Let’s face it: most brands think they can do it themselves. The numbers suggest that paying an agency might be unnecessary, especially when they could just as easily hire someone to pay someone else – essentially reaching out to creators themselves. But what’s the math behind that logic? When you really break down the costs of operations versus essentially a campaign-by-campaign need, the numbers suggest something entirely different.
Breaking Down the Salaries
Let’s assume a solid influencer marketing manager in a top market town is somewhere between $60,000 and $85,000 per year. At minimum, one person would need to identify creators, one person to manage, and one person to track performance metrics (although all leaders should do all of the above), plus a coordinator for contracts and payments.
That’s already three to four full time roles. Without even having created or paid talent on an initial campaign! So, we’re already up into the $200k to $300k range for salaries alone. Then, of course, there’s benefits, office space and equipment, all that fun stuff that employees require.
Then add in the learning curve. The new hires won’t know who drives what creators unless they’ve been working in the space for a while. They’ll overpay a creator and learn from their mistakes. They’ll miss major red flags like low engagement and black hat follower purchases. This isn’t speculation; it happens every day with brands trying to figure it out themselves.
Now Add in the Software
Professional influencer marketing requires software – think creator discovery software (which can run $500 – $2,000 per month based on features), as well as analytics (another $300-$1000 per month), and contracting software, payment software, content software, which is another steep expense.
Yet an established influencer marketing agency has all those options and pays them at a lower rate because they are meant for all clients. Furthermore, they’ve all paid for enterprise versions, which have deeper insights and better accessibility. So when brands try to piece together everything on their own, they’re paying for mediocre capabilities that an agency uses constantly.
Someone Relationships Can’t Quantify
Soft skills don’t make it on a spreadsheet, and yet they’re crucial to success in influencer marketing. Many agencies have pre-existing relationships with creators which allows them to know how they operate, respond to audiences, and their reliability.
For example, if an agency reaches out to someone they’ve worked with before, they are more apt to respond; negotiations will be swifter as trust has been built on payment structures prior. In comparison, if a brand reaches out cold, no response or poor response time will complicate negotiations and terms.
In addition, some agencies are able to get better rates through volume; a creator might charge a brand $5k for a post but $3.5k through an agency because they know there are more campaigns coming down the pipe.
Why Go In-House? Failed Campaigns Are More Expensive Than People Think
The biggest hidden cost of an in-house operation involves failed campaigns; it’s natural to learn along the way. A brand might spend $15,000 creating a campaign with three influencers only to get bad engagement as it converted nothing, or even worse, brand safety issues that could’ve been avoided had they vetted talent better.
Agencies fail sometimes too, but they’ve seen what works time and again through numerous campaigns and know which flags are red and not worth pursuing. They have learned best practices based on the platforms on which they’re posting.
For example, hypothetically if an in-house team runs ten campaigns, and three of them fail completely, when all is said and done, that’s a 30% failure rate, even though those failed campaigns still cost money (talent fees, creation costs, intra-company hours spent trying to put something together). An agency with a 10% failure rate is still more valuable even after adding in its service fees.
Timing is Everything
Trends happen quickly, and with agencies specializing in certain platforms, when a brand sees something trending and thinks it needs to get on board, an in-house team might spend two weeks trying to identify creators and negotiate talent only for time to expire.
Agencies can turn around that thought in three-to-five days because they know go-to creators off the top of their heads who have been previously vetted; their pre-negotiated structures of payment make expedited approval much easier. Timing means everything in influencer marketing, and many times it’s the reason why brands miss trends before they even start.
The same goes for contracting/invoicing/revisions/performance reporting; it’s not just posting that takes time, agencies have the means to expedite performance whereas in-house teams essentially waste hours figuring it out.
Why In-House Makes Sense for Some
Not every brand should work with an agency; brands with big budgets consistently utilizing influencer marketing might warrant agencies as there’s money in the bank to support quality output from agencies.
Brands with niche needs/products that require highly technical approaches could do better in-house if everyone intrinsically gets it, but even then many large brands use agencies for execution but have an internal strategic component that builds out the purpose.
Where Brands Lose Out
The logical math brand should figure out themselves involves the total cost of an in-house team (salaries, etc.) + failed campaigns versus a recommended agency fee + campaigns budgets; for most brands spending less than $500k annually on influencer marketing, it’s cheaper and better ROI always with an agency.
When opportunity cost comes into play, it’s even worse; while your internal team could be learning influencer marketing best practices from working years in marketing, your team could better be served applying their expertise elsewhere (email marketing? Website development? Content creation?) while industry experts specialize in influencer skills.
Replicable Platform Knowledge
Different platforms require different tones and strategies, what works on IG won’t work on TikTok; YouTube has different creators than LinkedIn; every agency has expertise across platforms and knows how to navigate and best access each one day to day.
An in-house team might get wise to one platform but might not be able to stay up to date across all platforms trying to juggle something else. Creators make adjustments and split second decisions based upon ever-changing trends, it’s nearly impossible for an in-house team unless its marketing team began small and gradually got up to speed over 5-10 years – which still may exclude them from certain niche projects that may not work financially at first given the best math compared on paper.
