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The in-house agency math test. How do you add up?

By: Harry

FIRST, A LITTLE HISTORY LESSON.

You have to love ironic names.

There’s the physicist named Adam Baum. 

The world’s fastest human, on land, Usain Bolt. 

And the world’s fastest human on computer, our very own digital studio manager at Tom, Dick & Harry, Matt Fast.

But by far the most ironic of all names was the amazing Steve Jobs.

Sure, he revolutionized the digital era with the super cool Macintosh computer, building one of the world’s most valuable companies.

But his true Noble-prize worthy contribution was creating a super huge inventory of designers and creative people.

Because of the Mac, design capability no longer depends on the eye of an artist but the dexterity of a mouse holder. Anybody can walk into an Apple Store and be ordained an artist just by learning to dabble in programs like InDesign. As a result, millions of art directors were not so much born as enabled. The same goes for editors, cinematographers and scores of multi-media “creative” people.

GOOD THING MACS HAVE CALCULATORS.

Corporations have found tremendous value in this technology. “All we have to do is hire a few folks and equip them with Macs and design software” management reasons and, voilà, the in-house creative department became a cost-cutting strategy. “Why rely on pricey agencies when we can handle design matters more efficiently and conveniently in house?” It makes good business sense, right?

Let’s do the math:

A midlevel art director of even modest talent and experience will cost around $50,000 per year. Figure in benefits, roughly 22% of one’s annual salary, and the cost is really $61,000. And because no art director wants to work on an island, it is customary to employ a second art director or designer. Let’s go a little younger here and get an entry-level candidate with some digital chops. That’s $40,000 in salary plus $8,800 in benefits, adding another $48,800 to the tally. 

Next, they’re going to need computers, software, furniture, a color printer, lights, paper clips, pencils, sketchpads and paper, lots of paper. So let’s get iMacs with stunning retina displays (so their creations will look more stunning) and the latest suite of software from Adobe, including InDesign, Photoshop and Illustrator. Plus a nice ergonomically designed swivel chair from Haworth with a fully stocked workstation. That’s another $15,000 per person for offices and equipment. Or $140,000 total for two people, assuming you have extra office space to house them.

While you’re at it, you’ll need a writer or social media content strategist to bang out brochures, website updates, Facebook and Twitter posts. These types are plentiful with millions of young journalism students hungry to break into marketing.

Don’t even flinch. Sign up a writer for $40,000 per year, $8,800 for benefits and $12,000 more for housing and equipment. That’s another $60,800 for the writer.

As long as we’re crunching numbers, don’t forget the cost of a freelancer to help while your in-house staff vacations in Paris, and to cover the 3-5 personal days and 3 sick days each (5 if you live in cold climates). Freelancers can range from $500-900 per day depending on ego.

Oh yeah, better figure on 3% raises per year for the department—gotta keep people happy. Heaven forbid they leave after a year; those headhunter costs run 20% of one’s annual salary. And who has the time to comb through portfolios and conduct interviews?

CHECK PLEASE.

Bottom line: It could be you’re spending $200,000 or more annually for a three person in-house creative department. They’d better be generating lots of efficient good thinking, that’s a lot of money.

THEN AGAIN...

Of course, there’s another way around all this. Simply hire an agency with a more sensibly priced fee structure. One that can deliver better work, an outside perspective and save you some money and headaches along the way.

We happen to know a good one for you.

So how’d you do?

04.23.14   The Biz

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Don’t put an ad on your tombstone. And other lessons from the One Club’s Creative Leaders Retreat.