Digital marketing is more than a mere list of online techniques; it's a complex combination of interconnected systems that function uniquely across industries, susceptible to swift trends, and demands seamless coordination for effective implementation within a project or business. The ongoing debate between in-house and outsourced marketing still persists, however there seems to be a third way through which a marketing agency can provide businesses not just a service, but a continuous and adaptable partnership – the subscription model, pioneered by such agencies as NinjaPromo.
Introduction
No company's marketing has ever been fully run through freelancers, and most, if not all companies with in-house marketing teams still have to turn to marketing agencies when they need to adapt, expand, manage crisis situations and test various hypotheses. A lot has been said on the pros and cons of focusing on in-house teams exclusively and other approaches.
The article will explore primarily the differences between subscription-based marketing agencies and contract-based marketing agencies, which represent two different models for providing marketing services to clients.
Subscription vs Contract-based Marketing Agencies
There are two distinct approaches to how marketing agencies offer services to their clients, each with their own pros and cons. The key differences lie in payment structure, service duration, and flexibility.
Payment Structure:
Contract-Based Marketing Agency: In this model, clients sign a specific contract that outlines the scope of work and the duration of the engagement. The agency may charge a lump sum upfront or set up payment milestones throughout the contract period.
Subscription-Based Marketing Agency: In this model, clients pay a recurring fee, typically on a monthly basis, to access ongoing marketing services. The fee is fixed, but the services rendered are subject to change on-the-fly, making it easier to control expenses in uncertain situations, while doing what needs to be done in the marketing department.
Service Duration:
Contract-Based Marketing Agency: The services in a contract-based arrangement are delivered within a specified time frame as outlined in the contract. Once the contract period ends, the engagement may or may not be renewed.
Subscription-Based Marketing Agency: The services provided by a subscription-based agency are ongoing and continue for as long as the client maintains their subscription. Clients can usually cancel their subscription with a notice period.
Flexibility:
Contract-Based Marketing Agency: While contracts can be flexible to a certain extent, they usually have a fixed scope of work for a specific duration. Changes to the scope may require contract amendments, which can be more cumbersome compared to a subscription model.
Subscription-Based Marketing Agency: This model offers greater flexibility as clients can often choose from various subscription tiers or plans based on their needs and budget. They can easily scale up or down their marketing services as required, based on the analysis of transparent reports that include hour-tracking data as well.
In fact, this is one of the best selling points of this approach, and a number of executives have voiced their opinion in favor of this approach in a recent Forbes article, highlighting the flexibility and the efficiency of a tailored approach to every client.
“Sometimes clients come with a certain goal in mind and have an idea how to reach it. Initially a client can engage our paid ads department for a performance marketing campaign to learn that the conversion rate is below expectations. However, we do not limit ourselves and our clients to certain ways to achieve their goals, and most of the time we test other services and hypotheses and stay goal-oriented, reaching the target through other means.” – Paul Lipen, Co-founder at ninjapromo.io, subscription-based marketing agency.
Commitment Level:
Contract-Based Marketing Agency: Clients are committed to the duration specified in the contract. They are obligated to fulfill the terms of the contract until it expires or, in some cases, negotiate early termination terms. On the other hand, the contractor can be incentivized to “cook the books” just before the end of the contract and artificially inflate some of the deliverables.
Subscription-Based Marketing Agency: Clients have an ongoing commitment to pay the monthly fee as long as they want to use the agency's services. They can discontinue the subscription at any time with proper notice. The agency is incentivized to commit heavily to each client and deliver value on a monthly basis, so that the client continues renewing the subscription. It promotes transparent two-way communication between the client and the agency and helps both manage their workload and expectations.
Focus on Retention vs. Project-Based:
Contract-Based Marketing Agency: The focus here is on completing the project or delivering the specified services outlined in the contract. While the agency may seek contract renewals or additional projects, the relationship might be more project-focused.
Subscription-Based Marketing Agency: This model often focuses on long-term relationships and client retention. The agency aims to provide continuous value to retain clients over an extended period, and is highly motivated to continuously look for new avenues to explore with the clients and gradually set more ambitious long-term goals.
Situations that Call for a Marketing Subscription
There are a number of situations where going down the path of marketing subscription is by far more preferable to contract-based agency work.
- Early-stage startups on funding stage
The way startups are built, especially in some segments like online SaaS services and applications, often leaves them in situations where they have an MVP with some traction, but lag behind in the marketing department all across the competencies: from go-to-market strategy and community, to branding, content and PR.
There's no time to build an in-house marketing team in this case, and there's a lot of room for experimentation, trial and error, so outsourcing the promotion of funding stage startups to a subscription-based marketing agency makes perfect sense. - Businesses looking to experiment
Sometimes a fully-functioning business needs an extra push to keep growing. It may have a great content and PR team, but if the competition starts using paid advertising or forming a community around their projects, it's easy to fall behind. In this case reformatting the in-house marketing team can take time and money, while success is never guaranteed. For a completely new foray into previously unused marketing tactics, it's a good idea to employ a ready-made team of professionals who can deliver results here and now, see if it's the right avenue to explore, and maybe eventually the business ends up getting its own specialists who work in the same key. But it's best to try before committing. - Company looking for marketing fit while lacking expertise
A highly qualified CMO ready to work full-time is a necessity for many companies, but it's hard to find one and it's a yearly expense of at least $100,000. Without one it's impossible to orchestrate a go-to-market strategy, define target audience, select the right marketing channels and set a company for long-term growth.
However, it's possible to borrow the same (if not better) kind of expertise by employing a subscription-based marketing agency, which has dedicated strategists with CMO-level experience, who will have a more than reasonable level of commitment and immersion (seeing how they can be working on multiple projects) at about a quarter the price, if you can their working hours that go towards working on a project's overall strategy.
Conclusion
Both models have their advantages and suit different types of businesses and marketing needs. Subscription-based agencies are well-suited for ongoing marketing support and maintaining a consistent online presence, while contract-based agencies work well for specific, time-bound projects or campaigns with highly predictable budgets and scope of work.
The emergent subscription-based model appears to be highly flexible, and there are only a handful of situations where employing it makes little sense, for instance for really small businesses which can only afford a freelance specialist and look for maximum savings, or for auxiliary one-off tasks that do not lead to creation of recurring tasks with measurable KPIs and goals.