Marketing is essential for growing your business. But left unchecked, marketing can become a significant drain on your budget. You need to get results, but you also want to make the most of your investment in marketing.
How can you get more mileage out of your marketing dollars?
Return on marketing investment, or ROMI, is the fastest way to calculate your marketing success. ROMI will help you:
- Justify marketing expenses.
- Make better decisions.
- Hold your team accountable.
- Benchmark your performance to industry standards.
Although some experts estimate ROMI across all industries to be $1.09 for every $1 spent, you need to see more dramatic results.
When it’s time to overhaul your marketing efforts, you have three options: hire an internal CMO, outsource to a marketing agency or partner with a fractional CMO. Understand the pros and cons of each option to choose the most ROMI-positive option for your business.
An in-house CMO is a popular option for growing businesses that need a higher degree of strategic marketing than an agency can provide. This C-suite role represents the interests of sales and marketing in the boardroom and holds the marketing team accountable.
The biggest benefits of hiring a full-time, in-house CMO are availability and institutional knowledge. Your CMO will be available 40+ hours a week, on-site, to handle any marketing emergencies. They will also learn more about your team and brand over time, bringing the benefit of institutional knowledge to your marketing strategy.
The downside to hiring an in-house CMO is the cost. The average CMO earns $145,000 – $190,000 a year, in addition to bonuses, PTO, and benefits. That means you’re paying well over $16,000 a month for an in-house CMO.
This doesn’t include the cost of executing your campaigns, either, so a full-time CMO can take a massive bite out of your marketing budget. In terms of ROMI, a full-time CMO doesn’t always make sense. $16,000 is a considerable expense and other options, like an agency or fractional CMO, can net you more favorable returns for the same spend.
34% of businesses outsource their digital marketing initiatives. Marketing agencies fill that gap by helping brands:
- Generate more leads.
- Collect data.
- Optimize for search engines.
- Strategize marketing initiatives.
- Execute marketing campaigns.
- Assess marketing performance.
On the low end, marketing agencies charge an average of $4,000 a month. This cost is solely for the agency overhead, though, and you can expect to pay an additional $2,000 – $10,000+ on expenses like ad spend or creative.
Marketing agencies are beneficial because they bring a larger team to your project. Instead of hiring experts internally, you can tap an agency’s professional team to do a task quickly and correctly.
Agencies usually specialize in a specific niche, like digital marketing or public relations. If you need deep knowledge in one area, an agency offers hands-off help and project-based support on a short-term basis.
At $14,000 per month, a marketing agency can be more affordable than hiring an in-house CMO. However, it isn’t always the most ROMI-positive investment.
It’s important to remember that marketing agencies aren’t a long-term solution. They typically partner with businesses for 12 – 24 months. You could invest those funds in a longer-term partner, like a fractional CMO, to establish a high-value relationship from the start.
Agencies also don’t have the authority and expertise you would receive from a CMO. This leads to issues such as:
- A lack of accountability.
- Higher overhead and staffing bloat, which significantly reduces ROMI.
- Non-marketing-related issues that an agency doesn’t have the expertise to address.
Unlike an in-house CMO, a fractional CMO splits their time with your business and other organizations. As experienced marketers with decades of experience, fractional CMOs help businesses with:
- Structural changes to your business model.
- Customer loyalty.
- Marketing strategy.
- Tactical execution.
- Financial planning.
If you have a lower-level marketing team that’s in desperate need of experienced leadership, a fractional CMO is a ROMI-positive investment.
The upside to a fractional CMO is that it’s a variable cost and you only pay for what you use. Fractional CMOs typically charge an hourly rate ranging from $200 – $400 per hour for up to 30 hours per week. On average, you’ll spend $8,000 a month on a fractional CMO, which is significantly more ROMI-positive than an in-house CMO or agency.
Unlike an agency’s short-term tactical approach, a fractional CMO makes your business better over time, leading to significant growth. Because the CMO comes from outside the company, they have an unbiased perspective on what it will take to grow your business.
Plus, if a fractional CMO sees operational inefficiencies or budget bleeds, they have the power to fix those issues. They identify much-needed changes in marketing and the business as a whole to improve what isn’t working.
If you run a large organization that requires 40+ hours out of your CMO, a fractional CMO may not be a fit for your business. A fractional CMO is also coming in from outside the company, which means they need time to familiarize themselves with your business.
Improve ROMI with a fractional CMO
Whether you hire an in-house CMO, marketing agency, or fractional CMO, every option has its pros and cons. It’s best to look at this in terms of investment: how far will your money go with each option?
Sometimes it makes more sense to outsource your marketing functions, particularly if your existing team is missing certain skills and expertise. A fractional CMO is the smartest option for any business that needs to improve its ROMI for long-term growth.
That’s why yorCMO’s fractional CMOs offer the benefits of a full-time CMO at a fraction of the cost. Tap into a readymade CMO’s unbiased expertise for strategy, execution, and accountability to move your team forward. See how our approach balances cost with results.