I’ve always found that the cost of an in-house agency is about 1/3 of the cost of using an outside agency. I operate exactly like an outside agency, having a core group of hands-on managers and creatives and using the top freelancers and sub-contractors just like an outside agency does.
Cost is Important – And Other Reasons Too
In an in-house agency, our time to produce and roll out content and campaigns is much shorter. We know the customers and their hot-buttons, subject matter, the benefits of our products and services, have the internal and customer contacts, can get teams together faster, get approvals quicker, etc.
We don’t have to constantly get an agency(s) up to speed and arrange formal approval sessions. Often, we just quickly, and many times informally, meet the division president or principle that needs the content for a quick one-on-one, and approval is done. No outside agency has that kind of access or speed.
I built an in-house TV & Multimedia Studio at Motorola (Business & Government Division) and the cost to run that became 10% of what it costs to go outside. In fact, we spent $5 million to build the studio and equip it and paid it off with savings in less than 2 years. It would be shorter now because of the lower cost and higher quality of broadcast quality equipment and software. I’ve replaced a post-production system with less than $1,000 in software on my laptop.
See the Quick Case Study below for an integrated in-house agency example.
No Such Thing as a Free Lunch
As a CEO or marketing executive, you may like those lunches and perks that the outside agencies provide; but, you’re the one paying for them with your own budget.
Bottom line, in-house agency cost per customer acquisition is much smaller than using outside agencies. Our cycle time is shorter. And our brand awareness and equity expands much faster.
I understand that not everyone can afford a full-blown agency or a TV studio for his or her business. However, hiring 2-3 key hands-on marketing and PR folks, with agency experience – and that also produce content for you in-house – will help you get the benefits for about 1/3 the cost of using a strictly external agency.
In-house works especially well when you use an integrated marketing strategy that includes brand journalism, social media, and measurement systems.
Brand journalism is one of the best methods for getting believable content to stakeholders, prospects, and customers. Producing that content from the inside makes more sense. There are so many moving parts and interactions, it’s hard to get a great story from multiple sources using an external agency.
When you concept, create, distribute, and measure in-house, your results are more believable. I’m not saying every external agency is like this, but they have a financial interest in getting you to buy more media. They make more money. I’ve seen campaign measurement results from outside agencies that were spun to recommend a larger media buy. The goal of an in-house agency is to CUT cost. The goal of an outside agency is to MAKE MORE MONEY for the outside agency.
Quick Case Study
As an example: When I took over DiVosta Homes and then eventually Pulte Homes and Del Webb in Florida, we had 80 actively selling communities in the state. We needed to sell over 4,000 homes a year for over a billion dollars in sales.
The annual marketing and PR budget for Florida, broken up in 7 divisions around the state, was over $20 million. There were a dozen external agencies involved with the local divisions. I moved all the marketing and PR in-house and had 7 people total: graphic designers, writers (including me), traffic manager, and media buyer (me) to produce and place content.
We did web, email marketing, newspaper, magazine, radio, TV, outdoor, pitched stories to the press, events, etc., all in-house with some outside freelancers. We produced hundreds of ads and stories every week… placed thousands every month.
The first year we cut $9.8 million from the marketing and PR budget, almost half. We went from $3,000-$7,000 in marketing expense per home sale to less than $1,200 per home sale. Our cycle time was much shorter to concept, produce, approve, and place. All done with 7 great in-house people – and sales continued without skipping a beat.
In fact, when I took over they had 70,000 qualified contacts in their prospect system. After the first year, we had over 300,000. That’s results.
Think about it… those 7 people replaced a dozen expensive agencies.
In today’s world, it’s all about content marketing. Getting out your honest and clear message by creating once, and publishing everywhere – and doing it for the lowest cost is the formula for success.
Contact me if you want to learn more: MikeBrown@BrownLtd.com