Guiding Principles
1st guiding principle.
If your company makes less than $75 million a year, building an internal agency will be too expensive to start, maintain, scale, and justify to most board members or investors.
2nd guiding principle:
If your company makes less than $3 million a year, you can’t really justify hiring an agency full time. You need a Marketing Director that can project manage individual agency projects to generate enough revenue to justify an agency of record relationship.
3rd guiding principle:
If your stakeholders aren’t prepared to spend 15-40% of expected gross revenue on marketing, go find another place to grow your career. We are happy to recommend a few. We care about your career, and austerity is not in your best interest.
Agency Cost Formula
Cost of agency recruiting process + Time spent + Agency fees + Ad and media spending commission + Marketing tools + Communication and project management = Agency Cost for Your Company
Variables that Will Help Ballpark This Cost
- Average Time Frame to Find an Agency – 3 months
- Average cost of an advertising agency that’s worth working with: $20,000+/month
- Average cost for a branding project: $50,000 - $300,000
- Average cost for creative campaign development: $50,000+
- Average cost for a website: $50,000+
- Average media commission: 8-15%
In-House Cost Formula
Cost of recruiting process + In-House costs (spaces and equipment) + Time spent + Full time salaries + Marketing tools + Training = In House Cost for Your Company
Variables that Will Help Ballpark This Cost
Average Salaries for Marketing Talent
- Marketing Manager - $81,078/yr
- Graphic Designer - $48,561/yr
- Web Designer - $57,470/yr
- Copywriter - $60,296/yr
- Digital Marketing Manager - $73,114/yr
- Social Media Manager - $55,199/yr
- Data Analyst - $67,377/yr
Average Time
- Average time to recruit one marketing teammate: 55 days
- Average Technology Costs
- Customer Relationship Management, paid search bidding algorithms, social listening tools: 10,000 + per month
The Rise of Consultancies
During your search, you’re going to read a lot about consultancies. There are two types of consultancies and they both have a place and purpose.
1: Accounting Firms Buying Ad Agencies: The big newsmakers are the financial consultancies that are layering on advertising services to their accounting services. Think Deloitte buying the digital ad agency Heat or Accenture buying the most critically acclaimed agency of the last decade, Droga5. Through vertical integration, access to the CEO, and the perception of data insight, these types of purchases will be a trend for the next half decade. Early results indicate that these relationships will create commoditized results and will provide a predictably average return on investment. Enough to keep you in business, but not thriving.
2: Individual Consultants / Boutiques: The advertising industry is full of executives with a lot of connections and knowledge, but they no longer want to do the dirty hard work. So they masquerade as consultants selling mostly stolen playbooks and connections from their previous agencies. These people are useful the first 18 months after they leave the advertising industry the better. After two years, their playbooks are dated, and their connections no longer answer their text.
Provocative retort to the first group: If your ad agency was just bought by an accounting firm, congratulations, you have two accounting firms.
Provocative retort to the second group: Copying other agency’s blogs and putting them into your newsletter will get boring soon. You know you want to come work agency side again.
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