Last updated on October 27th, 2023 at 05:14 pm
Marketing agencies play a crucial role in helping businesses promote their products or services and reach their target audience effectively. They are experts in their field and can help businesses scale their marketing much faster. However, one common question that arises when considering hiring a marketing agency is, “How much do they cost?” And, are they even worth it?
In this blog post, we will explore the factors that influence marketing agency costs and provide some insights into the pricing structures you can expect. Additionally, we will cover the question of if they are even worth it.
What Is A Marketing Agency?
A marketing agency is a company that helps other businesses promote and sell their products or services. They hire experts in different fields of marketing so when businesses need assistance with marketing, they can use a marketing agency team to help kickstart their program.
Marketing agencies use different strategies like advertising, social media, and market research to reach potential customers and make them interested in what the business has to offer. An important aspect of a marketing agency is that they work closely with the business to create effective campaigns and increase sales.
Next, let’s get into the factors that play into the costs of hiring a marketing agency.
Factors Influencing Marketing Agency Costs
These are just some of the factors that can influence a marketing agency’s pricing. Keep in mind, not only do these factors come into play, but also the pricing structure, and current market conditions which we will cover later in this article.
Scope of Services
The range of services offered by marketing agencies can vary significantly. Some agencies specialize in specific areas such as social media management, content creation, or search engine optimization (SEO), while others offer comprehensive marketing strategies. The more extensive the scope of services required, the higher the cost is likely to be.
Moreover, how detailed an agency will be within one marketing strategy will also influence the cost. For example, an SEO agency might spend hours building links while another may not offer link building at all which should result in a lower price.
Be sure to review your proposal from your marketing agency to ensure it includes everything you need.
Agency Reputation and Expertise
Established marketing agencies with a strong reputation and proven track record often charge higher fees. Their expertise and experience come at a premium, but they can deliver exceptional results. On the other hand, newer or less-known agencies may offer lower prices to attract clients and build their portfolios.
However, an agency should always understand the return potential of any marketing campaign to ensure they are not pricing themselves out.
Project Complexity & Size
The complexity of your marketing project can impact the cost. For instance, launching a national advertising campaign requires more resources and effort compared to running a local ad campaign. The level of complexity involved will influence the overall cost.
In another example, a small website for a local company will not be that expensive compared to a nationwide franchise web design.
Marketing agency costs can also vary based on the location of the agency. Agencies located in major cities or regions with a higher cost of living tend to charge more than those in smaller towns or remote areas. However, it’s important to note that geographical location doesn’t always correlate with quality, so consider other factors as well.
Some agencies, especially after COVID-19, have gone fully remote so geographical location may not play as much of a factor. Additionally, it’s important to consider where your agency serves customers. Nationwide agencies might charge an average while agencies that focus on particular regions might charge based on the local area.
The duration of your contract with the marketing agency can affect the pricing structure. Short-term contracts or one-time projects may have higher hourly rates or fixed fees, while long-term contracts or retainer agreements often offer discounted rates.
If there’s a lack of a contract (cancel with 30-day notice), you can expect pricing to be higher month over month than if you were to sign a year-contracted retainer.
Now that we understand the factors that play into pricing, let’s get into different pricing structures agencies may use. Marketing agencies typically offer these main pricing structures.
Some agencies charge an hourly rate for their services. The rate can vary depending on the agency’s expertise, location, and the specific services required. Hourly rates are commonly used for short-term projects or when the scope of work is uncertain.
Average hourly rates vary for marketing agencies depending on all of the factors noted above, but the typical range is from $150 – $250 an hour.
For well-defined projects with clear deliverables, agencies may provide a fixed fee. This approach ensures that both parties have a clear understanding of the project scope and associated costs. Project-based fees are often used for one-time campaigns or specific marketing initiatives.
Project pricing can vary drastically depending on the scope of work and what is involved. For example, web designs are commonly project-based pricing models. Some web designs could cost only $1,500 when it is a small, template website. Large, custom web designs with many teams involved could easily surpass $10,000 though.
Retainer agreements involve a commitment between the client and the agency. Clients pay a monthly fee to retain the agency’s services over an extended period. Retainer agreements are suitable for ongoing marketing support, strategic planning, and continuous campaign management.
Some retainer agreements rely on a 30-day notice to cancel, while others are contracted in for a year. The specific contract time of a proposal will help dictate the price of the retainer. For example, cheap SEO projects for small companies could be $100/month and can be canceled with a 30-day notice.
On the other hand, larger SEO scopes with huge teams could be $10,000/month and be contracted for a year. On average, most SEO retainers land about $1,000/month.
Marketing agencies may also offer packaged pricing and a la carte pricing detailed below:
A La Carte Pricing
A la carte pricing is used to sell individual items such as link building, content writing, social media design, etc. This can be useful if a company needs specific items, and does not want to pay for marketing services they can perform in-house.
Packaged pricing helps bundle specific marketing options into commonly served/purchased packages. These packages are useful to help lower the cost of purchasing the service items individually through an a la carte model.
For example, a company may purchase an SEO bundle that includes link building and content writing knowing that they cannot perform either of those services in-house.
Source: CMO Survey
How Much Should You Spend?
Your budget for a marketing agency will vary on your company size and industry. Most businesses agree that companies should average between 5% – 15% of the revenue on marketing. Therefore, if you make $1,000,000/year that would leave between $4,100 – $12,500 per month to spend on the marketing department as a whole.
Based on that information, you can split what you currently spend on marketing staff and advertising to view what would be left for a marketing agency. Alternatively, you can consider what your goals and expected return on ad spend is to get a better picture of how much you should spend.
And there you have it – how much agencies cost. When considering hiring a marketing agency, it’s essential to understand the factors that influence their costs and the different pricing structures they offer. Remember to evaluate the agency’s reputation, expertise, and scope of services provided before making a decision. By doing a thorough research and considering your specific needs, you can find a marketing agency that aligns with your budget and helps you achieve your marketing goals.
Looking for help with your next marketing project? Get a proposal with WolfPack Advising to see how we can help!