Outsource Advertising or Bring It In-House? Choosing a Good Agency and Building a Team That Delivers

“I want to start web advertising, but I cannot decide between running it in-house and outsourcing…”
“I do not know whether I need an advertising agency, what the going rate is, or how to choose one…”
“I don’t know what the ideal set-up looks like for getting results from web advertising…”

Plenty of business owners and marketers carry that worry.
In this article we look at web advertising management: the advantages and disadvantages of outsourcing to an agency, what it typically costs, and what to watch for when choosing one.

Our service guide on in-housing support is click here

1. What does an advertising agency do for you? What is included in an agency’s service?

First, a look at what advertising agencies offer.

Agencies provide three main functions.

① Strategy: proposing the advertising approach that suits the product
② Tactics: proposing improvements based on performance data
③ Execution: making the various setting changes the account needs

① Strategy: proposing the advertising approach that suits the product
Web advertising covers many delivery platforms: Google Ads (search and display), Facebook and Instagram ads, YouTube ads, TikTok ads, Twitter ads, LINE ads, DSP ads and more.
Each platform reaches different user attributes and different phases of the buying process, so the approach has to be chosen to fit the product.
Agencies therefore propose an approach drawn from their performance data and their experience.

② Tactics: proposing improvements based on performance data
The biggest advantage of web advertising is that you can measure it.
With an offline activity such as a billboard,
you cannot tell how many customers came in or how many people saw it, so
there is no way to gauge whether the activity worked, and the investment decision stays murky.

Web advertising, by contrast, gives you data such as impressions, clicks and the number of visit bookings, so you can measure the return on your investment.
Beyond that, you can collect plenty of information to work from, such as how many times a single user saw the ad and which search keywords brought them in.

Because that data lets you pinpoint problems and act on them,
you can lift advertising performance repeatably rather than by gambling.

Collecting that data and acting on it calls for knowledge of what each platform can report and of its delivery features, which is exactly where an agency’s ability shows.

③ Execution: the various account settings
Getting the data that makes web advertising what it is requires initial set-up.
Every platform works differently: embedding the tags management needs, adjusting cost per click day to day, setting up targeting such as remarketing, excluding keywords, configuring how creative is served. Each one has to be mastered, and in principle the agency handles all of it for you.

Our service guide on in-housing support is click here

2. Agency fees typically run at 20–30% of ad spend

Most agencies set their fee at 20–30% of the amount spent on advertising.
Depending on the firm, there may also be a minimum fee, charges for the ad spend itself, or an initial set-up fee.

Example: a monthly advertising budget of 1 million yen (management fee 20%)

Actual platform spend: 900,000 yen
＋
Agency management fee: 900,000 yen × 20% = 180,000 yen

Total: 1,080,000 yen

※ Advertising costs are normally paid by credit card. In some cases the agency pays up front; in others the client pays the platform directly by credit card.

3. Advantages of outsourcing advertising management

① You can get ads live quickly
The first advantage of outsourcing is that you can get ads live smoothly even with no advertising know-how or resource in house.
Running ads calls for specialist knowledge at the initial set-up stage, tag configuration included.
If nobody in house knows web advertising, paying an agency is the faster, surer and more efficient way to start.

② Experience across many accounts means higher quality management
Their depth of specialist know-how also brings you improvements you would not have thought of yourself, settings that use new features, and ideas drawn from similar work for other companies.
Managing many accounts builds far more experience than managing only your own, so the work gets more precise.

Our service guide on in-housing support Take a look

4. Disadvantages of outsourcing advertising management

① No know-how builds up in house
The biggest disadvantage of outsourcing is that no management know-how accumulates in house.
Most advertising platforms now use machine learning: the AI works out good management automatically from the account’s delivery data. That feature is a big part of what makes advertising perform.
Because this machine learning is tied to the data inside an account, it resets when you move from the agency’s account to your own.

It is not the same as know-how in the sense of knowledge and insight about advertising management, so however much you talk with the agency, no machine learning builds up on your side.
And if the whole improvement cycle is left to the agency, the data your ad spend bought never stays in house, and when the moment comes you find you cannot bring management in-house.

② They may understand your product and your users poorly
Two things are essential to getting results from advertising management: understanding each advertising platform, and understanding the end user.
A decent agency is expert on the platforms, but an amateur on the product it is promoting and on your users.
You therefore need to share what you know about the end user with the agency’s team.

5. Three things to look at when choosing an agency that delivers

In a word, what separates a good agency from a bad one is the quality of its analysis.
The higher that quality, the more effective the improvements it leads to.

Quality of analysis is not necessarily higher at a large agency. At large agencies each person handles a huge number of accounts, and in practice there are many cases where no real time can be spent analysing any one of them.

Large agencies also tend to put their strongest managers on national-client accounts spending tens of millions of yen a month, so for budgets under a million yen a small agency is more likely to manage your account in good faith.

With that in mind, here are three points for spotting a manager whose analysis is good.

・The number of accounts each person manages
　→ The fewer accounts a person manages, the more time goes into each one, so more of that time goes into analysis and quality tends to be higher.

・The person’s ability to communicate
　→ A manager who can explain the work carefully, in words an amateur understands, is a good one. Choose someone who explains thoroughly enough to leave you with no open questions.

・Whether they make an effort to understand the end user’s persona and insight
　→ There is no marketing success without understanding users. However skilled at the mechanics, a manager who neglects what real users say and why they buy will never produce quality analysis or quality activity.

6. Outsource advertising management or bring it in-house? The ideal set-up for getting results

There is a lot of debate about whether to bring advertising management in-house or outsource it,
and the answer shifts with the size and stage of the organisation and with the advertising budget.
The set-up we see as ideal, though, is a hybrid of outsourcing and in-house management.

Specifically, you create the account that accumulates the machine learning yourself, in house, rather than outsourcing it.
From there, we recommend sharing edit rights on the ad account with the agency and asking them to manage it. That way nothing is lost — not the machine learning, not the rest of the performance data — when you change agency or switch to managing it yourself.

For improvement work, the ideal is for the agency’s team and your own team each to take the roles below,
analyse together and look for improvements as one group. That is what gets the best results.

[Division of roles in managing the account]
Agency team: new features, specialist know-how, examples from other companies, planning activity, improving management
In-house team: user data, feedback on what actually happens in sales, sharing why customers buy

To download our service guide on in-housing support, click here

7. In closing

To get results from advertising management, you need to combine the specialist know-how an agency holds with the end-user data you hold yourself.

Bring it fully in-house and it becomes hard to stay in touch with the latest techniques or with what other companies are doing; your view narrows and specialist know-how runs short.
Leave it all to the agency, on the other hand, and understanding of your users stays shallow, the work becomes abstract, and fundamental improvement is hard to achieve.

Marketing is selling without meeting face to face.
What are prospects dissatisfied with?
What do prospects really want?
How do they get at information?

Build a set-up that properly reflects this first-hand data in how you run things and marketing starts to work of its own accord.

At NowVillage we support advertising management without creating an agency account, so you are ready to run it yourself if the need arises.
We would be glad to hear from companies planning to build an in-house advertising team over the long term, and from owners and marketing leads who are not satisfied with their current agency.