The ROI of Partnering with an SEO Contractor vs Full-Time Employee

What is The ROI of an SEO Contractor vs Full-Time Employee?

As a marketing manager or owner and operator, there is always the never ending question when you’re looking to grow your business. 

Should you hire an in-house employee or outsource the job to professionals? 

And the answers can vary significantly, depending on what area of your business you’re looking at.

Read to the end and you’ll have a solid understanding of what to do next for your business, when it comes to hiring or outsourcing Search Engine Optimization services.

ROI of Partnering with an SEO Agency or Contractor

The ROI of partnering with an SEO Agency or Contractor is quite simple as all costs are usually outlined clearly in a proposal for services.

To calculate the ROI of an SEO agency, there are 3 main areas to calculate:

  1. Cost of the agency: The true cost of the agency or contractor includes all hourly or project fees for service, employee time spent working with the agency and taxes.
  2. Work Scope: The scope of the SEO work can range from certain SEO tactics, to full-stack SEO services, combined with SEO driven content marketing.
  3. Outcome: This is the estimated result for increasing revenue or driving more traffic to the companies website.

ROI of Hiring a Full-Time SEO Employee

The ROI of hiring an employee can be a bit more complex due to the many other factors that go into the costs of hiring. A

As well as the potential for job description changes and “meeting-creep” with employees spending more time in meetings than anticipated.

To calculate the ROI of a full-time SEO employee, you’ll need to factor in:

  1. Cost of the employee: The true cost of a full-time employee includes their base salary, performance bonuses, payroll expenses, HR’s time investment for recruitment, benefits packages, vacation time, career development funds and resources for the employee.
  2. Job Description: The type of work the employee will do is outlined in their job description. This also does not include any job-creep that typically happens when hiring in-house. 
  3. Outcome: This is the estimated result for increasing revenue or driving more traffic to the companies website.
Source: Contrarian Thinking

ROI Comparisons

Let’s break it down with a comparison. Below is the equation we’ll use:

ROI = (Outcome – Costs) / Costs

Hiring in-house

The costs for hiring a Senior SEO specialist contains the following:

Total costs: $117,000 per Year

And there is an expected outcome that this hire will drive an additional $200,000 worth of new business or marketing influence. 

ROI = ($200,000 – 117,000) / 117,000 = 71% ROI

Outsourcing SEO

The costs for outsourcing SEO to a contractor or agency contains the following:

  • Average Yearly Retainer Cost: $84,000;
  • Taxes: $5,000;
  • Time Managing Agency: $1,000.

Total costs: $90,000 per Year

Using the same expected outcome, it’s assumed the agency or contractor will drive an additional $200,000 worth of new business or marketing influence. 

ROI = ($200,000 – 90,000) / 90,000 = 122% ROI

Overview

Employee ROIContractor / Agency ROI
71%122%

**However, it is important to note that these calculations are estimates and may not accurately reflect the actual results of either option. It is also important to consider other factors such as the quality of the work and the level of expertise of the agency or employee, as well as any potential long-term benefits or drawbacks of either option.

Savings Through Outsourcing

There are additional savings to think about when outsourcing that are often hard to calculate and can represent savings for a business.

Avoid ‘Job Creep’ 

When outsourcing, it’s much easier for the business to avoid “scope creep”, as the services to be provided are clearly outlined in proposals and contracts. This provides a clear picture of what work will be done.

Hiring presents a different challenge to “scope creep”, called “Job Creep“.

While a job description may help define the tasks to stick to, it’s very easy for managers and operators to ask their employees to complete other tasks.

For example, a Marketing Manager may ask an SEO to help provide support on a related Google Ads campaign or email marketing campaign. While this is an innocent ask, this actually costs the business as an employee may find it hard to say no and complete work that isn’t labelled in their job description. 

No Need for Promotions

SEO is one of the hardest marketing roles to promote because the job descriptions rarely change significantly with a promotion, unless the team is expanding significantly. 

Because of this, it can be difficult to promote in-house SEO employees and thus they’ll usually leave within 1-2 years. Ultimately, increasing hiring and turnover costs for the business. 

Getting Started with a Contractor or Agency

If you see value in an SEO-focused contractor or agency but don’t have the internal bandwidth to dedicate additional resources to SEO and content marketing, hiring a contractor or agency would be worth exploring. 

Get a free consultation with Demand Path today.

Ready To Scale Your SEO Efforts?

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