The in-house marketing vs. agency debate rages on, especially as more private equity firms turn to digital marketing to accelerate growth. Most firms recognize the role digital marketing plays in achieving value as quickly and efficiently as possible—in driving customer acquisition, revenue, and profits. As to the most effective and scalable digital marketing strategy?
While there are advantages to both in-house marketing teams and third-party agencies for private-equity-backed businesses, we’d like to dig into the agency side a bit more (okay, okay, we’re biased). So here are three important reasons why you should consider bringing an outside agency onboard rather than investing more in full-time employees.
1. Agencies Excel in Growth-Oriented Environments
Digital marketers do a lot of wonderful things in the world. Really! They build catchy campaigns, educate people, and shine the light on brands of all kinds. A lot of our most creative ideas come from the world of marketing. Yet, in the end, their success is almost always evaluated against hard metrics, most of which are mapped to objectives like growth, expansion, and better return on investment (ROI).
This gives agencies several advantages in the context of private equity:
They Adapt to Nuanced Markets
When you hire an agency, you’re also hiring top digital marketing experts who (among other things) can navigate complex and nuanced marketing strategies, including the diverse media mixes so common to private equity. For instance, agencies are ideal partners for direct-to-consumer (DTC) models that, as Stephen Diorio writes in Forbes, “directly engage customers using a call center, mobile, and digital channels to develop deeper customer relationships, insight into their behavior, and unmet needs.”
They’re Cutting Edge (Because They Have to Be)
The folks running your more reputable agencies also tend to be hyper-aware of the latest digital marketing trends, technology, and best practices. They have to be this aware to continue delivering results for their own client portfolios. Some will even employ specialized talent for clients in specific fields and industries (home services, for example, or dental support organizations).
They Live and Die By the Numbers
Finally, a good agency will not only have extensive, first-hand experience in scaling growth but understand that they’re being evaluated by their ability to perform highly and deliver hard outcomes. They not only understand the importance of good data, but they know where it lives, what data is important, and how to extract insights. As a result, they’ll proactively create and share reporting dashboards, alert you to issues or new opportunities, and provide timely updates.
2. Agencies Can Be More Cost-Effective
It’s easy to balloon your marketing spend. You’ve got your hands full with campaigns and tech, let alone in-house marketing headcount. Private-equity-backed businesses with their sights set on scalable growth must consider headcount when structuring the marketing program. How much are we keeping in house versus how much do we give to contractors? Could we tinker with that mix a bit—or turn it over completely to make our marketing dollars go further?
Which in-house positions are essential?
These are the questions that need to be asked in the private equity world. The answers aren’t always straightforward, but a digital marketing agency can generally provide more flexibility than traditional staffing. On top of that flexibility, digital marketing agencies give you access to a more diverse pool of experience and marketing specialties without the overhead expense.
For example, imagine the overhead involved with keeping in house all the specialized staff needed for paid media campaigns. You’d likely need a copywriter, graphic designer, media buyer, and more. For content marketing, you’d probably need to hire writers, strategists, editors, and search engine optimization (SEO) specialists (at the very least). An agency can supply any or all of these specialists with greater ease and at a lower overall cost.
3. Agencies Ramp Up Faster than In-House Teams
Ah yes, the need for speed. Take it from someone who works with a lot of private equity people: be prepared to pick up the phone and hear now now now. And that’s a good thing! It doesn’t bother me at all. Why? Because my agency is nimble. We have a team that can respond quickly.
You might say we’re ready ready ready.
Things Marketing Agencies Won’t Make You Wait For
- Learning new technologies, systems, software, and so on (they’re already trained)
- Training up on new marketing channels, strategies, and tactics (they’re already on top of it)
- Communicating about the things that matter (they value performance and respect time)
- Familiarizing with a new industry, market, or audience (they have specialists for that)
A new in-house team, on the other hand, might have to work out more kinks along the way. They might have to spend more time developing and formalizing new strategies and processes. They might not have someone on staff ready to build a multi-location paid search campaign. They might not have a specialist with experience in marketing for private-equity-backed businesses, either. This can make ramp-up time a bit slower.
Agencies are more apt to hit the ground running.
How to Evaluate a Digital Marketing Agency for Private Equity
For starters, you’re going to want to read How to Select Your First Digital Marketing Agency. You’ll find a lot of tips and lead indicators in that blog post, but here are a few highlights especially pertinent to the private equity sector. You’ll want to look for digital marketing agencies with:
- Comprehensive services for the core marketing competencies (SEO, websites, paid advertising, and so on)
- Experience working with private equity firms and in-house teams
- A data-driven approach to every strategy, campaign, and concept
- A culture of prompt communication, respect, and transparency
- Demonstrable experience (case studies, testimonials) scaling growth from a few locations to dozens
That last bit about case studies is an important one. It’s one of my favorite refrains (and one that my team is probably sick of): show me, don’t tell me. When evaluating a digital marketing firm, look for a rich portfolio of case studies that include firms similar to yours—and with similar needs. What were the specific strategies and tactics the agency deployed? What was the timeline? The cost? The qualitative and quantitative results?
Pay attention to the clarity and specificity of the answers you’re getting.
Digital Marketing Agencies Rock, But Do What’s Best For You
Sure, agencies can be a great way to augment—or even fully outsource—your digital marketing efforts. Between their growth-oriented mindset, cost-effectiveness, and speedy ramp-up times, digital marketing agencies offer a lot of agility that in-house teams often cannot.
However, agencies aren’t always the answer for private-equity-backed businesses. Some businesses can’t or won’t work much beyond their in-house team. It’s not unheard of for an in-house team to kick into the kind of gear that most private-equity-backed businesses operate in.
Rare, but not unheard of.
What’s more common is some kind of hybrid, with an agency stepping in to lend a hand, execute a certain specialty, or provide a supplementary staffer unavailable in house. What’s best will be what gets you to value most efficiently. If nothing else, a good agency will at least share some ideas on how to get there.