One of the many key decisions founders are faced with early on is what kind of foundational marketing support they will need. In the early stages, every decision counts, especially when it comes to allocating resources. This is one of the reasons why temporary business management or fractional jobs are up 57% since 2020. Founders are justifiably more reluctant to hire full-time resources early on given the dynamic nature of their business, the time it takes to find and secure talent, and the cost commitment. (Even bringing in temporary or part-time support requires time to onboard and manage on an ongoing basis, along with earmarking a dedicated budget for both labor and fixed costs.)
I’ve been in many conversations with founders who have invested in the wrong type of support initially, resulting in painful setbacks when it comes to achieving their growth goals. For example, investing in a consultant without confirming they have the capabilities and resources to actually execute the work leaves you no better than where you started. Investing in an agency before having clear objectives, a scope, and expected outcomes in place can burn through cash quickly. And hiring a fractional CMO without having the resources to support their vision can be problematic. This article outlines the differences between the three models, key considerations for deciding which makes the most sense for your current situation, and common pitfalls to avoid.
The Differences Between Consultants, Agencies, and Fractional CMOs
Marketing consultants often have expertise in specific areas such as branding, content, or market research. Their focused knowledge allows them to dive deep into your startup's needs and provide targeted solutions. Consultants bring specialized knowledge and skills to address specific marketing challenges or objectives.
Marketing Agencies typically house a diverse team of professionals with expertise in various areas of marketing. From graphic designers to SEO specialists to content creators, agencies provide a one-stop solution for your marketing needs. One caveat here is that there are two types of agencies to consider. The first is your traditional agencies (which I’m referring to here). The second type is specialized agencies, which focus on one or a few offerings. Examples of specialized agencies include content, social media, and branding. Read more about the differences in agency models here.
Fractional CMOs bring extensive experience and strategic insight to the table. They have a deep understanding of market dynamics, consumer behavior, and emerging trends and are able to support your longer term strategy. They operate as a part of your leadership team, often weighing in on strategic business decisions, and are responsible for managing internal marketing teams and external resources.
Keys To Making an Informed Decision
Within each model, there are a number of factors to consider before making a decision including your goals, budget, and preferred working relationship. Before deciding on how to proceed, consider the following:
- Resources: What amount of budget and time do you have allocated to achieve your marketing goals?
- Clarity on Goals: Do you need help figuring out where to start or do you have a clear idea of your current needs?
- Short term vs. Long term Strategy: Are you looking for quick wins or do you need a partner to set the vision for how Marketing supports your business?
Weighing the Pros & Cons
Here’s our take on which business case each model is best suited for, the pros and cons, and what to watch out for:
Marketing Consultants: Best if you are looking to experiment and achieve short-term marketing wins.
Pros:
- Cost Effective: Marketing consultants operate independently, so the value exchange is clear. You’re not paying for the overhead associated with running a larger business.
- Flexibility: You can engage consultants on a project basis, providing flexibility and agility for startups with limited resources.
- Personalized Attention: Consultants offer personalized attention, working closely with you to understand your business needs and goals.
- Fast Turnaround: Consultants can often provide quick turnaround times for projects, helping startups experiment and adapt to changing market conditions rapidly.
Cons
- Limited Capacity: Consultants may have limited capacity to handle comprehensive marketing campaigns or lack diversity in their skill sets.
- Lack of Continuity: Working with different consultants for various projects may result in a lack of continuity and cohesive strategy.
- Dependency on Individual: Your startup's success may become dependent on the availability and expertise of individual consultants.
- Accountability: Unlike a fractional CMO, consultants may be less invested in the business and therefore less focused on outcomes.
What to watch out for: Consultants who don’t have the resources to execute, or those that don’t commit to tying their work to ROI.
Recommended Pricing Model: Project-based
Agencies: Best for when you’re looking for “out of the box” ideas and end-to-end marketing support.
Pros:
- Diverse Skill Sets: Agencies offer a diverse team of specialists, providing expertise across various marketing channels and tactics.
- Scalability: As you grow, agencies will have resources and bandwidth to scale their services according to your business’s trajectory.
- Integrated Campaigns: Agencies develop integrated marketing campaigns that align with your brand identity and overarching business objectives.
- Proprietary Tools & Technology: You may have access to technology they’ve built in-house for things like media planning, measurement, and SEO, that adds value over off-the-shelf solutions.
Cons:
- Less Personalized Attention: Due to their client load, agencies may provide less personalized attention compared to individual consultants.
- Slow Ramp and Delivery: Agencies managing clients from different industries may take longer to become subject matter experts.
- Inconsistent Support: The turnover rate at agencies is incredibly high, so even if you’re working with the same agency over time, the people servicing your business will likely change.
- Costly Engagement: Scope creep with agencies can happen quickly, and agencies will often try to upsell additional services.
What to watch out for: Agencies that don’t have experience working in your vertical or with startups in general. Also keep an eye out for recent mergers or acquisitions that may impact how they service your business.
Recommended Pricing Model: Project-based or Incentives structure, (I don’t recommend putting an agency on retainer).
Fractional CMOs: Best for when you need clarity on how marketing will support your broader business goals.
Pros:
- Senior-Level Expertise: You’ll get access to senior-level expertise and strategic insight to guide your startup's marketing strategy.
- Strategic Partnership: Fractional CMOs operate as strategic partners invested in your startup's success, providing executive-level guidance.
- Cost-Efficient Leadership: Hiring a fractional CMO is often more cost-effective than bringing on a full-time CMO, especially for early-stage startups.
- Flexible Engagement: Opportunity for flexible engagement options, providing part-time or interim leadership tailored to your startup's needs.
Cons:
- Limited Availability: Fractional CMOs may have limited availability due to working with multiple clients, potentially impacting responsiveness.
- Transition Challenges: Transitioning between fractional CMOs or to a full-time CMO may pose challenges in maintaining continuity and strategic direction.
- Dependency on Individual: Similar to consultants, your startup's success may become dependent on the availability and expertise of the fractional CMO.
- True Costs Unknown: The resources needed to execute on the CMO’s vision can be widely variable. You’ll need to set clear guardrails before agreeing to a partnership.
What to watch out for: CMOs that have more than 3 or 4 clients at any given time, or do not have prior experience working with startups.
Recommended Pricing Model: Monthly Retainer
The Most Important Factor: The People Involved
Even if you have a clear sense of what type of model makes the most sense for your startup, the lines are increasingly blurred between the three. There are consultants out there who operate more like a fractional CMO, and there are agencies that are highly specialized and lean, operating more like consultants. Asking the hard questions up front to ensure that the pros are not outweighing the cons will help you avoid some of the common pitfalls outlined here.
At Seed Through Series, we operate across both consulting and Fractional CXO models depending on the business context and needs. Check out our offerings here. If you’d like to learn more about how we help startups like yours grow, reach out to us for a consultation call.
