Understanding digital marketing agency cost drivers
Cost is almost always a question when you are thinking about finding digital marketing help, whether you're just thinking about it or actually having conversations with prospective agencies. And the answers vary. Understanding what goes into those costs can help you to make a better decision.
The problem with agencies is the same problem that we have with advertising. Too often it can feel like a one-sided win for the agency - unless you really understand what you are buying.
The old saying holds true: Advertising (and marketing agencies) are always 100% effective for the one who sold them. The cost question is actually a value question: "What will you get for your money?"
The place to start with understanding digital marketing cost is by defining your growth economy. You have to decide what outcomes will make your business cash register ring.
In most cases, hiring a digital marketing agency is tied to a business goal, and the investment is designed to create something of value in return. If you know what that is, it will make it easier to identify the kinds of costs that are a better value exchange for you. Fuzzy goals or general goals like, "I want a new website," lead to fuzzy outcomes.
What are Agency Costs and What Drives Them?
Almost all agency costs are based upon an hourly rate. That rate in the United States usually ranges between $100 per hour on the low end and up to $250 an hour on the high end.
The range is based on experience, the value of their work in the niche where they focus, and to some degree, the geography of service (expect to pay more in NYC or Chicago).
Agency rates are based upon what it takes to put the right blend of people on the project, and just as with other kinds of hires, the quality and impact of what an agency can deliver comes from the experience and skill of their team.
Agencies that sell packaged services have simply standardized the labor and other costs into a package that they can repeat. It is still based upon their costs to deploy.
Two agency approaches are designed to reduce these costs (or the underlying expense). One is the use of offshore labor. The second is the use of highly templated digital tools.
The other set of costs come from the costs of software. There is a broad variety here, and there are more than 5,000 different kinds of software. Beware of using the cheapest software, because what the software doesn't do, a person will have to do instead. Or, the work will simply not get done.
Lower Agency Costs Based Upon Offshore Labor
The obvious strategy is to purchase labor offshore at a lower cost, and then mark it up for U.S. domestic purchase. These cost savings may or may not be passed on to you, but you do need to understand that the agency is heavily managing these offshore teams, because usually the offshore team usually won't communicate effectively or deliver exactly what is required without real attention and supervision. If an agency has extremely low pricing, this is likely the reason.
You Should be Aware of Three Offshoring Risks:
- The standardization and complexity of code that is used can be poor without a lot of supervision. For example, that can mean that a WordPress site that already has too much heavy code (slows down site speeds) becomes even more code-heavy because it was faster for an offshore code wizard to do the old-fashioned way.
- Security risks increase when offshore labor is used. It doesn't take much to insert a line of code in a website header that feeds into spam networks. And, complex code opens lots of vulnerabilities in a website.
- Custom-coded websites require developers to update, improve, or change them constantly. That means every time you want to make an update you'll be waiting on (and paying for) a developer. And if your agency has no domestic resources for development, they'll be relying on the offshore team again.
Lower Agency Costs Based on Highly Templated Web Tools
Some agencies have adopted DIY website systems for development. They have done this because it makes putting up a website faster and less expensive. It's important to know whether you are upscaling into mid-market technology or downscaling into consumer technology.
The difference? Consumer technology is extremely limited in its ability to make you competitive in SEO, conversions, and automation.
This approach is based on a digital marketing myth - that appearance or "prettiness" of a website is the primary factor in determining its value and effectiveness.
While a website should not be ugly, the "prettiest pixels" never win. In the list of what causes websites to win or fail, beauty is rarely at the top, unless you sell clothing or make-up.
In almost all cases, using a highly templated tool now to save some time or money will cost you later. Foundational choices affect your domain authority that takes time for development, customer experiences and your brand authority.
Risks of Using Consumer Level Products for Company Growth
- While highly templated consumer software may reduce the length of development time, it won't speed growth. What you gain in rushing to marketing will be lost in the pain of getting almost no value.
- While WordPress is a popular approach to web development, it is essentially a bloated consumer product, designed to make blogging accessible. What has to be done to make it work for more sophisticated projects has to include extensive code that adds functionality or custom coding that will tie you development expense. And when all is said and done, this modified consumer approach isn't very user-friendly. If you're not sure, just try to update a custom-coded WordPress website.
- WordPress is rife with security issues. Daily bulletins detail the latest hack. Low cost consumer tools are frequent sources of security breaches.
How Agency Standards Impact Costs
Digital marketing is a complex work with variety of the options increasing every year. For example, a website can be developed with a wide variety of standards.
While a local WordPress shop could put up a decent looking website in 40 to 100 hours (including the work of graphics, selecting photography from a stock library, and installing and configuring templated code, wrangling your content and brand graphics, installing a response form), that website only meets the most basic standards primarily centered around a single question, "How does it look?".
A more complicated version of that same website could cost 4 to 10 times as much.
The same process is applied to a basic marketing campaign and the assets required to place ads, create a page for learning more, and a basic response method. It might take 10 to 40 hours at the basic level.
The standards of development that the agency includes and the capacity of their staff to execute are largely determined by their experience and their internal development standards, not just the complexity of a website. While more pages and more design work increase costs, so does the underlying approach to how a website should be built.
A minimal website like the one described doesn't address a large percentage of what actually makes a website produce growth. The two lists below are probably not included in the minimal website described above.
Some of the essential standards should include:
- Growth standards- What does it take to be competitive in your industry, region and market?
- Accessibility standards - Does it comply with ADA requirements to avoid legal challenges?
- Search Standards - Will the website comply with and put you on top search rankings? Does it even have the technical capacity to rank?
- Security and upkeep standards - What is the ongoing labor required to keep code up to date, or address maintenance and security issues as they arise? (This is a regular WordPress requirement and is a monthly cost unless you are using a SaaS product like HubSpot.)
Additional standards that position you for growth:
- Improvement standards - How hard is it for your team to make adjustments and improvements to the website? How much is hardcoded and will force you to use a developer to make changes?
- Data-tracking and performance standards - Is the website set up for granular tracking and reporting beyond the need to wade through Google Analytics?
- Differentiation - How does the website differentiate your business and make it stand out from all the others who offer the same product or service?
- Lead and conversion standards - How does the website capture, nurture and convert leads into customers?
- Buyer's Journey - Does the website include a momentum building buyer's journey?
An agency that doesn't use these standards will sell a project at a lower cost because it simply takes less time - and it's worth less. It should be clear from the lists above that a 40 or 75-hour project is really only a fraction of what can and should be done to deliver a high-performing website or campaign.
If the standards above aren't part of the approach, it would be deceptive for an agency to sell you a project with the assurance that it is all that you'll need. In many cases, that website is simply a shell.
One example is the area of SEO (search engine optimization). It is very common for people to purchase website projects with a promise that SEO is included, that don't actually deliver even the most basics of SEO requirements.
Unfortunately, this is based upon the idea that the customer wouldn't know the difference between local SEO, technical SEO and ethical or unethical SEO. But minimal SEO won't position a website for high rankings.
What to Ask a Digital Agency about Cost
The big questions should include:
- What should you expect to come out of what the agency delivers?
- What is the cost basis of their work?
- What standards do they apply to their development?
- How high do they place "look and feel" on their priority list?
- What costs may occur in the future, after the current project is complete?
- What maintenance costs should you expect?