CMOs across the country are facing a similar challenge: Their budgets are being cut, and they’re being asked to do more with less.
An impossible ask? Not necessarily.
In the past few years, many of Echo-Factory’s clients have faced this reality and asked us to help them be more efficient while still driving growth. Often, this means we fill the role of a traditional outside marketing agency and act as an extension to their in-house team.
After a bit of a learning curve, we’ve found this to be a very successful model. We expect it’s a trend that will continue, partly because it saves costs, and partly because it delivers results.
Let’s look at the real challenges our clients have faced in implementing an “insourced marketing department” model and the strategies we’ve found are most likely to deliver success.
THE REALITY OF SHRINKING BUDGETS AND RISING COSTS
A Gartner survey found that marketing budgets overall dipped from a high of 12.1% of total revenue in 2016 to just 6.4% in 2021. Things recovered somewhat in 2022, but are still significantly down from pre-pandemic highs.
At the same time, overall U.S. labor costs are up 9% in just 3 years, and marketing roles aren’t immune from this trend. Today, many standard marketing roles are commanding well over $100k per year in combined salary and benefits.
The predictable result is that in-house marketing departments don’t always have the resources they once did. The numbers vary by industry, but we’ve seen in-house teams at successful companies shrink from dozens to a handful and smaller teams shrink to just a CMO supported by one or two other team members.
THE LIMITATIONS OF THE TRADITIONAL AGENCY MODEL
In broad business terms, outsourcing is often seen as a solution for improving efficiency. A 2021 Deloitte survey found that, 84% of the time, increasing efficiency was a top motivator behind outsourcing, and 88% of the time, companies achieved that objective.
Outsourcing isn’t a new concept to the world of marketing. It’s essentially the foundation of the agency model.
But that traditional model can fail many CMOs without the support of a traditional in-house team.
In the more traditional model, an in-house marketing team would be responsible for the day-to-day marketing needs of a company, the core knowledge of that company’s business needs and how those needs could be supported with marketing.
They would communicate those needs to an outside agency, and the agency’s role would be limited to developing and executing campaigns.
Today, we often see that traditional model failing in two ways. First, internal teams don’t have the capacity to address the day-to-day marketing needs of their companies. Things like creating sales support materials, planning events, and developing product rollouts that used to be typical in-house tasks don’t have the support they need. A true insourced agency partner needs to be able to handle large-scale campaign work that’s the traditional domain of an outside agency, along with the work that was traditionally handled by internal marketing teams.
Second, we see this model failing because agencies aren’t often equipped to bridge the gap between a business’s needs and its marketing strategy, especially for businesses with complex products or sales processes.
BRINGING YOUR OUTSIDE MARKETING TEAM IN
The solution, at its core, is to make an outside marketing agency function more like an in-house team, so that it can better work alongside your in-house team, more like colleagues than outside service providers. CMOs who succeed at this challenge can expect lowered costs with improved results. But it is a challenge.
It starts with a change of perspective and a rethinking of the divide between internal and external marketing roles.
In the old way of doing things, internal teams created a strategy and brief, then handed that to the agency for execution. Today, successful smaller internal teams are getting their agency partners involved much earlier in the process, and letting them become partners in solving business challenges long before they’re turned into marketing solutions.
Of course, this isn’t a model that every—or even most—agencies are suited for. It requires an agency that is comfortable acting as much like a business consultant as a marketing agency.
This is true for both big-picture strategy and execution and traditionally “internal” marketing tasks.
In short, with this model, CMOs are asking their agency to act less like an outside agency and more like a hybrid that combines the roles of both an internal marketing team and an outside marketing agency.
SHIFTING FROM FIXED TO VARIABLE COSTS
There are certainly advantages to in-house marketing employees, and this model should never seek to replace them. But an insourced marketing agency model can help your entire department be more efficient by giving you the flexibility to put your resources where they’re most needed at any single time.
Let’s imagine you bring a graphic designer in-house. There are certainly going to be weeks or months of the year where you have 40 hours of graphic design work to fill their schedule every week.
But maybe there are other weeks where you might not have 40 hours worth of need for a graphic designer, and what you really need is a web developer, a marketing strategist, or a digital media manager.
With an agency partner, you always have that option. With the right agency partner, those resources can function as efficiently as a member of your in-house team and closely collaborate with those team members.
In essence, this model recognizes that many marketing departments might not have the budgets for a large marketing team and lets them intelligently allocate their resources to the right mix of in-house and insourced marketing resources without the traditional knowledge gap that can come with outside contractors.
4 KEYS TO SUCCEEDING WITH AN INSOURCED MARKETING TEAM
For the past several years, our agency has been embracing this model. We’ll be the first to admit that it’s not for every agency and it’s not for every company. But if you think it might be right for you, here are four keys to success we’ve learned when implementing this model.
Pick a Partner You Trust
NDAs and confidential information are nothing new to agency/client relationships, but this model takes that a bit further. To effectively act like an in-house marketing team, your agency partner will need the same type of information that your executive team is operating with. Make sure you’re partnering with an agency you trust and that your team knows they can be open with that partner.
Start Research and Strategy
We now start all our client relationships with a pretty involved research and strategy project. Out of that project, we make sure we understand our partner’s business model, goals, competitive landscape, sales process, and pain points.
This project serves two goals. First, it makes sure that our entire agency team really understands the client and creates a strategy document for any new members joining the team or account so they can quickly get up to speed. Second, by combining this level of in-depth insight with our marketing expertise, we’re able to develop a marketing strategy that can drive forward our client’s business goals.
Make Your Sales Team Part of the Process
It’s not unusual for the relationship between a company’s marketing and sales teams to be a bit, well, complicated.
But it’s important with this model to get sales involved. Sure, some members of your sales team might be a bit myopic on their own goals, but they also have critical insight into the reputation of your company, its products, and your marketing efforts in the field.
Building a strong bridge between your marketing agency and sales team will pay dividends over the long term.
Establish and Track the Right KPIs
It’s easy to get a little lost in the weeds and lose sight of the big picture. Key performance indicators (KPIs) are critical to any marketing campaign—and doubly so with this model.
We’ve found that it’s critical not only to track KPIs for traditional marketing goals (clicks, conversions, impressions, and brand metrics), but also for the business goals (sales, revenue, growth, and employee satisfaction) that are tied to those marketing goals.
This ensures both that you’re keeping track of the big picture and that your marketing team has the information they need to help make your marketing efforts and business goals a success.
DOING THE IMPOSSIBLE
Doing more with less might seem like an impossible task for many CMOs, but it doesn’t have to be. By finding the right agency partner and integrating them as part of an insourced marketing department that enhances your in-house team, you can have the best of both worlds: the expertise and flexibility of a large external marketing team with the knowledge, integration, and strategic capability you’d expect from a fully in-house team.
As it turns out, you really might be able to have it all.
Mike Schaffer is founder and CEO at Echo-Factory, a digital agency headquartered in Pasadena, California