Agencies vs. In-House


Agencies vs. In-House Teams

I get asked the question all the time from–our small businesses to our enterprise level companies–why do agencies exist when you can just hire an employee?

Getting someone for like $30,000 a year can totally overcome the cost of an agency if your agencies providing a lot of services for you or a lot of value, in that case. So I kind of wanted a flash down, like, flesh out, drill down on why agencies even exist or how do they even exist. So in these 3 points that we have: we’re gonna talk about the real costs of an employee, we’re gonna talk about the team of experts that you actually get from an agency, and then we’re gonna talk about the manager’s worst nightmares, okay? So the real cost of an employee, when you boil down the wages, the salaries of an employee, you get usually like an hourly cost or a salary, right?

So by using these salaries we can sort of see what a yearly cost of an employee is. So say you’re hiring a young millennial fresh out of college to run your social media for you, you’re an enterprise little company, so you’re thinking maybe I can just hire someone pay them, you know, $18 an hour or something and get them to just post on social media for me and be sort of the social media expert because they’re young millennial and they know how to post on social media, right? So 18 bucks an hour, that’s going to boil down to, you know, like 30-40 thousand dollars a year.

So, on average an employee generally costs about 75 percent more than their actual wage, just based on providing job supplies, based on providing a culture for them, doing you know those food items, any benefits that are just bonus that you’re providing for these employees, these kids right? So you end up actually paying almost double on that employee, so you have to consider if you’re hiring a social media person you’re gonna spend $40,000 a year you should consider that you’re probably going to actually be spending like $75,000 a year and sure you’ll have an employee so it’s manpower, right, you’ll be able to take this employee and do with them what you please, you know, if they need to run some faxes for you or something you can have them do that, right, it’s manpower. But really they do have a specific job that they need to fill and have a certain bandwidth that they need to cover that job for, so if you can’t cover the social media job, this social media position, and they can’t do it well, then all the sudden you’re spending money on someone who has half bandwidth on one thing, half bandwidth on another, you’re actually only spending $12,000 on social media year and then you end up spending the rest on faxing and paying for job supplies, right. Look at these Expo markers, they’ll cost something right? So that’s the real cost and why the cost of agencies actually isn’t that bad.

You’re actually getting a very focused cost because they’re only providing one service our task for you generally. So the other thing is too you’re getting a team of experts. So having one employee doing social media is great. But usually, in an agency, tasks like that are tackled with multiple people. I know for us, for example, we actually use like almost 5 people for some of our tasks. So if we’re running like a free trial for Facebook ad management, you know, we literally use four people that are experts in specific fields that are immersed in it all day and every day to provide the service for you. So using just social media as like, just one person for social media is kind of like jipping yourself, because that person that has to be skilled in marketing campaign management and creation they have to be skilled in graphic design, videography, they have to be skilled in lead generation tactics through social media which means they’re probably creating some sort of lead magnet, they need to be good with your brand, they need to know your brand voice, they know how you’re networking in general.

So you know, that’s 8 different items under one umbrella and you’re asking one person to do it. Sure it’s their dedicated job, but you also get one person who’s trying to accomplish a task that 5 people literally could be experts on. You can have someone who’s an expert on a marketing campaign, an expert on brand and voice transferring over to you know graphics and lead gen, and other items, as well as you know having an expert on graphic design. How likely is it that one employee that you hire has the expert level skills for all those subsets? It’s almost impossible. You aren’t paying, you’re not paying for someone who’s $18 an hour at that point, you’re paying for someone who’s 45 or 60 dollars an hour just because they have the expertise for all those skills sets.

So secondly, you’re getting this specialized task from an agency. Usually, an agency only provides, you know–1, to 8 or 12 actual services. And they specialize on those services, they literally perform that service for many people, so they see all the time what works, what doesn’t work, and usually what ends up happening is that these tasks–because they’re so specialized–is you get better results right out the gate, you get more consistent results. This social media person, the one employee that you’ll be hiring has never worked on your social media before or if they have worked on your social media maybe work on some other social media or maybe they work for an agency which they had help for to do all their social work.

This specialized task that you’re getting ends up being very, very consistent and a guest optimize it to a higher performance level in a shorter amount of time through an agency. So that’s really important to remember. The other thing is too, if you think you’re just doing things your way by having an employee like, ‘we’re doing things our way, it’s an internal member, it’s our person, they’re doing things our way,’ then you obviously have never been asked by an agency what your brand voice is or how you would like things to be handled. So it’s an agency’s job to be sure that they’re handling things the way that you would like it to be handled. You know, everyone’s trying to be friendly you should be getting a strategic partner in a sense when you’re working with an agency, so the strategic partner needs to know how to do things your way. It should be no different than having an employee, you know, it’s a friend you’re working with not a foe, you’re not working with a ‘third party’. Sure it’s another organization that’s working with you, but it really is someone who should be doing things your way as well. Don’t think you’re getting jipped out of it because you’re not hiring an employee.

That brings us to our third and final point: manager’s worst nightmare. 9 times out of 10 if you ask a manager what their least favorite part of their job is, they’ll probably say they hate firing people and usually you have to fire people or get rid of people when they underperform. So you’ve committed to an employee for 1, 2, 3–5, 10, 15 years and they consistently underperform, your job as a manager is usually to help coach them up into a position where they’re actually providing value and a large return on investment for your company. So when you consistently see this underperformance and you have to actually make the move to fire them or part ways with that employee it gets really difficult, especially when you’ve built a relationship with that person, especially when you’ve invested time with that person, especially when that person has got to know your business. It becomes very difficult.

On the other hand, no one has ever felt bad about firing an agency. Usually, underperformance goes like this: you guys fired yourselves. So an agency gets taken out of the picture real quick when they underperformed, the terms of their contract are literally how long you have to work with these guys, so it could be a month it could be a year. So putting together this underperformance and get it like, putting it together with an agency, almost makes it a no-risk item to hire an agency or a far lower risk than hiring an employee.

When you should consider using an employee or an agency is when you are trying to hire or provide a service for yourself that is extraneous to what your company does or what it’s good at. If you’re car dealership and you’re really good at selling vehicles, you probably shouldn’t hire a social media manager, just because it’s not what you are specifically good at. If you need that person to do other things, you’re gonna find yourself stretching them and stretching yourselves to fit into each other’s work sets. Whereas an agency, you can specifically hire for a specific task, so if you need a CRM, you go to a third party because you wouldn’t develop a CRM for yourself. So that’s a very specific task for a very specific third-party application.

So that’s when agencies become really good: when you don’t see much overlap on your services that you’re really good at in the item that you want to provide. So if you want to provide social media and your car dealership you’re not providing that service, right, it’s separate so you should probably hire an agency. So just like the 2 political parties, they’re both trying to do what’s good for the nation, right, the US, but there is the employee way and there’s the agency way and one way is right one way is wrong, but you have to discern and figure out what’s right for you.

9 times out of 10 I like choosing an agency for specific task because, quite frankly, we’re not good at doing a lot of things–we’re really good at doing one or 10 things, but we’re not really good at doing–like I couldn’t sell you a car because I just don’t know enough about vehicles., it just doesn’t make sense for me to sell cars, but maybe I could tell you to go to my friends down the street and they can sell you a car. But what I am really good at is making marketing and sales decisions. So that’s the time to use an agency.

With that being said, thanks.