In-house vs Outsourced CMO: Which is Right for You?
When it comes to staffing the marketing function, middle-market companies typically enlist a senior leader—a Chief Marketing Officer (CMO)—to develop a strategic, revenue-generating marketing plan and lead its execution.
But hiring a CMO isn’t just a matter of running a job ad on LinkedIn or Indeed. The first step is to decide whether you need a fully dedicated in-house CMO or if you can outsource the role to a fractional CMO. As with any choice, each path presents potential advantages and disadvantages.
The In-House Path
Hiring a full-time employee to lead the marketing charge can work well in some situations. Factors like these should play a big role in driving the decision to hire an in-house CMO.
Institutional knowledge. Over time an in-house CMO gains deep institutional knowledge of your company, industry, products, and services. If you hire someone with prior experience in your industry, you’ll have the extra bonus of accelerating the learning curve. On the flip side, a CMO that works in the same company or industry for a long time runs the risk of becoming insular. Ensconced in the four walls of the same company, their view can become limited (though they may not even realize it). There’s also a risk that an in-house CMO won’t feel tremendous pressure to keep up with what’s new in marketing through conferences, webinars, podcasts, and other resources.
Cultural insight. Developing a strong understanding of your company culture tends to be easier for in-house CMOs than it is for fractional CMOs. But that familiarity shouldn’t equate to being limited by what your company has done before or is willing to do; it’s more about knowing where the land mines are and how to avoid them. A business is like a family: When you know the dynamics, it’s easier to skirt trouble. And it’s easier to get important things accomplished. On the downside, being too wed to the culture can mean an in-house CMO doesn’t advocate for new ideas and accepts the mindset that “we don’t do that here.”
Fluidity. An in-house CMO is often perceived as being more readily accessible than a vendor because they’re “on the clock.” But with many employees working remotely (at least for the foreseeable future), the accessibility advantage has diminished a bit. An in-house CMO can no longer walk down the hall and knock on someone’s door or gather an impromptu in-person huddle. But any senior marketing leader can use technology tools like Slack and email to keep in close contact with their colleagues.
Agility. The tumultuous year of 2020 has taught us many things—among them, the importance of being agile. When you add a CMO to your FTE head count, you lose some of that agility, making it tougher to scale your marketing up/down or even hit the pause button, as many companies did at the start of the pandemic. Once you’ve completed the upfront foundational and strategic efforts of a marketing program (like branding, positioning, and building a marketing culture), the pendulum will shift more toward execution—which isn’t what you pay a high-priced CMO for.
Breadth of experience. When you hire an in-house CMO with a depth of experience in your industry—or retain the same senior marketer on staff for years—you may sacrifice breadth of experience. Senior marketers who’ve worked for multiple companies in varied industries bring a broader set of experiences to the table. For every initiative on your list—a branding project, a new website, implementing marketing analytics—they’ve seen it and done it many times.
Cost. For middle market companies, an experienced and talented in-house CMO will demand a base salary of about $200,000, plus a bonus and fully loaded benefits. That can chew up a big chunk of your marketing budget! At that level, you won’t want them focused on tactical work like writing content or setting up email campaigns. But once you get past the initial strategic planning, there may not be enough high-level work for an in-house CMO—so you’re likely to divert them to tactical execution and overpay in the process. (That’s also one reason there’s a high churn rate at this position.)
The Outsourced Path
Could a fractional CMO be a better fit for your middle-market company? Consider factors like these as you weigh the pros and cons of taking the outsourced path.
Ability to right-size. A CMO’s talent and expertise can prove valuable throughout the life of a marketing program, but it’s especially useful in the early phase, when you’re conducting research, developing strategies, and creating a marketing plan. When you use a fractional CMO, you can right-size the amount of marketing guidance you need, when you need it. But keep in mind: Since fractional CMOs aren’t full-time resources, they can only flex up as the scope of work allows.
Flexibility and scalability. Marketing is a discipline made up of many specialists. No single marketer (including CMO-level talent) will have expertise in all the specialty areas your marketing plan might require. By not tying up too much of your marketing budget on an in-house CMO’s salary, you gain the flexibility to tap the particular specialists you need, when you need them—flipping the right levers to deliver the best results. Likewise, you’ll find it easier to scale up or down as your needs flex.
Marketing acumen. When a company is paying you for advice, you need to be perpetually better than the next person. You simply can’t afford to get stale. That propels fractional CMOs to stay on top of their game by keeping up with the constant changes and advances in marketing. There are certainly in-house CMOs who do the same; there just isn’t the same sense of urgency, which can make it a lower priority. While there are no absolutes, generally marketers who gravitate toward consulting are eager for a variety of challenges and interested in staying on the cutting edge.
Breadth of experience. Just as a lack of breadth could be the case with an in-house CMO, a broader experience base is usually the case with a fractional CMO. They’ve worked with many clients, likely across many industries, and have tackled a diverse set of challenges. That’s why 15 years of experience as an in-house CMO often looks quite different than 15 years of experience as a marketing consultant. That difference often means a fractional CMO can get further, faster—executing effective marketing campaigns quickly and driving revenue growth sooner.
Breadth of networks. Outsourced CMOs are continually tasked with finding the best resources to implement the strategic marketing plans they develop. To match the right specialist to the specific need and provide the greatest value, they reach across their networks to secure reliable, talented experts at the right price. In-house CMOs typically don’t need to have those marketing specialists at their fingertips, so they may not have as broad a network to draw from.
Cultural challenges. Even when an outsourced CMO knows the client’s industry well, it still takes time to get to know the company’s culture. A fractional CMO can’t match an in-house CMO’s cultural acumen and institutional knowledge out of the gate. To shorten the learning curve, they conduct a lot of due diligence as quickly as possible, to understand preferences, identify challenges and obstacles, assess the appetite for change, and get to know the personalities involved.
Vendor mentality risks. Fractional CMOs are most effective when the client views them like an in-house employee. When they become an extension of the business—when they’re fully ingrained—that’s when the best results happen. Even something seemingly small as having a company email address can help pave the way for success. Yet, some companies have a tough time viewing an outsourced CMO as anything other than a vendor. If that’s the case, a fractional CMO might not be the best fit.
If you think a Fractional CMO structure might be right for you, check out our guide: 5 Questions to Ask Before Considering Fractional Marketing.
When it comes to deciding whether to hire an in-house or outsourced CMO, there’s no single right answer that fits all situations. But for middle-market B2B companies that find a fractional CMO is the best fit, Marketri is often the best choice! Our senior consultants apply decades of broad experience to help B2B companies develop and execute strategic marketing plans that drive revenue growth. Contact Marketri to learn about our fractional CMO services!