Marketing: In-House vs. Agency … And Everything Between

In-house, agency, boutique, or fractional; the models, costs, and trade-offs executives can’t ignore in 2026.

Every fall, leadership teams gather around the budget table. Alongside the spreadsheets and forecasts sits another decision: how to resource marketing.

Should we scale in-house? Double down with the current agency? Bring in a specialist? Try a new pricing model?

There’s no single right answer, but there are clear trade-offs. Many times, executives default to the model they’ve always used or treat in-house versus agency as an either/or decision. The truth is more nuanced. Agencies aren’t the enemy, and internal teams aren’t the cure-all. What matters is knowing how each model really works, where the hidden costs lie, and how incentives align with outcomes.

As 2026 planning ramps up, executives who see through the surface will make smarter calls, and avoid being surprised when spend doesn’t translate into results.

Marketing Resourcing Models

In-House Teams

In-house teams offer control, brand intimacy, and quick alignment. They know the business best, and for many companies, that closeness is invaluable. But they can also be costly to scale, carrying 30–40% in overhead beyond salaries [4]. A marketing manager’s median salary is ~$130K [4], and even a modest four-person team can run $480K-$525K annually once benefits, insurance, and tools are included [5]. The challenge isn’t capability so much as perspective. In-house groups can lean into “business as usual” thinking, sometimes missing external signals or the depth of specialized expertise.

Full-Service Agencies

Full-Service agencies bring scale, breadth, and specialized talent that’s hard to replicate internally. They can deploy full teams across creative, digital, media, and analytics, giving clients instant access to capabilities without carrying the headcount.

But that capacity comes at a cost. Retainers can run $25K-$40K per month [6], and most agencies apply additional layers of fees: 15-20% commissions on media buys [1], 25-40% markups on production [2], and 10-15% margins on technology resold through their stack [3]. On a $5M media spend, a 17% commission alone equals $850,000 in fees before creative work begins.

The model works best when transparency is clear and incentives are aligned. Leaders should pay close attention to how contracts are structured, as hidden fees or volume-driven incentives can erode impact and misalign outcomes.

Consultants & Fractional Leaders

Project-based and fractional engagements provide targeted expertise without fixed overhead. Senior consultants run $200-$500 per hour [6], which can be more cost-effective than hiring a fully loaded executive. Fractional CMOs or interim leaders can deliver strategy and oversight, supported by internal staff or contractors for execution.

The trade-off is continuity. Between projects, momentum can stall, and outcomes depend heavily on the consultant’s experience and clarity of scope. The pace of value depends on experience and clarity of scope. Structured well, however, this model balances flexibility with strategic guidance.

Boutique Agencies

Boutique firms typically focus on a single domain; digital, creative, PR, or media. Their depth of expertise and nimbleness can be valuable, especially when needs are narrowly defined. But specialization creates blind spots. A creative shop can’t run advanced analytics. A digital agency may not guide brand strategy. Relying on multiple boutiques increases coordination demands and risks fragmented execution. Specialists shine when mandates are narrow; they strain when asked to carry the full marketing mandate.

Holding Companies

On the opposite end of the spectrum are global holding companies such as WPP, Omnicom, Publicis, IPG, and Dentsu. Their scale provides reach and resources, but at a cost: multiple agencies under one umbrella, centralized profit centers, and layered overhead.

The Cannes Lions Festival has become shorthand for this model’s excess. Yacht parties and $1,500 rosé brunches may symbolize prestige, but the bill traces back to client budgets. Recognition has value, but executives must ask: whose budget is really funding the celebration? HoldCos excel at global campaigns with unmatched scale. However, they can falter on agility, transparency, and cost efficiency.

Common Pricing Models

Retainer Model

For decades, retainers have been the default: predictable monthly or quarterly fees covering a bundle of services. They provide continuity and stable access to resources, and when scoped well they create efficiency and momentum. The downside isn’t the model itself, but how it’s managed. Poorly defined retainers risk paying for unused capacity or misaligned priorities. When reviewed regularly and tied to outcomes, retainers remain one of the most effective ways to engage senior-level expertise without building fixed overhead.

Hourly Rate Model

Some agencies and freelancers bill strictly by the hour. Rates vary widely: executional work may run $100-$150/hr., while seasoned strategic talent commands $200-$500/hr. [6]. The advantage is transparency; you pay for time used. The drawback is misaligned incentives: efficiency can reduce agency revenue, while inefficiency is rewarded. Hourly billing works for discrete tasks but rarely scales well for strategy or ongoing programs.

Project-Based Model

Project-based pricing sets a fixed cost for defined deliverables: a campaign, website, brand refresh, or product launch. It provides clarity, easier ROI measurement, and budget control. But it can create stop-start momentum and gaps between projects if not tied into a broader strategy. Without a unifying leader, multiple project vendors can operate in silos.

Outcome-Based Pricing

The latest trend ties fees to results; clicks, leads, conversions, or even revenue share. On paper, this aligns incentives. In practice, it often distorts them. Agencies may chase volume over quality, or focus on short-term gains at the expense of long-term brand equity. Attribution disputes are common, and definitions of “outcome” vary widely. The promise is accountability; the reality is often opacity.

Revenue-Share Models

A variant of outcome-based pricing, revenue-share agreements give agencies a percentage of sales generated. These are most common in ecommerce, affiliate marketing, or lead-gen environments. While they may align topline growth, they rarely account for profitability. Agencies can benefit even if margins shrink. Executives should ask whether revenue-share truly reflects incremental growth or simply rewards volume.

Pricing Models at a Glance 

Insights into the Cost Equation

Executives often underestimate how dramatically costs shift across models. To illustrate, consider a business with $20M in annual revenue and a marketing budget set at 7% (~$1.4M annually). The comparisons below are based on current industry averages and are broken into three cost buckets to make them equal across options:

  • Salaries / Fees → what you’re paying for people or services

  • Overhead / Markups → what gets layered on top; benefits, admin, or agency markups

  • Available GTM Spend → what’s left to put into actual marketing programs and media

In-House

Lean Team (5 people, Staff of 4 + Manager)

  • Salaries/Fees: ~$375K-$450K

  • Overhead: ~$110K-$150K

  • Available GTM Spend: ~$800K-$900K

Average Team (10 people, staff of 9 + Director)

  • Salaries/Fees: ~$900K-$1.05M

  • Overhead: ~$270K-$400K

  • Available GTM Spend: ~$0-$200K (budget nearly consumed by people/overhead)

Full Ops (20 people, staff of 19 + VP or above)

  • Salaries/Fees: $4M-$5M

  • Overhead: $1.2M-$2M

  • Available GTM Spend: $0 (requires $6M-$7M+ annually, far beyond a $1.4M budget)

Full-Service Agencies

  • Salaries/Fees (Retainer): $300K- 480K annually

  • Overhead/Markups: 15-20% on media and production (e.g., $750K-$1M on $5M spend)

  • Available GTM Spend: Reduced; markups apply regardless of budget size, and the impact compounds as spend scales.

Fractional / Consultant

  • Salaries/Fees: $150K-$250K (strategist + contractors)

  • Overhead/Markups: Varies (can be standard agency style mark up or transparent and pass-through only)

  • Available GTM Spend: ~$1.15M-$1.25M (majority of budget flows directly into programs/media)

Boutique Agencies

Boutique agencies span a wide spectrum. They’re often a strong fit for smaller companies that only need support on an as-needed basis; for example, a campaign, rebrand, or digital project. They also work well with mid-size businesses on ongoing retainers. Most boutiques flex between hourly project work and $10K-$20K/month retainers ($120K-$240K annually), depending on scope.

  • Salaries/Fees: ~$120K-$240K annually (retainer model)

  • Overhead/Markups: Lower than holding companies, but 10-15% pass-through on media/production is common

  • Available GTM Spend: ~$1.1M+ of a $1.4M budget can still flow into market activity, but service depth and scalability may be limited

Key Consideration: Boutiques can deliver nimble expertise, but capacity constraints and “order-taking” risks mean they often work best as complements to in-house teams or strategy-led consultants. In many cases, boutiques themselves serve as vendors to larger agencies, providing specialized execution rather than full strategic ownership. 

The Takeaway

On the surface, the numbers can feel overwhelming. But every successful company faces the same equation, and there’s always a path to align spend with strategy. Marketing isn’t a sunk cost; it’s how brands secure tomorrow’s revenue. Which is why the smartest leaders sharpen their questions before they finalize their next plan.

What Executives Should Ask Before 2026

The best decisions aren’t about choosing in-house, agency, or consultant; they’re about demanding clarity where it matters most:

  1. Budget discipline: Where does every dollar actually go, and what impact does it create?

  2. Aligned incentives: How are partners both internal and external rewarded, and does that align with business goals?

  3. Value clarity: Am I paying for strategy, execution, or just layers of overhead?

  4. Agility: What happens if priorities shift mid-year, and how quickly can resources pivot?

  5. Ownership: Who controls the data, insights, and relationships - us or the vendor?

  6. Scalability: How will this model flex as the business evolves?

Because those who ask differently, lead differently. 

The Executive Advantage

Because the truth is: agencies aren’t the problem. Neither are in-house teams. The real opportunity lies in aligning incentives, and rethinking old structures that limit impact.

In a year where every dollar is under the microscope, leaders can’t afford to choose based on habit or surface promises. The winners in 2026 will:

• Understand the trade-offs.
• See through the jargon.
• Align spend with outcomes, not overhead.

 The right question isn’t agency or in-house?
It’s how do we structure marketing to drive outcomes transparently, strategically, and without waste? 

Our Perspective

There’s no perfect model — only the one that best aligns with your goals, resources, and stage of growth. The opportunity lies in asking sharper questions, seeing where risks hide, and structuring relationships so every dollar drives outcomes, not overhead.

That’s where experience matters. At CLINTONSCOTT, we’ve worked across agencies, in-house teams, and hybrid structures. We help executives weigh options, anticipate pitfalls, and make confident choices … from strategic direction to tactical execution. Our commitment is simple: no layered fees, markups, or wasted capacity. Strategy leads; execution follows transparently.

If you’d like more insight into which model makes the most sense for your business.

 

Sources

[1] Elevation B2B. The Secret Agency Cost Formula. 2024. https://elevationb2b.com/blog/secret-agency-cost-formula-b2b-marketing-agency
[2] UmbrellaUS. What is the Average Profit Margin for a Digital Marketing Agency? 2024. https://www.umbrellaus.com/what-is-the-average-profit-margin-for-a-digital-marketing-agency
[3] Parakeeto. Agency Fee Calculator. 2024. https://parakeeto.com/blog/agency-fee-calculator
[4] Hawke Media. In-House Marketing vs Agency. 2024. https://hawkemedia.com/insights/marketing-agency-in-house
[5] Flyrise.io. The Real Cost of In-House vs Agency. 2024. https://flyrise.io/in-house-marketing-vs-agency
[6] Avalanche Firm. The Real Cost of Hiring a Marketing Agency vs In-House Team. 2024. https://www.avalanchefirm.com/blog/the-real-cost-of-hiring-a-marketing-agency-vs-in-house-team
[7] HawkSEM. Marketing Agency Pricing. 2024. https://hawksem.com/blog/marketing-agency-pricing

 

 

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Clint Allen