China Marketing Blog

China Marketing - Agency or In-House?

Tait Lawton — Thu, 05/04/2017 - 06:43

So you’re entering the China market soon. Should you hire an in-house team to do the marketing or hire an agency?

I’m interested in your opinion, please leave it in the comments. First I’ll share my own.

I’ll share some of the pros and cons of each method, including a few hidden risks you might now have considered. Finally, I’ll talk about hybrid approaches.

 

Agency vs In-house – Pros and Cons

With an in-house team, you have more control and can try to build the China marketing function into your company’s DNA. Your in-house China marketing pros will gain a great understanding of your brand and products. Plus, they’ll form strong relationships within your company, which should help them attain the resources necessary to succeed.

An agency will be less expensive and offer more expertise on Chinese marketing. They’ll be able to get moving a lot faster. They might be able to provide a fresh perspective as well.

Pros & cons of using an agency or in-house approaches for marketing in China.

Since I run an agency, all of those points feel obvious to me. But the one part that takes some people by surprise is that agencies are less expensive.

Here are a few reasons why that’s the case:

  1. It’s easier for an agency to attract talent. Great marketers want to work where they can become even better marketers. They love the fast pace and variety of agency work. To attract those same type of people to work in-house, you would have to offer a premium salary or other expensive options (better office, more holidays, etc).
  2. If you’re hiring in your home country, chances are that salaries are going to be a lot higher for you there.

    If you’re hiring in China, there are various human resources costs you’ll need to factor in, such as severance packages, lawsuits, maternity leave. Just read through China Law Blog’s section on China employment law. But don’t read it just before bed, there’s some scary stuff in there!

  3. With an agency, you can buy as much service as you want. For example, you can hire the equivalent of 0.5 people instead of 1. Or 2.3 instead of 3, or whatever it is that you want.
  4. Training! This is the biggest expense that is overlooked. When clients pay an agency, they pay for the work done for their company. But agencies are always investing in training. That’s really the key.
  5. Media buying. Agencies can apply leverage to get discounts on media spend.

 

Case 1: Agencies can Invest More in Training

We had a client that was facing a lot of pressure from competitors on their existing channels. They came to us to better manage Weibo advertising. But, we found an additional opportunity in affiliate marketing.

The client wouldn’t have had the budget to learn how to apply affiliate marketing, the learning curve would take too long. It was pretty new to us too. For us though, it made sense, because we could apply the learnings from this project to several other client projects.

Affiliate advertising is their largest channel now, with the best ROI too.

In a field like digital marketing, keeping up with training is a huge expense. Agencies can foot the bill because they do the training once and earn revenues from multiple clients.

Sample Chinese affiliate ad

 

Question to Ask: Which Skills Do You Need?

It’s key to gain a clear understand of which skills you really need to have access to. If you’re considering whether to hire an agency to help with marketing in a foreign market, you’re not only gaining marketing skills.

There are actually at least two main skillsets that you’re hiring for:

  1. Chinese marketing.
  2. Cross-cultural communication skills.

It sounds simple, but sometimes it’s not so simple to recognize in practice, for a couple reasons.

First, there’s going to be a learning curve for the Chinese market. In my experience, Western marketers don’t understand how tough it’s going to be, and can’t yet see how their ‘tried-and-true’ marketing tactics will fail. They can learn faster if the China marketing team has the ability to help educate them. That’s where an experienced account manager comes in handy. Somebody that has knowledge of Western & Chinese marketing, so can explain things in a way that a Western marketing lead will understand.  So educating your higher-ups doesn’t only require marketing skills, but also cross-cultural communication skills as well.

On the other hand, it’s very common to hear questions from clients about “translating” campaigns. They’re seeking help with cross-cultural communication basically, but it’ll involve a lot more than that because China has a totally different environment and all the platforms are different.

Nowadays, the marketing platforms in China aren’t only different, but many of them are so far ahead of Western platforms that Western marketers might not even have the framework for understanding them. The field of social commerce is a good example. Unless you’ve lived in China, you can’t really know the full potential for integrating social media with service and e-commerce.

Whichever team format you decide, you’re absolutely going to need to have the team stacked with both Chinese marketing skills and cross-cultural communication skills.

 

Question to Ask: How Much Control Do You Need?

Having in-house team members will give you more control, almost certainly. Having an agency on hand will help you get marketing results faster.

In my experience, control & results are inversely related. The more control you give up to a good agency, the better results will be. For that matter, the more control you give up to a good employee, the better the results will be. That’s my management philosophy: 1) get everybody on the same page, 2) measure results quickly & accurately, 3) give each team member freedom to do their job.

 

Case 2: An Agency for Hands-off & Results-focused Client

One e-commerce client of ours isn’t at all like the larger brands we serve. The only thing they care about is sales revenue. We run all their Chinese marketing, have full control of the website and customer support. They can’t read Chinese either. Talk about being comfortable without control… They must meditate…

Results are amazing, costs always stay low. We can find and implement new marketing channels with very little hindrance.

 

Alternative: Hybrid Approach

Of course, you could choose to build your team out of both in-house and agency team members. Indeed, some form of this is my favourite approach for any brand that can afford it and wants a higher degree of control.

I think this approach works great when the in-house team member is a generalist and the agency staff support them with expertise and the efficient implementation of various marketing functions. For example, the in-house lead may co-ordinate the website, marketing strategy, reviewing results of ad channels, co-ordinating customer support, contributing to company strategy, etc. Meanwhile, the agency team members should provide specific marketing functions such as managing a Baidu advertising campaign, launching a live-streaming event with an influencer, suggesting unknown new marketing options, advising on promotion strategy, etc. This can be done by an agency team of 3-5 people, each with various strengths.

 

Case 3: Brand Experienced With China Goes Mostly In-House

First of all, I’ll mention that I looked pretty hard to find an example of success with a purely in-house strategy. I couldn't find a purely in-house example, but here’s the closest case I could find, which is mostly in-house, courtesy of Ashley Galina of ChoZan.

An International chain store uses in-house staff to run all of their organic (non-paid) social campaigns. They have a strong marketing function within their organization and a strong presence in China already, so are able to create China-centric campaigns. They have a nine-person in-house marketing team.

They do almost everything in-house but also hire agencies to plan & launch bigger ad campaigns. The ad campaigns are more complex, involving online-to-offline, social, media and celebrities.

They’ve been able to go mostly in-house because they have the resources to grow a strong in-house team that has a great understanding of what their customers want. Still, they chose to hire experts for challenging large-scale advertising campaigns.

 

A Couple Examples

Off the top of my head, here are a few more situations, and what I’d probably recommend:

  1. A university marketing team wants to run a Chinese lead generation campaign for 3 months with a budget of 10K USD, and get started within 2 weeks.
     
    I’d recommend using an agency only. Why? Because the budget is low and their in-house team would never be able to launch in time.
     
  2. A Spanish luxury footwear brand wants to build their brand in China over the next three to five years, they don’t yet have a strategy.
     
    I’d recommend an in-house lead with an agency to support strategy formation. Why? They will need to gain a strong understanding of the market and how their brand can be positioned in China. Plus, they have time for an in-house team member to learn. An agency can help them form a strategy a lot more quickly, and launch a trial campaign as well.
     
  3. A bilingual individual wants to create their own online English-language learning course. They can work part-time and aren’t in a rush.
     
    I’d recommend going in-house only. Why? They can learn it themselves over time. Learning Chinese marketing skills will be essential for their business. After they grow, they could hire team members in-house or via an agency.
     
  4. A startup with a hot new product wants to enter the Chinese market and quickly ramp up sales before the competition has caught up.
     
    I’d recommend an agency only. Why? As a startup, I’ll assume they haven’t built up their business enough to be able to handle major new initiatives. Plus, they want to get moving fast.
     

Closing Thoughts

If I were a company moving into the Chinese market, I’d almost always look for support from an agency while also having an in-house team member involved. The decision would come down to deciding on the mix.

When deciding the mix, follow these tips:

  1. Be sure which skills you need on your team.
  2. Remember to compare the full cost of in-house staff vs agency fees. In other words, to calculate in-house expenses, remember to add in costs related to training, office space & equipment.
  3. Use simple & clear progress measurement methods in order to get everybody on the same page.
  4. Give all members the room to do their work.

 

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