But what category does your business fall into? Should you outsource digital marketing? Or keep things at home? This question can be challenging to answer.
Usually, we like to sit down with potential clients and discuss their business ins and outs to answer this question. If outsourcing digital marketing makes sense, we’ll let them know. If not, we will explain why and try to point them in a more efficient direction.
After all, no one needs to hire an agency if it’s not right for your business.
That kind of assessment is a little tricky to do on a blog, so we’ve put together the next best thing: a quick quiz you can use to determine if you should outsource your digital marketing. This test isn’t a perfect predictor, but it’s a good and simple place to get a feel for what your business needs.
If you’re reading this article, you’re outsourcing your digital marketing and unhappy with your results, or you’re in-house wondering if outsourcing might be the best solution.
How much do you want to improve your online marketing?
Whether you outsource digital marketing or manage it yourself, marketing is an investment, and not just in terms of advertising costs.
If you don’t want to find the best ways to market your business, your marketing will never reach its full potential. You can do it yourself or by hiring an agency, but it’s an investment you must make if you want to succeed.
If you can afford to spend only a few hundred dollars a month testing and refining your marketing, outsourcing probably won’t be the right move. At this price point, any agency you hire will either not put much effort into your account or will not have much experience to use.
What is your average gross margin per new customer?
Even if you are willing to spend heavily on improving your online marketing, you may not have the wiggle room you think. That’s why it’s essential to look at your average gross profit per new customer.
Whether it’s a direct investment in testing new campaigns or paying third-party professionals, improving your marketing takes money. This money is often not immediately translated into sales. Hiring an agency may not be the right decision if you’re not generating enough revenue to handle the extra cost of outsourcing your marketing.
Low profit per client
Let’s say you sell cell phone accessories to show you how this works. The average cost of your order is $28, and it costs $10 to complete the order, giving you about $18 in net profit per sale. Considering your current sell price is $12, you get $8 per trade.
If you are willing to invest, a good agency can do a lot for you, but it will take time to see results. You only get $6,000 a month, so outsourcing your marketing will eat up 40% of your current profits.
High profit per client
On the contrary, let’s say your business is a commercial HVAC installation instead. You charge an average of $2,700 per job and your gross margin is $1,250. The selling price is about $750, which gives you a $600 net profit per install.
These are highly simplified scenarios, but they highlight how profit per customer can affect your decision to outsource or manage business internally. Total sales and net monthly income were identical for both companies, but since gross profit per customer was much higher for the HVAC business, hiring an agency was a much more affordable option.
How much of your business is related to new customers versus existing ones?
The higher your turnover, the better your marketing should be.
For example, suppose you produce industrial-grade diamonds. In that case, only a few companies are willing to buy what you sell (and you probably already have established relationships with all of them). Additional marketing won’t do good at this stage, so you might not benefit much from hiring an agency.
How well do you know the nuances of online advertising platforms?
I mentioned that if marketing is essential to your business, then agency experience can be helpful. That is if you don’t already have that experience.
If you’re not proficient or knowledgeable about a particular platform, a good agency can make a huge difference. To make things better, outsourcing your digital marketing can be a great way to learn more about different platforms.
How many online advertising experts do you have?
A part of developing expertise is assembling a team of experts. Internet marketing is such a large field that it is complicated for one person to master all aspects of digital advertising.
You will likely need a team of internet marketers to succeed in today’s competitive internet marketing environment.
The presence of own specialists provides clear advantages. An agency will do its best to get to know your industry, vision, and priorities, but it can be hard to beat the knowledge that comes from within.
First, most SMBs don’t need an in-house designer, in-house paid search expert, dedicated social media manager, paid social media marketer, web developer, copywriter, email automation, or specialist. They need it all, but they can’t afford to hire someone for every one of those roles.
What is the conversion rate on your site?