Summary of Episode #53: "Should You Outsource to an Ads Agency? Pros & Cons"

Podcast: Marketing Matters with Ashley Brock
Host: Ashley Brock
Release Date: December 31, 2024

Introduction

In Episode #53 of the Marketing Matters with Ashley Brock podcast, Ashley delves into a pivotal decision many small business owners face: Should you outsource your advertising to an agency? Drawing from her extensive experience working at four different ad agencies over the past decade, Ashley provides a balanced exploration of the pros and cons of outsourcing ad management versus handling it in-house.

The Decision to Outsource Ad Management

Ashley begins by emphasizing the critical role advertising plays in making a business visible and profitable. She underscores that while being excellent at what you do is essential, without effective advertising, your business remains a "best kept secret" (00:00). This sets the stage for her analysis of whether entrusting this vital function to an external agency is the right move for your business.

Pros of Using an Ad Agency

1. Access to Expertise and Resources

   • Experienced Teams: Agencies come equipped with teams that have diverse experiences across various clients and industries. Ashley mentions, “When you work at an ad agency, you have an abundance of people with experience with different clients and different levels” (Transcript).
   • Data-Driven Decisions: With significant ad spend and multiple campaigns running simultaneously, agencies have access to vast amounts of data, enabling more informed and effective advertising strategies.

2. Comprehensive Service Offerings

   • Variety of Platforms: Agencies manage ads across multiple platforms such as Facebook, Google, YouTube, TikTok, and Instagram, providing a holistic approach to your advertising needs.
   • Continuous Testing and Optimization: The environment in agencies fosters constant testing and optimization, which can lead to better ad performance over time.

3. Scalability

   • Handling Large Accounts: For businesses with substantial ad budgets, agencies can efficiently manage and scale campaigns, ensuring that advertising efforts grow in alignment with business expansion.

Cons of Using an Ad Agency

1. High Costs

   • Expensive Fees: Ashley breaks down the typical costs, stating, “If you were to outsource just social media ads... that adds up to $6,000 a month” (Transcript). She explains that these fees can escalate quickly, reaching upwards of $72,000 per year.
   • Fee Structures: Agencies often charge either a flat retainer, a retainer plus a percentage of ad spend, or purely a percentage of spend. For example, a common model might be “$500 per month plus a 5% of spend” (Transcript), which can become prohibitively expensive as your ad budget grows.

2. Lack of Dedicated Attention

   • Multiple Clients: Agencies typically handle multiple clients simultaneously, which can lead to delays and less personalized attention. Ashley notes, “If you're outsourcing, you have to say, hey, we would like to make a change. And most agencies... respond within 24 hours” (Transcript).
   • Account Rotation: There’s a risk of being rotated to different account managers over time, disrupting consistency and rapport. “You might get rotated out with your account support even when you’re like in a place where you really enjoy working with that person” (Transcript).

3. Delayed Implementation

   • Response Time: Implementing changes swiftly can be challenging with an agency. Ashley illustrates, “If you want to set up a sale on a Tuesday, you might have to wait 1-2 business days” (Transcript), potentially costing you revenue due to delays.

4. Onboarding Challenges

   • Understanding Your Business: Agencies may require significant time to fully grasp your business’s unique messaging and goals. This can lead to inefficiencies and the need for constant oversight to ensure alignment.
   • Communication Barriers: Misunderstandings can arise, requiring business owners to spend valuable time micromanaging the agency’s efforts.

5. Risk of Errors

   • Mistakes in Ad Management: Ashley recounts a personal experience where she accidentally overspent on an ad campaign: “I made an error and clicked the wrong button... I accidentally spent too much money” (Transcript). Such mistakes highlight the risks involved when entrusting your ad spend to an external party.

6. Financial Impact

   • Negative ROI: Ashley presents a scenario illustrating how outsourcing can sometimes lead to a negative return on investment (ROI). For instance, spending $3,500 a month on ads and management fees with a 2:1 ROI results in a net loss: “You just lost $500. Oh, no, not good” (Transcript).

The Case for In-House Advertising

1. Cost Efficiency

   • Lower Long-Term Costs: By handling advertising internally, businesses can save on hefty agency fees. Ashley compares it to the difference between renting (outsourcing) and owning (in-house): “Renting is easier, but you have less control. When you own, you have more control” (Transcript).

2. Greater Control and Flexibility

   • Immediate Changes: In-house teams can implement changes instantly without waiting for an agency’s response time, providing greater agility in responding to market demands and opportunities.
   • Tailored Messaging: Having an internal team ensures that the messaging aligns perfectly with your business’s vision and values, reducing the need for extensive onboarding.

3. Building Internal Expertise

   • Skill Development: Investing in your team’s advertising skills not only builds equity in your business but also empowers your employees. Ashley states, “When you have advertising skills, you’re creating revenue” (Transcript).
   • Long-Term Benefits: Unlike ongoing agency fees, developing in-house capabilities is a one-time investment that continues to benefit the business indefinitely.

4. Enhanced Communication and Understanding

   • Alignment with Business Goals: Internal teams have a deeper understanding of the company’s objectives, culture, and customer base, leading to more effective advertising strategies.
   • Reduced Delays: Businesses can implement and adjust campaigns quickly without the bureaucratic delays often encountered with agencies.

Final Thoughts and Recommendations

Ashley advocates for building internal advertising capabilities as a more sustainable and cost-effective approach in the long run. She emphasizes the importance of having at least a basic understanding of advertising principles within your team to confidently manage outsourced efforts or to handle advertising in-house effectively. Key takeaways include:

• Invest in Team Skills: Developing internal expertise can lead to better control, lower costs, and higher ROI.
• Understand the Fundamentals: Whether you outsource or manage advertising internally, having a foundational knowledge is crucial for making informed decisions.
• Evaluate Your Business Needs: Consider your current scale, budget, and long-term goals when deciding between outsourcing and in-house management.

Ashley concludes by encouraging listeners to embrace the Power of Paid Ads to accelerate their business growth, highlighting her upcoming Power of Paid Ad Summit as a resource for mastering advertising skills.

Notable Quotes with Timestamps

• “You being the best kept secret helps no one, right?” (00:00)
• “Advertising is a skill and it takes time.” (Transcript)
• “If you have not gotten your ticket to the Power of Paid Ad Summit, click the link below” (Transcript)
• “Outsourcing your advertising cuts into your revenue.” (Transcript)
• “Imagine if you actually gave your goals room to breathe.” (Transcript)
• “Ignorance will cost you and competence will emboss you.” (Transcript)
• “You have to have some base level of understanding of how to grow a team and how to advertise.” (Transcript)
• “You can guarantee that your burger, when you put it in your mouth, is stinking good.” (Transcript)

Conclusion

Episode #53 of Marketing Matters with Ashley Brock provides a comprehensive analysis of the advantages and disadvantages of outsourcing advertising to an agency. While agencies offer access to expertise and resources, the high costs, potential delays, and lack of control present significant challenges. Ashley makes a compelling case for developing in-house advertising capabilities as a more sustainable and profitable strategy for small businesses aiming to grow and scale effectively. By investing in your team's skills and maintaining control over your advertising efforts, you can enhance your business's visibility and profitability without the ongoing financial burden of agency fees.

For those interested in further mastering paid advertising, Ashley promotes her upcoming Power of Paid Ad Summit, positioning it as an essential event for business owners committed to leveraging advertising for accelerated growth.

Links & Resources:

• Power of Paid Ad Summit: ashleybrock.com/summit