Make or Buy: The Decision Most Marketers Get Wrong

The make or buy decision sits at the intersection of strategy, capability, and cost, and most marketing teams handle it badly. They either default to outsourcing everything because it feels lower-risk, or they build in-house because someone senior wanted control. Neither instinct is a strategy.

Done well, make or buy thinking forces you to be honest about what your organisation is actually good at, what it costs to be good at it, and where external capability genuinely outperforms internal effort. That clarity is rare, and it is worth pursuing.

Why This Decision Matters More Than Most Teams Realise

Make or buy sits quietly behind some of the biggest commercial decisions a marketing function makes. Whether to build a content team or brief an agency. Whether to invest in proprietary data infrastructure or buy a SaaS platform. Whether to recruit a paid media specialist or retain a performance agency. These are all versions of the same question, and the stakes are higher than most people acknowledge.

I spent a significant part of my agency career on the sell side of this equation. Clients would come to us because they had decided to outsource, and our job was to make that decision look right. I was good at it. But the longer I ran agencies, the more I noticed how rarely clients had thought rigorously about whether outsourcing was the right call in the first place. They had often made the decision emotionally, or by default, and then rationalised it afterwards.

That matters for a reason that connects directly to buyer psychology. When you have already committed emotionally to a direction, you stop evaluating the alternatives honestly. Vendors know this. The best ones will reinforce your existing bias rather than challenge it, because challenging it risks losing the deal. If you want to understand how psychology shapes the commercial decisions buyers make, including this one, the broader thinking on persuasion and buyer psychology is worth spending time with.

What the Textbook Gets Right and What It Misses

The classical framework for make or buy analysis is straightforward. You compare the total cost of building a capability internally against the cost of purchasing it externally, factor in quality differences, strategic considerations, and risk, and then make a decision. It is a clean model. It is also incomplete.

The problem is that total cost calculations in marketing are notoriously difficult to do honestly. Internal cost is almost always underestimated. People forget to include management time, recruitment costs, training, tooling, the cost of mistakes made during the learning curve, and the opportunity cost of leadership attention. External cost, meanwhile, is often presented by vendors in a way that obscures the true picture. Headline day rates look manageable until you add up the hours, the retainer, the scope creep, and the cost of briefing and managing the relationship.

I have seen this play out in both directions. When I was growing an agency from around 20 people to close to 100, we were regularly competing against the option of clients building in-house teams. The clients who did the analysis properly, accounting for all costs on both sides, often came to genuinely mixed conclusions. The ones who did it poorly almost always underestimated what in-house would actually cost, and then came back to agencies 18 months later having learned an expensive lesson.

The Three Questions That Actually Matter

Strip away the frameworks and the spreadsheets, and the make or buy decision in marketing comes down to three questions. Most teams only ask one of them.

Is this capability core to your competitive advantage? If the answer is yes, you almost certainly want to own it. Outsourcing a capability that genuinely differentiates you in the market creates dependency, erodes institutional knowledge, and hands strategic leverage to a third party. If the answer is no, the calculus shifts significantly. Not every marketing function needs to be a core competency. Distribution, for example, matters enormously, but whether you run your own programmatic trading desk or buy that service externally is rarely a source of competitive differentiation for most brands.

What happens to your cost structure when volume changes? In-house teams create fixed costs. Agencies and freelancers create variable costs. This distinction matters enormously across an economic cycle. When I was managing turnarounds, the businesses that had over-indexed on fixed internal capability were the hardest to restructure when revenue fell. The ones that had retained more external flexibility had more options. Building in-house is not inherently wrong, but you are making a bet on sustained volume, and that bet deserves explicit acknowledgement.

How long will it take to reach competence, and what does the gap cost you? This is the question that almost nobody asks clearly enough. When you decide to build an internal capability, you are committing to a ramp-up period during which performance will likely be below what a specialist external provider could deliver. For some capabilities, that gap is small and closes quickly. For others, it is significant and takes years. Paid media is a good example. The gap between a well-run external performance agency with deep platform access and a newly assembled internal team can be substantial, and it has a real commercial cost that rarely appears in the business case.

How Vendors Shape the Decision Without You Noticing

This is the part of the make or buy conversation that most strategic frameworks ignore, and it is the part most directly connected to buyer psychology.

When you are evaluating whether to outsource a marketing function, you will almost always be doing some of that evaluation with the help of the vendors who want to win the business. They will provide benchmarks, case studies, and cost comparisons. They will introduce urgency into the conversation. They will use social proof to make external provision feel like the obvious choice. These are not necessarily dishonest tactics, but they are persuasion tactics, and if you are not alert to them, they will shape your decision in ways you have not consciously chosen.

Urgency is particularly worth watching. A vendor who tells you that now is the right time to act, that a particular pricing window is closing or that a competitor is already moving, is applying a well-documented pressure technique. Copyblogger has written thoughtfully about how urgency is used in commercial contexts, and the same dynamics apply in B2B vendor relationships as they do in consumer marketing. The question to ask yourself is whether the urgency is real and driven by your business context, or manufactured and driven by the vendor’s sales cycle.

Social proof operates similarly. Case studies from other brands in your sector, testimonials from recognisable names, awards and accreditations: all of these are designed to reduce your perceived risk of buying. They are legitimate signals, but they are curated signals. Social proof works because it shortcuts independent evaluation, and vendors know that. The antidote is not to dismiss social proof but to weight it appropriately and to seek out references that the vendor did not choose for you.

Trust signals operate on the same principle. A vendor’s website, credentials, and client roster are all designed to lower your psychological barriers to buying. Trust signals are a deliberate part of the commercial presentation, and recognising them as such does not make them invalid. It just means you should be verifying them rather than absorbing them passively.

The Hidden Cost of Getting This Wrong

Poor make or buy decisions are expensive in ways that rarely show up cleanly on a P&L. The costs tend to be distributed, delayed, and easy to attribute to other causes.

When you build in-house and it does not work, you carry the cost of underperformance, the cost of restructuring, and the reputational cost of a failed initiative. When you outsource poorly, you carry the cost of misaligned incentives, knowledge that walks out the door when the contract ends, and a dependency that is difficult to unwind if the relationship deteriorates.

I once inherited a situation where a predecessor had outsourced almost every marketing function to a single agency on a long-term contract. The rationale had been cost efficiency and simplicity. What it had actually created was a situation where the client had almost no internal marketing capability, no institutional knowledge, and very little leverage in the relationship. When performance deteriorated, there was no easy exit and no internal team capable of picking up the work. The cost of rebuilding took two years and was significantly higher than building the capability properly in the first place would have been.

The reverse failure is equally common. Businesses that build in-house too quickly, before they have enough volume or clarity about what they need, end up with expensive fixed overhead attached to a capability that does not yet know what it is supposed to produce. I have seen marketing teams of 15 people producing work that a two-person external team could have delivered more effectively, because the in-house decision was made for political reasons rather than commercial ones.

When Hybrid Models Make Sense and When They Do Not

The answer that most consultants land on is some version of a hybrid model: own the strategy and the data, outsource the execution. It is a reasonable heuristic, but it is not universally right, and it is often used to avoid making a harder decision.

Hybrid models work well when the boundary between strategy and execution is genuinely clean. In paid media, for example, there is a defensible case for keeping audience strategy, measurement frameworks, and budget allocation in-house while outsourcing campaign execution to a specialist. The strategic layer requires deep knowledge of the business. The execution layer benefits from platform scale and technical expertise that most in-house teams cannot replicate.

Hybrid models work badly when the boundary is blurry, which in marketing it usually is. If your in-house team sets a brief and an agency executes it, but the brief is weak because the in-house team does not have enough technical depth to write a good one, you have not solved the problem. You have just moved it. The quality of external execution is almost always constrained by the quality of internal direction, and that constraint is invisible until something goes wrong.

The more honest version of the hybrid question is: where specifically do we have genuine capability, and where are we pretending? That requires a level of self-awareness that is uncomfortable for most marketing leaders to apply to their own teams. But it is the only version of the question that leads to a decision you can actually defend.

How to Approach the Decision With More Rigour

There is no formula that removes the judgement from this decision. But there are disciplines that make the judgement better.

Start by separating the cost analysis from the capability analysis. Most make or buy assessments conflate them, and the result is a number that feels precise but is built on assumptions that have not been tested. Cost what you know. Flag what you are estimating. Be explicit about the assumptions embedded in both sides of the comparison.

Then ask whether the capability in question is genuinely differentiating or whether it is a commodity. If it is a commodity, the make case needs to rest on cost or control, not on some vague notion of quality. If it is differentiating, the buy case needs to address how you protect strategic knowledge when it lives inside a third party.

Build in a review trigger from the start. The make or buy decision should not be permanent. Business volumes change, capabilities mature, vendor markets evolve. A decision that was right three years ago may not be right now. One of the more consistent failures I have observed is organisations that made a make or buy call at a particular moment in time and then never revisited it, even as every underlying assumption changed around them.

Finally, be honest about who is making the decision and why. Make or buy choices in marketing are frequently driven by internal politics, personal relationships with vendors, or the preferences of a new CMO who wants to put their stamp on the function. None of those are illegitimate inputs, but they should be acknowledged as inputs rather than disguised as analysis. The decisions that go badly wrong are almost always the ones where the conclusion was reached before the analysis began.

If you are thinking carefully about how buyers, including your own internal stakeholders, process and make decisions, the full body of work on persuasion and buyer psychology covers the mechanisms that shape commercial judgement in ways that most organisations do not account for.

The Measurement Problem That Sits Underneath All of This

There is a reason make or buy decisions in marketing are so often made on instinct rather than evidence: measuring the actual performance of a marketing capability is genuinely hard, and most organisations do not do it well enough to make the comparison meaningful.

If you cannot measure what your in-house team is producing in terms of business outcomes, you cannot compare it accurately to what an external provider would produce. You end up comparing inputs, hours, headcount, cost per deliverable, rather than outputs. And inputs are a very poor proxy for commercial value.

I have a strong view on this, formed over years of running agencies and watching how clients evaluated our work. If businesses could honestly measure the true commercial impact of their marketing activity, much of the industry’s self-confidence would deflate rapidly. A significant proportion of what gets counted as marketing performance is either measurement artefact or demand capture dressed up as demand creation. Fix the measurement, and the make or buy decision becomes much clearer, because you can see what is actually working rather than what looks like it is working.

That is not an argument for paralysis. You will never have perfect measurement, and waiting for it is just another way of avoiding a decision. But it is an argument for building honest measurement into the make or buy process from the start, so that whatever decision you make, you have a way of knowing whether it was right.

About the Author

Keith Lacy is a marketing strategist and former agency CEO with 20+ years of experience across agency leadership, performance marketing, and commercial strategy. He writes The Marketing Juice to cut through the noise and share what works.

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