In-house or outsourced marketing: what is better for a small business?

Marketing budgets were among the first casualties of the recession and as many firms struggled to rein in spending, marketing activities began to be seen by many business owners as an unnecessary luxury.

In reality, of course, efficient marketing is at the heart of any successful business. It should remain a priority, regardless of the economic climate. But in these difficult times firms must find cost effective methods of ensuring that their message is heard.

Many firms choose to outsource their marketing activities, particularly if they cannot afford to take on a dedicated member of staff. Enlisting the services of a marketing agency is often seen as a cheaper alternative to developing an in-house department.

But an increasing number of small businesses are becoming savvy to the fact that it is often possible to run a successful marketing campaign on a ‘DIY’ basis. With some inventive thinking and even with limited resources, many businesses can produce enviable results – but in-house marketing is not for everyone.

Who has the necessary expertise?

Your level of marketing expertise is one of the primary considerations when determining whether or not to bring your marketing activities in-house. Many business people like to think they know a thing or two about marketing, but be realistic. Unless someone in your business has a grasp of the basic tenets of marketing, you are unlikely to be able to make the most of your efforts.

Experience and understanding of the sector in which your business operates is crucial. Marketing tactics can vary significantly from industry to industry, and it is important that you entrust your budget, however small, to someone with relevant knowledge.

Depending on the nature of your business, you may find it difficult to secure the services of a marketing agency with the right level of knowledge. If yours is a very niche industry, or one that relies heavily on personal relationships between client and supplier, you may find that in-house marketing is the best option.

Think about scope and offset the cost

You must be realistic about the scope of your activities. Many SMEs have a very limited amount of cash to spend on marketing, and it is vital that this money is spent in the right places. Marketing agencies exist to make a profit and, if you enlist their services, part of your budget will be spent on paying their wages. This can result in the scope of your campaigns being reduced. Of course, if they do their job well this cost will be offset by increased turnover.

But you should also remember that, by paying a third party to carry out this work, you are freeing up time to spend on making sure that the leads generated by the marketing activity are successfully converted to sales. Are you better off at the business end of things? If so, contracting an agency may be your best bet.

It is also worth noting that professional services of this sort are an allowable expense for tax purposes, and can therefore be used to reduce your taxable profits. If you are unable to offset the cost of an agency, however, your only option is to do it yourself.

Should you hire in marketing staff?

At some point in its existence, a company will choose to begin building its own marketing department. Doing so has the advantage of allowing the business owner to get on with running the business, while ensuring that marketing – one of the most important elements of any successful venture – is part of a ‘joined-up’ organisation, with departments working closely together.

While hiring marketing staff is often seen as an ideal solution, it should be remembered that the costs are very high. While it is perfectly possible for the headline wage you pay a member of staff to be less than the fee commanded by a good marketing agency, the miscellaneous costs associated with taking on employees can make it a significantly more expensive proposition. You must factor in PAYE and National Insurance Contributions, as well as employee benefits. Furthermore, recent surveys have suggested that the cost of the recruitment process can run to several thousand pounds per employee.

Of course, if you simply cannot afford to pay for the services of a marketing agency then you must take matters into your own hands. However, if you have sufficient cash to contract a reputable firm but are unsure whether outsourcing is right for your business, you should keep a few fundamental principles in mind.

Primarily, are you able to find an agency with suitable knowledge and expertise? Paying a little less for a firm that will do a poorer job is likely to be a false economy in the long run.

Finally, are you confident that the cost of a marketing agency can be offset? Are their activities likely to pay for themselves – or can you utilise the time you are saving to increase your profits? If the answer to all of these questions is ‘yes’, you should seriously consider outsourcing.

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