The choice is not obvious because both options have both advantages and disadvantages. The main factors to take into account are obviously costs and internal skills, but these factors can weigh very differently depending on the type of business and its margins.
Let's see, therefore, what to pay attention to in order to choose in the best way.
The budget available for the investment
Let's start from the hypothesis that the company has the minimum skills that allow it to set up a simple advertising campaign in the channels it has decided to use, or that it can easily equip itself with them.
The first parameter to take into account when deciding whether to outsource is simply the amount of budget that will be invested in the campaign. For simplicity, we could divide it into three groups: low budget, medium budget or high budget campaigns.
Low budget: up to 500.00 Euro per month
Many small businesses invest a few hundred euros a month in online advertising campaigns – for example, using Google or Facebook platforms.
If they have the necessary skills, in this case it is correct to manage the operational part internally. With these amounts, in fact, an agency could hardly invest a lot of time in campaign optimizations, tests, or repay its cost thanks to the greater efficiency of advertising actions.
It may be beneficial, however, to conduct tests and experiments yourself, to better understand the tool and your audience.
Medium budget: from 500.00 to 1,500.00 Euro per month
In this case, turning to an agency can be convenient, provided that the agency is really very competent in the chosen platform (or platforms). In fact, on these figures, you can appreciate clear differences between the results of basic management and those of expert management in campaigns.
However, it is important to verify the actual competence of the agency: a few months will be enough to understand if it is bringing better results than those of internal management.
Budgets over 1,500.00 Euro per month
Starting from these amounts, the work of a good agency can bring tangible results. A serious agency will dedicate the time and attention necessary to grow the company's business, making the most of its experience and optimizing the resources that have been entrusted to it for investment.
The average margin on new customers
Every business has a different margin; this value weighs on how much it is possible to spend for the acquisition of a customer (since this cost further lowers the gross margin).
Marginality is even more important if we consider that marketing costs do not always translate immediately into sales and can therefore weigh for a long time before yielding the desired results.
Thus, having an agency also cover the cost of managing the campaigns is not always the best option.
Generally, on products with very high margins, the agency fee is a great investment. A campaign managed by experts can in fact bring extra sales that quickly repay their cost and translate into higher earnings for the agency.
The opposite is not always true. Products with a lower margin are those on which advertising investments weigh the most; an e-commerce that sells items for a few euros, in other words, could have margins that are really too low once the following are deducted from the selling price:
Production costs
Advertising costs, plus agency fees
Shipping costs.
Is it better to do everything in-house? In many cases, yes. But not always: sometimes it is better to consider these higher costs as an investment to acquire the customer, focusing not so much on the value of the immediate purchase but rather on its lifetime value.
Depending on the main objective of the company, therefore, one can arrive at very different conclusions.
