Why Are Marketing Agencies So Expensive?

May 9, 2023 | All, Digital Marketing, Marketing

This article explores why marketing agencies can be expensive and what justifies the premium you pay and the benefits of hiring a professional agency.

How much do marketing agencies charge?

As an agency at the forefront of delivering client results, we are repeatedly asked to justify our costs. If you plan to hire a marketing agency for your campaign, this question will likely be on your mind.

Google marketing firm prices, and you’d come across a minimum of $4000 monthly. At first glance, that would seem high, especially when discussing digital marketing. It may seem out of bounds if you are a small business unless there is a high ROI that you can expect from the campaign. Before we delve into the reasons behind the high advertising agency costs, let’s look at alternatives you may have.

Do It Yourself or Destroy It Yourself

You have come across ads for free website builders or SEO tools that promise you the moon for free. They promised to help you build websites and manage digital marketing campaigns for as low as $10 monthly. Sounds perfect, right? Well, if they were that true, we bet every marketing agency would close shop and look for alternative business opportunities.

As the saying goes, “The devil’s in the detail.” Once you scratch the surface, you come across the truth. Yes, a website builder can help you build a website without coding knowledge and even let you run a rudimentary SEO campaign. They cleverly ignore the time and effort it takes to run and manage a campaign. For example, if you have to spend 2 hours daily on your campaign and work 22 days a month, you will save $90 per hour if we consider advertising agency costs to be $4,000 per month.

Are you willing to divert attention from your core business for two hours daily to save $180?

Even if you do, you are unlikely to achieve the same kind of results as a professional agency can. It is one thing to have access to Google Analytics, Facebook Ads, or other marketing and adverting tools and quite another to leverage them for success. Looking at marketing firm prices from the cost perspective, not the opportunity perspective, is the worst mistake a business can make.

Why Do Marketing Agencies Charge at Premium?

Marketing agencies aren’t laughing their way to the bank. It isn’t a high-profit-margin business today (even if it was in the past). A lot goes into delivering you the best digital marketing services. Here’s what your marketing agency has to spend on to deliver these services –

  • Salaries of people starting from designers to copywriters and analysts to SEO experts
  • Salaries of non-core staff, such as HR and housekeeping
  • Rent and non-IT infrastructure costs, such as power
  • IT infrastructure costs, including software and tool subscriptions
  • Hiring and staffing costs for the best resources
  • Training costs to stay in sync with the shift in the industry
  • Overhead expenditure

To understand why the top agencies charge you at a premium, you need to do some basic math. Let’s keep aside infrastructure and other overhead costs of running an agency and look at the average cost of staffing a small team of professionals in San Fransisco, our current location. We are using Glassdoor for this example –

  • Graphic Designer – $57,540 /year
  • Web Developer – $92,558 / year
  • Social Media Manager – $60,038 / year
  • Copywriter – $55,917 /year
  • Search Engine Optimizer – $73,216 / year

It is the average salary we are talking about, and an agency needs to have multiple people for the same roles cutting across experience levels and salaries. If you dig deeper, the profits you imagine an agency making would vanish. The margins, if anything, have thinned down post-Covid as inflation has shot up the salary costs for agencies with little to no increase in receivables from the project.

Estimates show that agencies make anywhere between 15-35% on successful and long-term projects. We aren’t even counting projects where clients abruptly pull the plug! The bottom line is – agencies aren’t robbing clients but working on wafer-thin margins in these testing times.

Is Paying a Premium Worth It?

Now that we have settled the debate on how much do marketing agencies charge and why, let us look at why it is worth paying for premium services. There isn’t a thing called low-cost marketing! There are only good and ordinary marketing services. When you look at marketing firm prices, you should avoid looking at them from the cost prism alone. Let’s look at an example to understand this better –

  • Company A hires a professional marketing agency for $4,000 a month for a year. At the end of the year, they have $480,000 worth of new business, which can be attributed to the marketing efforts of the agency they hired.

 

  • Company B hires a freelance marketer for $1,000 monthly for a year and pitches in with in-house efforts to support the campaign. At the end of the year, they have $50,000 worth of new business from their joint efforts.

As you can see in this example, the agency that Company A hired has offered a 10X ROI, while the freelancer has just managed a little more than 4X. Which of these would you choose? While you may save by adopting Company B’s approach, you will be a loser in the long run.

Remember, when promoting your business, it isn’t the cost of advertising and marketing that should matter but the ROI. Being a bargain hunter while hiring a marketing agency is the worst mistake. You not only lose your dollars but forego potential opportunities.

 

Why Work with Marketing Agencies?

While you can take the DIY route or compromise by working with fly-by-night operators that don’t ensure continuity or results, it is important to understand why it is worth working with professional marketing agencies, even though the upfront cost may seem high.

Bouquet of Services

In today’s day and age of digital marketing, you can’t choose one marketing strategy over the other. Several strategies add value proposition to your campaign, often playing complementary roles. A professional marketing agency houses all these skills under a single roof and offers you a bouquet of services that put you ahead of your competitors. These services include –

 

When you strike the perfect mix between all these services, magic happens, and you can generate qualified leads that increase your market share and revenue. 

Specialized Expertise

There is a reason you consult a cardiologist when you have a heart ailment. They are better skilled in diagnosing your problem and suggesting the right remedy. When you hire a marketing agency, you gain similar expertise. They employ highly skilled and experienced professionals in designing, advertising, branding, public relations, and digital marketing. These professionals command higher salaries due to their expertise and the competitive nature of the industry, but they deliver the results you are looking for.

 

Unlike agencies that promise you the cheapest marketing services, you rest assured that the web designer won’t create your content, or an SEO specialist will run your PPC campaign! The best marketing agencies hire people with different skill sets to manage comprehensive campaigns that build your brand equity across channels.

 

Customized Solutions

Every client’s needs are unique. Your needs from a marketing agency would be different from that of your nearest competitor. Marketing agencies provide customized solutions tailored to client’s specific goals and objectives. It requires significant time and effort, which can translate into higher costs. However, these costs are justified as they ensure a higher ROI for your business, with more leads coming in, giving you a competitive edge.

 

Time and Effort

In marketing and advertising, you pay for time and effort. An AI tool can generate a 144-character tweet in seconds, while a copywriter may take an hour to write a killer tweet that engages your audience. The bottom line is marketing campaigns require significant planning, research, and execution to be effective. It can involve a lot of time and effort on the part of the agency, which is why you can’t always quantify the costs based on what you see.

 

Scalability

Marketing is a never-ending game. You must constantly spend on your marketing campaign to stay ahead of the competition. The top marketing agencies can scale their services up or down depending on a business’s changing needs and budget. For example, if you need to double up on your PPC campaign during the sales season, your marketing agency has the bench strength to handle the additional requirement. The best agencies have surplus resources to meet such requests from their clients. While this can increase the average cost of hiring such agencies, their flexibility and scalability are unmatched.

 

Resources and Tools   

Along with human expertise, the success of any project also depends on advanced marketing technologies and tools. Apart from optimizing the campaign, these tools also provide deep insights into the opportunities on the horizon. When you hire a top marketing agency, they bring the latest tools and technologies to your project. While this may be one of the factors behind the high advertising agency costs, it also puts your campaign ahead of the competition.

Can You Reduce Marketing Firm Prices?

Now that you know marketing agencies charge you what they do, and they aren’t robbing you, is there a way you can reduce the cost of your campaign? Since you can’t do without marketing in today’s day and age, you have got to explore your options. Here are a few ways in which you can bring down the advertising agency costs.

  • Ask for a Discount – It is a good case to ask for a discount from the agency. If you are looking for a 5-10% discount on your monthly bill, ask for it. You can’t get a discount unless you ask for it! However, be realistic in your expectations about a discount and not ask for something that leaves no room for negotiations. For example, if an agency makes 20% profits per account, they may be willing to offer you a 5% discount but asking for a 15-50% discount is akin to asking the agency to donate money to your business! No agency will offer you a 50% discount, and if they are so, better avoid working with them as their discount services may not be up to par.
  • Lower Deliverables – In a typical digital marketing setup, agencies charge you based on deliverables such as the number of pages on your website, creatives, social media posts, leads, the level of support, etc. Ask for a skimmed package that includes the must-haves and excludes the fancy elements in the package. By lowering your expectations, you can lower the costs! It isn’t an out-of-mind suggestion, as not all businesses, especially smaller ones, need the top-end marketing package. After all, a skimmed advertising campaign is better than a no-campaign! You can pluck the low-hanging fruits and opt for a higher package when your budget allows.
  • Leave the Rockstars Out – If you are desperate for a discount, be willing to work with people lower in the hierarchy and pay scale. Every agency has a mix of high and low-paid employees with skills in similar trades. You can lower costs if you are happy working with interns and rookies. On the worst side, you won’t be able to tom-tom about your campaign. For instance, as an auto repairer, you can do with an informative and engaging website less on bells and whistles. You don’t need a website good as Tesla. However, rookies can deliver the best creative work as they bring a fresh approach to the table.
  • Ready To Share Work – Not all an agency delivers needs to come from their office. For example, if they write weekly blogs for you, they charge for them. What if you could create the blogs yourself? Similarly, there are other areas where you and your team can contribute to the campaign and lower the costs. Explore all these options and negotiate with the agency, and you can strike a better deal.
  • Pay For What You Want – When you hire an agency, you are looking at their skills and expertise. Do you care whether they operate out of a swanky office or a garage? Do you care if they have a 24/7 dedicated customer support team? In most cases, you may not even need to be face-to-face with the team ever in your life. Hence look for efficient services and solutions without compromising quality. You’d be surprised by the discounts agencies operating out of small offers and suburbs can offer.

Final Thoughts      

You had started with the question, “How much do marketing agencies charge” and now you have the answer on pricing methods and why professional services price their services at a premium. You can ask for a discount and take it only that far. If you are serious about growing your business through marketing and advertising, you must work with a reputable agency. While there are tons of DIY tips and digital marketing tools, businesses can’t sustain campaigns without diverting resources from the core areas of the business.

If you are looking for an agency that delivers stellar digital marketing campaigns, we at Cyrusson Inc. would fit your bill perfectly. As a full-service agency, we offer everything from web design and development to search engine marketing, social media marketing, paid advertising and reputation management services. We have the skills and expertise to drive your growth story. You don’t have to worry about the advertising agency costs, as our prices are competitive.

Whether you own a small business or a large enterprise, we deliver results. Call us at 415-228-9969 to schedule your Free consultation today, and let’s get started!

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