The Pros and Cons of Using an Agency vs. an In-House Marketing Team

Al Leong
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July 29, 2021

The advantages and disadvantages of hiring an external marketing agency vs building an in-house team can be categorized into 3 areas:

1. Cost – Advantage to In-House Teams

  • Building an in-house blockchain marketing team (in-house agency) typically costs less as employees are compensated annually and have lower billable rates than agencies and contractors. However, if the team or business situation evolves where there requires the dissolution of the team, these marketing employees need to be either reassigned elsewhere or there is a termination cost involved (severance, vacation, and other termination costs) that can erode the cost advantage.
  • Clients pay for the profit margin of a blockchain marketing agency.
  • Agencies have larger economies of scale than in-house teams (media buying, software subscription costs (tech stack), project management that is spread over multiple clients. This erodes cost advantages of an in-house team.
  • Larger Tier1 or Tier2 blockchain firms with larger resources can afford to pay for the best talent. This erodes or negates this advantage for an in-house team.

2. Skills – Advantage to Agencies

Skills in blockchain design, strategy, copywriting, promotion, advertising, marketing processes, and efficiency are likely to be higher in agencies than in-house marketing teams. The reasons are manyfold:

  • Depth and breadth of experience in blockchain by agencies because of its client experience, give agency talent much more experience. Agency talent leverage this experience in strategy and execution to the benefit of other clients. The synergy between agency staff and clients accelerates learning, innovation and marketing through leadership more than an isolated in-house team. Creative talent, especially highly skilled want to work for an agency more than a typical blockchain startup for these reasons: range of experience, marketing project variety, agency reputation and esteem vs singular client reputation/esteem, and that the creative talent is the core business of an agency whereas in a blockchain startup or company, marketing is often viewed as an ‘evil-necessity’ or secondary function to its core technology (engineering) and can demoralize or demotivate creative staff and contractors. The best talent migrate to leading blockchain and creative agencies. Talent with strong agency experience on their resumes get better pay and opportunities. Agency talent are motivated by building a diverse blockchain portfolio on their resume to get more work and better work, and thus more income.
  • InHouse staff probably have less industry experience than many blockchain agencies (not all).
  • Agencies may have shorter turnaround times than in-house teams because they can assign larger staff working in parallel (like community management teams) and teams during crunch periods (e.g., Roadshows, Token Sales, STOs, IDOs) that require high temporary throughput during a shorter time period.
  • In-house blockchain marketing skills tend to be broad and generalist rather than specialist or specific. E.g., agencies may have expertise in NFT growth hacking, yield farming and staking positioning, P2P wealth management blockchain platform marketing, cross-platform composability and cross-chain platform marketing, DeFi Wallets, blockchain investor sentiment market research for an agency).
  • Agencies may employ staff and contractors including adjunct and distinguished professors in marketing from leading global universities, as well as retired and current CEOs that have vast and deep strategic marketing experience, available on-call.

3. Dedicated Knowledge, Confidentiality – Advantage to In-House Teams

  • In-house teams understand the firm’s blockchain products, technology features, services, and technology better because of a singular focus. Agency staff must learn all their clients’ technologies and marketing strategies to a degree probably less than their client, but this is not true in many cases of dedicated agencies (Spark44, a dedicated agency founded by LandRover and Saatchi and Saatchi, as an example).
  • There is less risk of confidentiality breaches/risk exposure to in-house teams (NDAs not required for in-house teams). However, clients who lose or terminate employees can break employee NDAs and confidentiality to their next employer. Disgruntled employees threaten this confidentiality and dedicated knowledge, which erodes the sense of control and confidentiality advantage.

4. Flexibility – Advantage to Agencies

  • For the higher cost, clients get the flexibility of termination and quickly eliminate or reduce marketing expenses without longer-term liabilities (employee termination). If BTC prices go down, and the market goes into bearish territory, clients have the flexibility to quickly reduce costs.
  • Agencies with more extensive staff can provide added marketing capacity to clients experiencing rapid growth, especially in blockchain bull run-ups. There is no need to staff up, which can take 2-8 weeks for recruitment, onboarding, training, and team-building for in-house teams.

5. Control – Advantage to In-House Teams

  • Clients with in-house team have a greater sense of control over their work/project deliverables. This is in part due to listening to and heeding the advice of an external agency and its counterparts. In-house teams are viewed as ‘on the same team,’ but not always.
  • However, agencies with professional best-practices procedures and controls erode this advantage for in-house teams.

In the end, it is important to assess your situation given your circumstances to determine if it is more advantageous for you to hire an external agency versus building an in-house team given these factors, at any given time. These advantages may appear or disappear given your specific context. These characteristics are general observations and provide a guideline only and do not necessarily hold in every circumstance.

ABOUT AUTHOR

Al Leong

Chief Marketing Officer, Advisor, Board Director

Award-winning CMO, Board Advisor, Board Director, CEO, and executive with 31 years of experience with Fortune 500 brands, blockchain firms, and SMEs. Former Board Director of the American Marketing Association (both BC and Toronto Chapters), Metro Vancouver CrimeStoppers. Board Director for BC Bostal Association, the AI 2030 think tank. Former "CI" for the FBI, SEC and Ontario Provincial Police.

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