What's up? Sorry for the delay on this, wrote it on the plane on Sunday but traveling with a toddler is crazy so just getting to send it out with edits.

I'm writing this in my favorite place to write and think. No, not that one. I'm on a plane to California for a week of family vacation. I tweeted about how my thoughts on in-house vs agency have evolved over the years and it got some good interest and discussion going so I'm gonna try to give it some nuance here. As. always this is one of those it depends and needs nuance. I also always reserve the right to change my mind but here are my current thoughts.

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I'm just gonna do a bullet list with some thoughts, and lots of pros and cons of agency, in-house, and freelance. Since it does depend, I'll try to list some situations where each one makes sense.

A General Note

I think you should try to be cost-effective while playing to your strengths. I think you need to have your unique strengths in-house, and you should absolutely not try to have your weaknesses in-house. Jones Road is the farthest thing from a tech company you can get. We know our strengths, but more importantly, we know our weaknesses. We don't try to have in-house engineers or our website, or data. We partner with agencies or companies who can fill those functions for us at a fraction of the cost, and without needing to build the expertise internally. But we are going to run paid media on Meta from the day we launched until the day we stop selling, so it makes sense to have Meta buying in-house. TLDR is outsource the parts that someone can do better than you, and keep in house the things that are core to you doing business.

Paid Social

Let's face it, being good at growth marketing is integral to a successful DTC business. Listen to Marketing Operators or Operators podcast and even the Presidents and CEOs of each business are very knowledgeable about the digital ads ecosystem. You simply can't try to abdicate this to an external partner and expect success. I am not saying you shouldn't work with an agency here. Please note that everything in this newsletter is content-dependent. But your ads are going to be one of the largest expenses you have. Don't you then want the person controlling them in-house and fully aligned with your business goals? I do think that whether you have an agency or in-house, you need to know this stuff well and you shouldn't be paying a percentage of spend. For most 8-figure and above brands, you should have paid social in-house and can use an agency for paid search.

Creative

This should be a combo of in-house, freelancers, and agency. You want to be different, so you should have a strong "brand" creative team internally that sets the brand guidelines, core brand messaging, and the like. Hopefully, if you have the budget, you should also have an in-house Creative Strategist just on the growth team, with either in-house or freelance editors, copywriters, and designers. You should have an in-house creative engine, and as you grow it becomes essential to build this out. However, I don't believe you can get by with an in-house team alone. Even as your team grows and scales, there are several reasons you need to bring on external ad creative partners.
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First, you just need that much ad creative. You should be testing creative weekly, and as you scale spend the amount of creative that you need grows very quickly. Secondly, I find that teams get good at one or two types of creative. As you scale you need to reach new audiences, and the best way to do that is diversified creative. You should be getting creatives from a few different sources with very different skillsets. It's just not possible to do this solely in house with the quantity and types of creatives needed in 2024.

Other Media Buying

I think a lot of other media buying can be done via agencies. For example, we run TV with a small agency. We likely will always be running TV, but the spends aren't large enough for us to justify a full time hire. On paid social, we can easily have somebody manage Meta, TikTok, and Pinterest. But it would be crazy to ask them to run TV ads. I think a Google agency makes the most sense for most brands. It's a very specialized skillset and very different than Paid Social. But if you're large enough, it's certainly it can be worth it to bring in house.

On Price

So what is cheaper, internal hires versus agencies or freelancers? The reality is it depends. A good rule of thumb is to budget 110% of a full time employee's salary for tax and benefits. So often times, freelancers can win there. Secondly, sometimes you don't have 40 hours or work, so it can make a lot of sense to fractionalize the cost.

But sometimes in house can be cheaper. If you are paying an agency a % of spend, at a certain rate it will be cheaper to bring things in house. I once helped a company who was paying $70k month to an agency bring on 2 internal hires and saved them a bunch of money a month with same performance.

Here are a few other Pros and Cons of agencies/freelancers vs in house:

In House

• Pro: Easier to set incentives. Your incentives will NEVER be aligned with an agency. You can very easily align incentives intenrally. This is perhaps the biggest reason to keep in house.
• Pro: Communication is easier. If I need to ask my team to change Meta budgets, I know I get them for 40 hours a week and can expect them to do is asap if needed. An agency may have 6 other accounts they manage and may not get back to me for a day. That doesn't work.
• Pro; There is operating leverage. Your costs don't scale with revenue or spend.
• Con: HR nightmares. Say you bring somone onto your team and don't want to keep them. There are HR and cultural ramifications to that. No one will worry if you let an agency go.
• Con: Things can get stale. You need to make sure your in house team stays fresh, so retain some type of consultant who can bring them fresh ideas from a different perspective.

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Agency/Freelancer

• Pro: Less committment. It's like buying vs renting. Let's say you are not sure if TV ads will work for you. You don't need to hire someone internally, that would actually be a terrible and reckless idea. But an agency can be a great way to try out a channel or strategy before fully investing
• Pro: Fresh Perspective and Skills - You can't be great at everything. Don't even try to be. Find where you are week, say Google ads compared to Meta, and find the best agency to run it for you.
• Pro: No HR challenges. While you should be communicating openly with agencies, they don't need formal 1 on 1 and performance reviews. As you grow a larger organization, those things can get exhausting and you may breathe a sigh of relief when you can bring on a team to do a function without needing to add to those things.
• Pro: Access. There are people you can work with that are experts at what they do that you'd never get the chance to hire full time, but can through an agency, freelance relaitionship, or software as a service. The team at Haus is filled with a bunch of data scientists, we can't afford a full time data scientist but we benefit trememdously by working with them. Same for data engineers, it wouldn't make sense to hire one full time but we do need data models built our and we work with Daasity to run our stack. Same with Northbeam for MMM, the list goes on and on. You can get very specialized knowledge from people it would never make sense to bring on full time.
• Con: Communication and Goals. It's not the easiest to get all agencies in tune with your goals and way of doing things. You should try, and I think a successful relationship with one depends on both parties sharing the same goals and understanding of success. But it's definitely more challenging.

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I tried to have this be a bit different than the typical agency vs in house debate where people mention how you get a junior, burnt out perosn on your account, etc. We've all heard that, so hopefully this has a few new ways to look at it. TLDR is you really do need a mix between in house employees, agencies, and freelancers. I think you should keep your core strengths in house, fill in some part time gaps with freelancer,s and then find experts in areas where you are weak in to support you.

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That's all for this week folks. Hope you enjoy this and a little mid week newsletter. See you next week.

-Cody

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