketing director might be a viable option. The reason for this is that agencies fees typically run around 15% of a marketing budget. For a half-million dollar budget, this runs about $75,000, or $6,250 per month in fees. That amount is about the minimum salary necessary to hire a reasonably capable marketing person. Let’s call it $6,500 to $7,000 a month in salary, or $78k to $84k annually if you include payroll taxes and benefits.
If your marketing budget is, say, $250,000 per year, then a marketing agency would likely charge around $37,500 per year, or $3,125 per month. That amount is significantly less than a competent, well-rounded marketing director.
One Expert Vs. Multiple Experts
The issue of salary vs. agency fees is not the only issue a company should look at when considering whether or not to hire a marketing director. Another consideration is the level of expertise a solitary director of marketing has compared to a marketing agency that has multiple experts in various fields. A competent agency employs or partners with several people who specialize in various marketing channels.
For example, at Lightyear Marketing Group, I am personally Marketing Strategist, specializing coordinating marketing from a big picture perspective. I am also an expert at pay-per-click advertising. However, I am not personally a graphic designer or website coder, so I have specific people who are experts in that area who build the websites for my clients. I also have separate specialists in Search Engine Optimization, Social Media Marketing, Direct Mail, Radio, and so on. I am able to use the expertise of ALL these specialists for any given client, all for the same 15% agency fee.
On the other hand, a director of marketing will likely only specialize in a couple areas of marketing. They may need to bring in specialists in various other areas to effectively execute the marketing plan. This adds extra costs to the marketing budget above and beyond the marketing director’s salary.
A Marketing Director AND a Marketing Agency?
As a company’s marketing budget grows, it most likely becomes more elaborate and labor-intensive to oversee. Even with a highly competent marketing director, the chances are that person will not be able to perform all of the marketing functions necessary to execute the strategic plan. As a result, the marketing director will have to outsource some of the marketing or hire more people to fill in the gaps. Again, one has to look at the costs of outsourcing versus the costs of hiring another employee.
A typical situation is for a company to have a full-time director of marketing who oversees both marketing employees (if there are any) and coordinates with a marketing agency. This is my opinion, but rarely will a director of marketing be able to perform his function on his or her own better than if he/she has a marketing agency’s assistance. The more streamlined and efficient a marketing plan is carried out, the more profitable the marketing efforts will be. Therefore, it makes sense for a business to utilize all the assets available to it, including an advertising agency, in order to get the most value out of their marketing efforts.
The Agency Myth
One bit of resistance I’ve had to this idea is the mythical notion that an agency is going to cost a more money than “doing it on their own” or “going direct”. I discussed this issue last week in my article 11 Reasons to Hire and Advertising Agency Instead of Going Direct. Granted, I may be biased, but I have not experienced an in-house marketing team at a small or midsize company that was able to accomplish as much for the same amount of money as an advertising agency.
That’s not to say that some advertising agencies in the past haven’t taken advantage of their clients, providing less value for the dollar than advertised. A few bad apples have given advertising agencies a bad rap. Also, not all agencies are created equal. Some are simply better than others for certain types of advertising campaigns and industries. However, when it comes to the issue of “costing more”, modern agencies are expected to operate with very high levels of accountability. Gone are the days when advertising agencies could operate with impunity. Advertisers should be able to see in great detail (and often in near-real-time) what their marketing dollars are doing. This allows a business owner to have proof that his marketing dollars are being effectively invested. My clients are able to see the data and I know for a fact I am not unique in that respect.
To sum it up, I believe that if a company has a half-million dollar marketing budget or more, then hiring a marketing director makes sense. They may still want to outsource some functionality to a marketing agency, but at least they will have a competent person in-house to oversee all the various marketing activities. Also, the business owner will have a single person at their beck and call. I am sure there are other arguments both for and against hiring a director of marketing or an agency (or both). Please feel free to add your comments below.