Building a Marketing Organization: Models and Structures of Agency Utilization

The in-house vs. agency debate is a false choice. The real question is how to architect the relationship.

Every head of marketing eventually confronts the agency question. Not whether to use agencies — almost everyone does — but how. How much to outsource, what to keep in-house, how to structure the relationship, and how to avoid the dysfunction that plagues so many client-agency partnerships.

Having sat on both sides of this table — as an agency owner and as a client — I’ve seen nearly every model. None of them are perfect. But some are dramatically better than others, and the difference usually comes down to how deliberately the model was designed.

The spectrum

Agency utilization exists on a spectrum. Most organizations land somewhere in the middle, but it’s useful to understand the extremes.

Fully outsourced

Everything — strategy, creative, media, production, analytics — is handled by one or more agencies. The in-house team is essentially a procurement and coordination function.

When it works: Early-stage companies without marketing infrastructure. Organizations in transition. Categories where specialist expertise is more valuable than institutional knowledge.

When it fails: Always, eventually. No agency will ever understand your business, your customers, or your internal dynamics as well as your own people. And the incentive structures are fundamentally misaligned — agencies are rewarded for complexity and hours, not for simplicity and outcomes.

Fully insourced

Everything is handled in-house. No agencies, no contractors, no external partners.

When it works: Rarely. Even the most capable in-house teams benefit from external perspective, specialized expertise, and surge capacity.

When it fails: When the organization can’t attract top creative talent (compensation, culture), when speed requires parallel workstreams that exceed internal capacity, or when institutional thinking becomes an echo chamber.

The models that actually work

In practice, the best marketing organizations I’ve seen use one of three hybrid models:

Model 1: Strategic core + specialist agencies

The in-house team owns strategy, brand, and the customer relationship. Specialist agencies handle execution in domains that require deep technical expertise or creative specialization.

This is the most common model among mid-size companies, and it works well when the boundaries are clean and the in-house team is strong enough to actually direct the work.

Model 2: In-house studio + agency of record

The organization builds a full internal creative studio capable of handling 70-80% of production. A single agency of record handles big-bet campaigns, brand evolution, and work that benefits from outside perspective.

This model requires significant investment in internal creative talent but pays for itself within 18-24 months through reduced agency fees and dramatically faster turnaround times.

Model 3: Embedded agency teams

Agency staff are embedded full-time within the client organization. They sit in your office (or your Slack), attend your meetings, and function as an extension of your team — but they’re employed and managed by the agency.

This is the most expensive model on a per-person basis but often the most effective for organizations that need agency-caliber talent with in-house-level context.

Principles for making any model work

Regardless of which model you choose, certain principles apply:

1. Own your strategy. Never outsource strategic thinking. An agency can inform strategy, pressure-test it, and help develop it — but the final decisions about who you are, what you stand for, and where you’re headed must be made by people with long-term skin in the game.

2. Define the operating model explicitly. Who briefs whom? Who approves what? How are conflicts resolved? What are the SLAs? Write it down. Review it quarterly. Most agency dysfunction comes from ambiguity, not incompetence.

3. Align incentives. If your agency is compensated on hours, they will find ways to spend hours. If they’re compensated on deliverables, they will optimize for volume over quality. The best arrangements tie compensation to business outcomes — but this requires trust and transparency from both sides.

4. Invest in the relationship, not just the contract. The best client-agency relationships look like partnerships, not vendor arrangements. This means investing time in helping the agency understand your business, including them in strategic conversations, and treating their people with the same respect you’d give your own team.

The quality of work an agency produces is directly proportional to the quality of the relationship. I’ve seen mediocre agencies do exceptional work for clients who invested in the partnership, and world-class agencies produce garbage for clients who treated them like vendors.

5. Plan for transition. Every agency relationship ends eventually. Build your operating model so that knowledge transfer is continuous, not catastrophic. Document everything. Ensure your team understands the work, not just the outputs.

The decision framework

When deciding what to outsource, ask three questions:

  1. Is this a core competency? If understanding this domain deeply is essential to your competitive advantage, keep it in-house.
  2. Does this require sustained context? Work that benefits from deep institutional knowledge should lean in-house. Work that benefits from fresh perspective and diverse experience should lean agency.
  3. Is the volume consistent or spiky? Consistent, predictable workloads favor in-house. Project-based or seasonal spikes favor agency.

There’s no universal right answer. But there is a right answer for your organization at this moment in its evolution. The key is to design the model deliberately, revisit it regularly, and resist the temptation to let it drift into something no one actually chose.