Founders face the dilemma of deciding between hiring an agency vs. in-house marketing. Both have their merits, but one seems more cost-effective, especially for early-stage startups with considerable budget constraints.

This single decision will have far-reaching consequences on business continuity and success because it will determine the success of your ad campaigns and how you sell your MVP to the right audience. It will also determine how fast and well your brand grows.

In this article, learn about:

• What does hiring an in-house marketing team entail?
• What outsourcing marketing to an agency looks like?
• Agency vs in-house marketing: Factors to consider 
• When should you consider a startup marketing agency?
• Agency vs. in-house marketing: Which is right for your startup?
• Hiring a digital marketing agency for your startup

What does hiring an in-house marketing team entail?

Hiring a team is a good idea if you need to keep the skills in-house long-term. That means you need to hire a marketing strategist—this person should be experienced and assigned the leadership role. You’d also need a copywriter, graphics designer, and a social media manager. So, that’s a compact team of four. 

The Society for Human Resource Management (SHRM) puts the average cost of recruitment in the US at US$4,129. That cost includes:

• Job advertising.
• Screenings and background checks.
• Documentation and legal compliance.
• Onboarding and training.
• Employee referral programs.

Apart from these direct financial costs, you’d also have to factor in the average time to hire, which is now 44 days, according to a recent Josh Bersin report.

Benefits of hiring an in-house team

Despite the time and cost of hiring in-house, it has real benefits, and here are the most important ones for founders.

• Direct control over marketing activities: Since it's in-house, founders can have direct input and oversight. You can join in meetings and give directions based on data and industry trends.
• Better familiarity with business: An in-house team has a better understanding of a product, its features and benefits. That helps them craft the right messaging for their audience.
• Closer collaboration with other departments: An in-house marketing team has direct access to data and information from different departments, which helps them to improve strategy.

Downsides of hiring an in-house marketing team

It’s a trade-off; you get more control and oversight and better inter-team collaboration, but it comes at a cost.

• Time and resource-intensive recruitment: It takes about 44 days to hire a talent in-house, and this could be more, considering you’d need to fill four roles at a minimum. There are other resource-intensive aspects to it, such as background checks, interviews of multiple clients, and the onboarding process.
• High overhead costs: Aside from the cost of hiring, startups must pay a wage that is in line with industry requirements. Here is a breakdown of what that could cost based on figures from Robert Half's Marketing and Creative Salaries and Hiring Trends report for 2024.

Overhead costs for hiring an in-house marketing team:

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Other expenses include:

So, you’re looking at a monthly wage bill of around US$16,187 for a modest team of three. You also expect the team to wear multiple hats. Add to that an extra US$2,000 monthly average for training, tech stack, and hiring, and that’s a bill of US$16,187.

On the tech stack, you want to leverage free tools as much as possible, but they are often limited. You may need to cough up those extra costs for Canva, a keyword research tool, and a BI tool for data analytics. 

Limited expertise and scalability: You may need to scale if you’ve had initial success with ads and the in-house team lacks that specialist skill.

What outsourcing marketing to an agency looks like?

Partnering with a marketing agency does two things for you. First, if you’re starting from a blank slate, they provide the buffer and experience to get your marketing strategy off the ground. Then, there’s a second scenario where you have achieved some success and need to scale. 

For instance, if you have had success with initial paid ads, you then need to scale that, and it requires a different kind of experience—startup marketing agencies provide that.

Benefits of outsourcing to a startup marketing agency

There are also other benefits to outsourcing your marketing to a startup marketing agency, and here are some of the most important ones.

• Experience across various fields: Let’s consider the team at Kaya. It’s made up of marketing strategists, copywriters and designers, all with analytics expertise.
• Cost-effectiveness without overhead: You can look at cost-effectiveness from two main perspectives, which are:some text
  • Financial savings: If you consider the in-house team of 3 for a combined investment of US$204,935, whereas with Kaya’s basic plan, your expenditure will equal US$36,000 for a full year. You save US$168,935.
  • Time savings: Founders also often overlook the time factor. The team of 3 officially works for 120 hours every week, and the number drops to around 115 hours if you subtract breaks. Considering the tasks that need to be accomplished, it could take months before you start to see results. Kaya only needs 2 weeks to deliver results.
• Access to better tools: The estimated US$3,168 on tech stack is for the most basic plans available—and they do not offer full features. Kaya’s built-in AI workflows and analytics dashboard are industry-leading innovations that startups do not have.
• Scalability and flexibility: Startups that need to scale marketing often struggle with harmonizing data. Kaya’s proprietary AI solves that problem and eases decision-making.
• Established partnerships: Kaya is Y-combinator-backed, giving them a strong insight into the startup ecosystem. Agencies typically also have established partnerships with Meta, giving them an edge on how things work behind the scenes.

Downsides of outsourcing marketing to an agency

Although these are surely not deal-breakers, there are a few downsides to outsourcing that you need to be aware of and prepare for. Here are the most obvious ones.

• Less direct/instantaneous control over marketing strategies: With an external agency, implementing changes may require additional coordination as you’re not a shoulder tap away from the team. Speed to market is crucial for many startups. Startups that prioritize rapid iteration may find it challenging to work with traditional, less agile agencies.
• Potential for feeling like a lower priority: Some agencies may prioritize other clients with bigger marketing and ad budgets.
• Inadequate product knowledge: This could create a real problem when the agency does not have all the details of the features and benefits of your MVP, leading to poor messaging.

Despite the above, choosing an agency that can prioritize your needs and understand your product offers great benefits. Such an agency will also schedule periodic meetings where you can contribute your ideas.

Agency vs in-house marketing: Factors to consider 

Hiring a startup marketing agency vs. an in-house marketing team comes down to balancing affordability, time savings, ROI, and speed of delivery. Here are some factors to consider.

Tools and techniques

As marketing technology tools evolve, in-house teams may struggle to keep up. Startup marketing agencies rarely have such problems. Consider Kaya’s analytics dashboard and AI-driven solution, which offers a one-of-a-kind digital marketing solution and has been featured in HubSpot’s Podcast, Marketing Against the Grain.

Kieran Flanagan, the CMO of Zapier, spoke about it:

This is one of the examples that came up in that LinkedIn thread I really like. It’s a company called Kaya. They’re a startup marketing agency that has AI deeply integrated into how they work. This is what I think is gonna be the type of agencies we will see in the future.

(It’s) run by a small group of incredible marketers with really deep expertise who know how to train the models and agents to automate a bunch of customers' work.

Skillset

Again, we can trace this to cost. When you compare in-house marketing vs agency, the skillsets make a difference. A startup marketing agency has the core mandate of delivering marketing solutions and services—hence, they commit to hiring for the needed roles. It is full-stack in every sense of the word. 

If we consider the example of a team of 3, you’d require team members to wear many hats, while an agency could have a team of 10 to 15 specialists handling your project for a fraction of the cost of setting up and maintaining that small team. 

Cost

Kaya's proprietary AI tools offer smart recommendations, helping their team of experienced marketers deliver exceptional work 10 times faster. Here is how Kaya stacks up with the in-house marketing team and freelancers.

The cost difference between a lean, experienced team of 3: In-house marketing team vs. hiring Kaya vs. freelancers

Return on investment (ROI)

You’d also want to understand the efficiency of your marketing or ad investment, and an excellent way to do that is through a head-to-head comparison when getting started on ramping up your marketing initiatives with an in-house team vs a startup marketing agency like Kaya. Here is the scenario:

• Given both have the same ad spend of $1,000 and profit of $200,000;
• Delivery time for the in-house team is longer, estimated to be at least 2 months leading to first delivery, including hiring and onboarding (vs. Kaya, see results in 2 weeks)
• The monthly cost for the in-house team is higher, as calculated in the Cost section above, including a lean, experienced team and tech stack (vs. Kaya, up to 9x lower)

Marketing ROI for Kaya is at least 7x higher than running an in-house team, and that’s assuming the profit is the same.

Summarized: Benefits of hiring a digital marketing agency vs. in-house marketing

Here is a summary of the benefits of hiring a startup marketing agency as against an in-house marketing team.

When should you consider a startup marketing agency?

There are two key moments that should determine if you need to hire a marketing agency for your marketing needs.

• You have not done any paid advertising: If you’re starting from scratch, a startup marketing agency can hold your hands and get you going.
• You have done some paid advertising: If you have dipped into paid ads and achieved some results, you’d then specialized skills of an agency to scale.

There are also other signs to know if you need to hire a startup digital marketing agency. They include:

• When it makes financial sense, that is, cost-efficiency.
• When you need to save time.
• To access a more efficient marketing system.

Agency vs. in-house marketing: Which is right for your startup?

You may be tempted to go with one or the other. After all, your goal is to manage the budget, get results and build the ability to scale without falling off. You can get creative and combine the two—an in-house talent plus a startup marketing agency.

Ideally, you need someone who understands your culture and product and someone you can directly oversee. It then makes sense to hire a marketing talent as your internal eye and get an affordable marketing agency to provide the skills. Here is why this works for you.

• Having a lean internal team is costly and doesn’t give you all the skills you need. That leads to slow iteration.
• Tasking a single person with your marketing strategy is risky.
• Too many inexperienced talents could lead to costly mistakes and time-wasting.
• Tasking your internal team with strategy and execution could be too much work, which results in losing the big picture.

With the in-house marketing plus agency arrangement, you will:

• Have someone to bridge the gap and manage the relationship between your startup and the agency.
• Create the right conditions for knowledge transfer.
• Enable seamless communication to align strategy and execution, as well as marketing and sales.

Another option is to outsource totally to a startup marketing agency. Aside from the cost savings, there are other benefits that you must factor in, as follows:

• Access to better technology and tools required to execute a successful strategy.
• A marketing agency can act as a buffer to help you get a marketing program off the ground.
• It takes the burden of marketing off your shoulders, allowing you to commit time to running your startup.

Hiring a digital marketing agency for your startup

By now, you’re ready to hire a digital marketing agency, either to get you off the ground or augment your in-house marketing talent. There are certain things to look out for, as follows:

Cultural fit: With traditional agencies, you get slow on iteration and experimentation. They prefer so-called tried and tested methods. That's not ideal. You need fresh ideas, a data-driven system, and flexible processes that iterate quickly and can pivot when required.

Technical expertise: No two days are ever the same in the startup ecosystem. You need an agency that has a firm grip on the latest technology trends, your target audience, and your preferred platforms.

Experience working with low budget: Dealing with products or brands with low awareness requires a different approach, as the conventional methods are almost sure to fail. Seek out a startup marketing agency with this specific experience.

Here are extra tips to help you identify the right marketing agency for your startup and a free checklist to vet marketing agencies.

Case studies

Abbot

Faced with the dilemma of house marketing vs. agency, Abbot opted to outsource its marketing to Kaya. 

Kaya developed a strategy that focused on first understanding the client’s vision, their product, and what problem it was meant to solve. That enabled the team to create the right customer persona to target in marketing campaigns. By so doing, Kaya helped align the brand, its product, messaging, and the target audience, leading to marketing gains for Abbot.

Hear from Paul Nakata, the founder and CEO. 

Kaya has been helping us out with some marketing as well, and they have been AMAZING to work with. Highly recommend talking to them!

SnapStudio

When SnapStudio hit a wall with their marketing, they had the option of either building an in-house team or outsourcing to an agency. By opting for Kaya, they were able to transform their marketing outcome.

Kaya improved its ROI by relying on its proprietary AI tool and marketing analytics to extract its performance data from Meta and Google ads platforms. That way, they were able to see effective keywords and ad opportunities.

Zach Nieman, the Founder, commended the effort.

"Kaya’s network of venture-backed companies and top-notch leadership is highly responsive and proactive. They care about getting results for their clients and go above and beyond to make sure every base is covered from the very beginning."