At some point or the other, most businesses have considered hiring an external marketing agency to grow their company. A small business with one marketing person may need help with SEO or an organization with an in-house marketing team may require support for a specific project. Some companies may even prefer to outsource their entire marketing function. Regardless of the situation, hiring a creative agency can be a complex process and the biggest consideration for clients is usually the budget or cost.
It can be extremely difficult to give an accurate cost estimate to engage a marketing team since the fees charged by creative agencies can vary considerably between clients or even projects for the same client. It depends upon many variables such as:
1. Objectives and scope of the campaign
An ad campaign to increase sales leads by 20% in six months will cost more than a similar campaign which only needs to increase sales by 10%. This is only to be expected given that the former goal will require more aggressive tactics and man-hours. Similarly, a comprehensive marketing program will be more expensive than just SEO optimization.
2. Current in-house assets
If a company already has an in-house team and other assets such as a website, CRM software, business pages on social networks etc., the ad agency may only need to provide support for specific projects. On the other hand, a smaller business with no such assets will have to pay more since the agency has to build them from scratch.
3. Range of services provided
Some agencies may only handle PR work or direct marketing while others provide a larger range of services which can include market-research or production of advertisements. Depending on the needs of the client, agencies will also hire external providers such as photographers or musicians. In such cases, the fee structure will also incorporate a handling fee or markup on those services.
Traditionally, ad agencies worked on a commission basis such as a fee of 10% on all media expenditure. This model has fallen out of favor as marketing campaigns now include unconventional media such as blogs or social networks and ad-spend on television and newspapers has fallen considerably.
Instead, many agencies either charge a monthly fee for ongoing services such as managing social media or a project-based fee for one-time campaigns such as a website redesign. Nevertheless, cost estimates for a pitch may not adhere strictly to these models and some providers will tailor budget estimates according to the needs of the client.