You Ask, I Answer: In House vs Agency KPIs?

In today's episode, Mara asks, can you touch upon expectations of an in-house marketer has on social media versus agencies, like in terms of content and KPIs? I would say the expectations are or should be the same, which is some kind of result, depending on what the mandate of social media is, uh, will determine the metrics. For example, if brand awareness is your KPI, then in your marketing mix model or your attribution model, you should have some kind of brand awareness outcome metric that says, yes, we're achieving brand awareness. And then regardless of in-house or agency, whoever's doing the work should be hitting that number. It should be hitting whatever whatever you agree brand awareness is.

And there are a variety of ways of doing that. You can do it through attribution modeling, marketing mix modeling, surveying, um, polling, etc. There's no choice, uh, there's no shortage of ways to do that. But where the differences between in-house and agency is typically in resourcing, right? So an employee costs X dollars an hour, like maybe $40 an hour.

And they have, you know, presumably dedicated a part or whole of their job towards doing the social media function at your company. An agency will charge some kind of rate, um, a retainer and so on and so forth, and then deliver uh whatever's in the scope of work. So the real question you have to say is, can you do an apples to apples comparison of both the results that an agency gets versus an employee and the costs of an agency versus an employee? Agencies are almost always going to be more expensive than employees. Almost always.

The general rule of thumb that agencies operate on is sort of a 3x rule. So whatever a person's salary is, you need to bill them out at 3x their salary in order for that employee to be profitable, because a certain percentage of the time that employee is probably not billable for a client. So if you're paying Sally $40 an hour as your in-house social media manager, then Tom at the agency is probably going to be billed out at $120 an hour, assuming that Tom makes $40 an hour at that agency. So the question is for that money, can Tom generate 3x the results that Sally does. One of the things you have to think about is what is your cost per result or is cost per outcome.

If both Sally and Tom are assigned to improve the your brand recognition score by 4%, and you're paying Sally one third of what you're paying Tom, Tom had better create three of that 4%, right? Sally could create 1% of that left, Tom better create 3% to be commensurate with the money that you're spending on Tom versus Sally. If there, if that's not clear who's doing what, then you've got to figure that out with a more sophisticated analytics solution to help you understand, yes, this is what Tom generates, this is what Sally generates. If you can't do that, you may want to pause one or the other, maybe reassign Sally to some different work, and then see you know how much of a delta there is between the work the result that was happening when Tom and Sally were working together versus when you reassign Sally maybe to uh organic search uh or email marketing, and it's just Tom at that point at the agency generating the the social media results, the KPIs you care about. If you do that and you see that suddenly instead of 4% lift because Sally was doing one and Tom was doing three, you would should see you know 3% in uh social media lift because Sally's gone and Tom's the got the other 3%.

If you go down to 1%, then you know Tom wasn't carrying his weight, right? You know that the agency was not doing what it was supposed to be doing. That's the that's the trade off between an agency versus in house. In house, like I said, is almost always going to be cheaper because you have the the full-time employee. The challenge is do you have the budget to maintain that head count over the long period of time you need to make social media KPIs worthwhile.

Social media KPIs, if if you're doing them well, are gonna be things like brand awareness, are gonna be things like lead generation, and those metrics take time to create. You can't just hop on Twitter tomorrow or put up stuff on TikTok tomorrow and expect overnight results. That almost never happens. More often than not, it takes sometimes a year, two years, three years to ramp up uh your production and and work the kinks out so that you can create great results consistently. And so if you're going to hire an in-house social media marketer, one of the things you have to ask is can we maintain this presence for three years with this, you know, this full-time employee?

And then you ask the same question of your agency too. You may change agencies, but your expectations are that an agency will create that outcome in a commensurate with the budget you give it. So maybe you allocate $5,000 a month internally for a social media resource, and you allocate $10,000 a month for an agency resource. It is not unreasonable to say the agency resource had better generate 2x the results the in-house resource does because we're paying 2x the money. If they don't generate that result, might be time to switch to a different agency.

More important, it's great and important to be clear up front to say like this is what we expect. These are the results we are trying to create. And we want you know, you agency to generate these. Can you achieve this 4% brand recognition lift? And if an agency says, yes, we can, then you have them sign on the line and you hold them accountable to that, right?

Just as you would an employee. So that everybody's held accountable to the same outcomes, and the outcomes are commensurate with the resources you invest in them. So those would be my expectations of content and KPIs for an agency versus in-house. It's commensurate to the resources you invest, and you choose the metrics based on the outcomes that make sense to the business. Thanks for asking.

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