Private equity and venture capital—these very words are synonymous with growth. But while both PE and VC firms have reputations for dramatically increasing the value of their investments, many firms are behind the eight ball when it comes to implementing marketing strategies and bringing attention to themselves. In fact, it’s not uncommon to see even mid-sized firms operating without a marketing team—or marketing strategy—in place.
As the investment market becomes more competitive, it’s become even more important to prioritize marketing functions in order to help your firm communicate more frequently and efficiently to intermediaries, business owners, and potential or current limited partners.
Small- to mid-sized investment firms that don’t have the financial resources to hire an in-house marketing team or full-time CMO position can greatly benefit from a part-time, on-demand solution. But does your firm need a fractional CMO or a digital agency? While both solutions can be a catalyst for building your firm’s marketing efforts without the longtime commitment of an in-house team, there are key differences of each to consider, as well.
In this blog post, we’ll break down what exactly each entails and their unique advantages in order to help inform and allow you to decide which is best for your firm.
Spoiler: Your firm may actually benefit from both a fractional CMO and a digital agency.
What is a fractional CMO?
‘Fractional CMO’ has been a growing buzzword across industries—but also one we’re hearing more often as we speak with private equity firms. Despite this surge in popularity, the role of CMO is still widely misunderstood. A quick search yields no shortage of promises for how a CMO can help bolster your firm’s marketing efforts, providing both an actionable communications strategy and profitable strategy execution. While this is true, it’s important to understand not just what they offer, but why it is a valuable asset to add to your firm and when it can make the biggest impact.
As the name implies, a fractional CMO is a part-time, C-suite marketing executive responsible for designing, leading, and managing marketing initiatives. Working just a handful of hours per week (and costing a fraction of a full-time CMO), a fractional CMO can make a huge impact, providing a fresh set of eyes and lending a deep bench of expertise.
What is a digital agency?
Digital agencies are strategic and creative marketing partners that offer expertise in a variety of digital areas from branding, web design, messaging strategy, and content marketing to tech stack integrations, analytics, SEO, and backend web development. Similar to a fractional CMO, they work on-demand on a retainer basis, providing flexibility both in cost and time output that can work to suit your firm’s needs.
The best digital agencies commit time and resources to stay on top of the latest trends, delivering a best-practices approach to marketing.
Keeping a small in-house marketing team up to date on the latest trends can often be cost prohibitive—with so much evolving in the realm of marketing, in-house teams are typically generalists in nature. In addition, an agency with a thorough discovery process also has the potential to help solve problems that may even lay outside marketing.
It sounds simple enough, but how do you know when a fractional CMO or digital agency is needed? We’ve rounded up six signs where it might make sense to consider outsourced marketing.
6 Signs It’s Time to Outsource Your Marketing
There are a number of times throughout a firm’s lifecycle where it can make strategic sense to bring in a marketing leader or team. Whether you should pull the trigger (assuming you have found the right person or agency) depends less on your size, and more on where you are with marketing efforts now and your visions for the future. Take these scenarios for example:
1. Your marketing efforts aren’t working or you haven’t ever invested in marketing before.
If your firm has had a less than ideal marketing performance in the past or you haven’t invested any resources in marketing before, you’re not alone. We’ve spoken to firms of all sizes throughout the years, and have found even sizable firms with over $1B in AUM who still have no definitive marketing strategy in place. If this is your firm, don’t let this discourage you from making marketing a priority now.
Your firm deserves a dedicated resource who can not only offload responsibility from other firm members, allowing them to focus on their own critical roles, but also who can provide a higher level of expertise for your marketing initiatives. A fractional CMO can look at your firm from the outside in, assess your resources, develop goals, and create a plan of action, while a digital marketing team can help you seamlessly execute it.
2. The marketing direction is steered by multiple people whose roles fall outside of marketing or it has no direction at all.
We’re serious when we say this—your Head of Investor Relations does not count as a CMO or as a marketing team. Neither does whoever is in charge of Business Development. A fractional CMO should be equipped with niche experience and talent that is unique to the chief marketing role. While other members of the firm play an integral part in working with who is spearheading marketing efforts, the marketing executive should provide the overall direction and strategy, and have a specialized skill set to tout in order to make an impact.
Another misnomer we commonly see with firms who operate without a marketing executive is their concept of a marketing strategy. While sending emails can be an important and valuable part of a marketing plan, it’s not a strategy in and of itself. A marketing strategy should entail a detailed, structured plan of a firm’s promotional efforts across platforms and channels, and contain elements like your value proposition, key brand messaging, personas, and more. The right marketing professional can help develop and run point on this strategy.
3. Your firm lacks insights when making marketing decisions.
If your growth equity firm hasn’t invested in marketing previously, it may lack the critical infrastructure to capture data to inform decision-making. A professional CMO or digital team can help you get set up with the tools to track actions, create reports, and perform additional analysis.
4. Your firm is facing budget constraints and needs to maximize a lean budget.
A part-time, outsourced marketing solution can actually increase efficiency with your budget and provide a deeper level of expertise that would otherwise cost higher if the service was in-house or full time.
5. Your firm needs flexibility and isn’t ready to commit long term.
A part-time CMO or digital team can be on-demand—helping you more when you need it, and taking a backseat when business is less busy. Depending on your contract with either party, a fractional CMO can work for a set number of months, while a digital agency can provide support on a recurring monthly or quarterly retainer.
6. Your firm needs a fresh perspective.
Marketing plans and initiatives are dynamic and should grow and evolve over time. An outsourced CMO or digital team brings a unique, outsider’s perspective—so they can evaluate marketing in a new light and bring fresh ideas. Sometimes having a new strategist on board can help shine light on details that were overlooked. Having worked with many different clients in a number of different industries, both a fractional CMO and digital team comes with a diverse set of experiences that can help with problem solving.
How CMOs and Digital Agencies Work Best Together
While it can be tempting to opt for one or the other, the reality is that your firm’s marketing efforts will have the biggest impact if you choose to have both a fractional CMO and digital agency team working in tandem with each other. To understand this more clearly, let’s take a closer look at each role and their responsibilities and skill sets:
The Marketing Leader: The Fractional CMO
A fractional CMO has experience serving as a part- or full-time CMO in previous roles and should have a deep understanding of how to lead teams and provide strategic marketing guidance.
Unlike a digital agency, a fractional CMO works as an internal member of the firm. This means that they’re tied in with leadership meetings and work cross-functionally, coordinating across departments and working directly with managing partners, directors, and principals. With this working relationship in effect, fractional CMOs have greater autonomy and insider knowledge to define the marketing direction, goals, and strategy compared to digital agencies. This makes them the perfect fit for leading marketing efforts and acting as the accountable party.
While a fractional CMO has an experienced skill set, they are often more generalist compared to the niche expertise that a digital agency can provide. An agency will come equipped with a full team, all with specialized knowledge and skill sets, whereas a fractional CMO is often a jack of all trades, and may only have proficiency in most areas.
A fractional CMO can help with:
- Overall marketing and GTM strategies
- Setting goals and key performance indicators
- Data collection and KPI reporting
- Customer champion / service
- Market research
- Marketing funnel audit and road mapping
- Establishing processes that extend outside of marketing into business development / sales, etc.
The Marketing Executor: The Digital Agency
A digital agency is a team of experts that specialize in modern digital marketing techniques such as website design and development, search engine optimization (SEO), content marketing, email marketing, and other services. They help research, develop, and execute marketing initiatives—delivering top notch, quality work.
While they may also provide strategic recommendations that help steer the overall marketing strategy, a digital agency’s primary focus is on the execution of marketing tactics, utilizing technical skill sets that the fractional CMO most likely lacks or doesn’t have the bandwidth to execute on his or her own.
While a digital agency can specialize in niche industries, such as private equity and venture capital (like our team at Durkan Group), they work collaboratively with key stakeholders and/or a CMO or marketing team in order to learn the nuances of each unique company they partner with. Because agencies act as external partners, they require some direction and input from the firm’s team members.
Unfortunately, if the investment firm lacks a concrete marketing direction or point person to provide feedback, the digital team can face an uphill battle on getting information or approvals—however, this is where a fractional CMO comes in. A fractional CMO working in tandem with an agency can streamline knowledge sharing and feedback, allowing both parties to work on strategy and execution accordingly.
An added bonus: An agency will also have access to a full suite of marketing tools, as well as knowledge and familiarity on how to improve your existing tech stack or set one up.
A high-quality digital agency can provide the following:
- Overarching digital strategy driven by insights from team-led workshops
- Digital branding
- Designs tailored for specific marketing channels
- Content copywriting and microcopy development
- Front and back-end development
- Keyword analysis and SEO
- Implementing and integrating platforms within your tech stack
- Interpreting and creating meaning from analytics
- Email marketing
- Competitive analysis
- Marketing automation
- Digital campaign management
Kickstart Your Marketing Strategy
Whether you’re beginning to build the foundation for a marketing strategy or you’re in the process of taking it to the next level, hiring both a fractional CMO and digital agency to work in tandem can help your firm achieve optimum results.
We can help set you on the right path and answer any follow-up questions you may have. Shoot us a message to connect and subscribe to our newsletter to get our next blog post straight to your inbox. Have a topic you’d love to hear our thoughts on? We’re all ears on that, too.