Study: Half of Small Digital Agencies Outsource SEO & Web Development
March 3, 2015 | Contributed by: Joe Morsello
A large percentage of SMBs outsource digital marketing because of time, expertise and resource constraints. Interestingly enough, in some ways small to mid-sized online marketing agencies aren’t much different.
According to a new study by HubShout, of the most common online marketing services they provide, local boutique agencies outsource a good portion of the work they do. SEO and website development – the top two according to the study in regards to client allocation of online marketing spend – led the way, being outsourced by 52% and 58% of these agencies respectively.
On the low end of the scale is reputation management and social media, with 25% of agencies saying they outsource this work. One in four agencies is nothing to scoff at, especially when, technically, all of the services these agencies provide could be managed in-house with the proper know-how and strategy.
With clients of small agencies spending over half of spend on websites and SEO, and with over half of these agencies outsourcing this work, the question is, where is this spend going? Simply put, national vendors. According to a recent study from Borrell Associates, national vendors earn around 60% of web presence spend or about $54B more than what is spent with local vendors.
The Borrell study showed that the most cited national vendors for web presence support included Facebook, Frogman, GoDaddy, Google, HubSpot, SquareSspace, Dex Media, Web.com, Weebly and Yahoo.
What is most interesting when comparing the Borrell and HubShout studies is the notion of competition. While Borrell’s study suggests competition for digital marketing spend is intense, HubShout seems to be showing it is half as intense as we thought. Many of these small, local digital marketing agencies are willingly giving spend away to their larger competitors.
While we can definitely attribute some of this outsourcing to resource constraints, the larger picture is probably more complex than that. Small agencies, much like their SMB counterparts, and even national brands, are challenged by a complex and fragmented digital marketplace.
On the question of effectiveness, in a recent BrightLocal survey 11% of “marketing” SMBs – digital marketing, marketing consultants, and local SEO agencies – reported internet marketing to be “not effective.” While 11% isn’t much, it is interesting when considering that these SMBs are selling and providing the very services they don’t find effective!
A few weeks ago I discussed the way in which overall industry understanding of digital marketing continues to be one step behind tech, platforms and software developments. I think this is equally or even more applicable to the small digital marketing agency. But if these agencies are to ultimately succeed, they will need to do what it takes to bring this spend in-house. After all, they have one huge benefit that many national vendors don’t: they are local.