The agency versus in-house decision gets made on cost most of the time. Someone builds a spreadsheet comparing agency retainer to a full-time hire's salary, picks the cheaper option, and calls it strategy.
That is the wrong frame. The real question is: what does your account need right now, and which model delivers it? Sometimes that is an agency. Sometimes it is in-house. And sometimes the spreadsheet comparison misses the actual cost of both.
This post gives you a framework for making the decision based on your actual situation, not the industry default.
The Real Cost Comparison (It Is Not What You Think)
A good in-house PPC hire costs $80K to $120K/year in salary, plus benefits, tools, and the time it takes to recruit, onboard, and ramp up. That ramp period is typically 3 to 6 months before the person is operating independently. During that time, your campaigns are running without senior oversight.
Agency retainers at the level of actual managed service (not account management theater) run $3K to $8K/month depending on scope. Over a year that is $36K to $96K. On paper, in-house looks cheaper. In practice, the in-house hire is one person with one skill set, usually no specialization in both paid search and paid social, and no bench coverage when they leave.
Neither model is obviously right. The comparison should be capability per dollar, not cost in isolation.
What In-House Teams Do Better Than Agencies
In-house teams win on product knowledge and organizational context. A full-time hire can sit in on sales calls, talk to the product team, get immediate answers from the CEO, and build campaigns around real buyer language in a way no external team can fully replicate.
They also win on speed for tactical changes. If a pricing update goes live at 3pm, an in-house person can have updated ad copy running by 4pm. An agency on a weekly cadence might not catch it until the Monday call.
For companies with a single, simple product, a consistent offer, and an ICP that does not change much, in-house is often the right answer. The work is repeatable enough that depth in one person is better than breadth across a team.
What Agencies Do Better Than In-House Teams
Agencies win on pattern recognition across accounts. A senior account manager at a focused agency has seen 30 to 50 accounts in your category. They have run the same test you are considering in multiple accounts. They know which experiments are worth the setup time and which ones fail 80% of the time.
They also win on specialization. A good agency has people who only run Google Ads, people who only run Meta, and people who only do tracking and attribution. An in-house hire is one generalist. That gap matters most when your account hits problems that require depth in a specific area.
Agencies also absorb turnover. When a key person leaves an in-house team, the account knowledge leaves with them. An agency has institutional knowledge, documentation, and continuity.
The Budget Threshold Where the Math Changes
At $10K to $20K/month in ad spend, an agency is almost always the right model. The account is not complex enough to justify a full-time hire, and an agency can cover the strategic and execution needs at a fraction of the cost.
At $50K to $100K/month, the case for in-house gets stronger. The account is large enough to justify dedicated headcount, and the organizational context advantages of in-house start to matter more.
Above $150K/month, most companies end up with a hybrid: an in-house strategist who owns the relationship and account direction, paired with an agency for execution and specialist support. That is usually the highest-performing model at that scale.
The Account Complexity Test
Score your account on these four dimensions. One point each: you run more than two paid channels. Your conversion cycle is longer than 14 days. Your product line has more than five distinct offers with different ICPs. You operate in more than two countries.
Score of 0 to 1: in-house is viable. A single experienced hire can manage the account. Score of 2 to 3: agency or hybrid is worth considering. The complexity starts to require specialization that is hard to find in one person. Score of 4: agency or hybrid is almost certainly the right model.
The point is not to make the decision for you. It is to make the complexity visible before you pick based on price.
Hybrid Models: When Both Makes Sense
The hybrid model works when you have enough internal context to direct the work but not enough internal capacity to execute all of it. An in-house growth lead owns strategy, reviews performance, and handles the organizational interface. An agency handles day-to-day execution across channels.
This model also makes sense during transitions: when you are scaling quickly and need to grow the in-house team but have not hired yet, or when you are evaluating channels before committing to headcount.
The failure mode of hybrid is unclear ownership. If both the in-house person and the agency can make campaign changes without the other knowing, account quality degrades. Define who owns what before you start.
Five Questions to Ask Any Agency Before You Sign
One: who will actually manage my account day to day? Not the sales lead. Not the account director. The person running the campaigns. Two: what does your reporting cover? If the answer is CTR and impressions, that is not a revenue-focused agency.
Three: how do you handle underperformance? What happens if ROAS is below target for 60 days? Four: can I see an example of a real client audit you ran in the first 30 days? The audit quality tells you more about the team than the pitch deck.
Five: what is the exit process if we part ways? Who owns the accounts, the creative assets, and the conversion tracking setup on day one after the engagement ends? If the agency owns those, that is a problem before you even start.