You're spending ₹25 lakh per month on Meta and Google Ads. Your agency reports strong ROAS, but the invoice arrives and you're paying ₹5 lakh in management fees on top of your ad spend. Your CFO asks a simple question: "Would we save money building an in-house team?"

The answer isn't simple. Most teams calculate agency costs incorrectly. They see the 20% management fee and assume building in-house will save that money. What they miss: salary costs, tool stack expenses, recruitment cycles, training overhead, and the hidden productivity cost of building institutional knowledge from scratch.

This isn't about finding the cheapest option. It's about understanding total cost of ownership across different growth stages and making the right structural choice for your current budget, team capability, and strategic priorities.

The Build vs Partner Decision (Beyond Simple Cost Comparison)

The agency versus in-house question gets asked too early by most teams. Before comparing spreadsheets, you need to understand what you're actually buying.

Agencies sell two distinct capabilities. First, execution velocity: they run campaigns, iterate creatives, optimise bids, and maintain platform hygiene without you hiring specialists. Second, strategic depth: they've seen patterns across dozens of clients and know which tactics work for apps at your scale and vertical.

In-house teams offer different advantages. They understand your product deeply, move faster on experiment cycles, own the full customer journey from acquisition through retention, and build institutional memory that compounds over quarters.

The mistake most teams make: treating this as a binary choice. The actual question is which capabilities matter most at your current stage, and which structure delivers those capabilities at acceptable cost.

Understanding True Total Cost of Ownership

Total cost of ownership includes everything required to run performance marketing, not just the visible line items on invoices.

For agencies, this means management fees plus hidden costs: time spent in weekly calls, internal hours reviewing reports, delays waiting for campaign approvals, opportunity cost of slower iteration cycles, and the strategic tax of working through an intermediary who manages multiple clients.

For in-house teams, this means salaries plus tool costs plus recruitment expenses plus training time plus the cost of mistakes during the learning curve. New hires don't deliver full productivity for 90 days. Junior team members need oversight. Senior specialists command premium salaries in competitive markets like Bangalore.

The real comparison requires calculating fully loaded costs over 12 months, not just monthly retainers versus salary figures.

Agency Model: Cost Structure Breakdown

Management Fee (10-20% of Spend or Flat Monthly Retainer)

Agencies charge two ways. Performance-based fees tie directly to ad spend, typically 15-20% for mid-market apps. Retainer models charge flat monthly fees, usually ₹2.5-5 lakh for ₹25L monthly spend clients.

Performance fees scale automatically as you grow. Spend ₹50L next month and your agency fee doubles. Retainer models offer more predictable costs but often include spend caps. Exceed ₹30L monthly and you renegotiate terms or pay overages.

Most agencies structure pricing in tiers. Smaller accounts (₹5-15L monthly spend) pay 18-20% or ₹1.5-2.5L retainers. Mid-market accounts (₹15-50L monthly) negotiate 12-15% or ₹3-5L retainers. Enterprise accounts (₹50L+) secure 8-12% or custom arrangements.

Beyond the headline rate, check what's included. Some agencies bundle creative production, landing page optimisation, and analytics setup. Others charge separately for anything beyond campaign management.

Platform Fees and Tool Costs (Who Pays for MMP, Creative Tools?)

Agencies use attribution platforms, creative tools, analytics dashboards, and reporting infrastructure. Someone pays for these. Usually you.

Typical agency tool stack for a ₹25L monthly spend client: MMP like AppsFlyer or Branch (₹80K-2L monthly), creative tools like Figma and video editors (₹25-50K monthly), analytics and BI platforms (₹40-80K monthly), and reporting automation (₹20-40K monthly). Total: ₹1.65-3.7L monthly in tools.

Some agencies absorb these costs in their management fee. Others pass them through as separate line items. The latter structure often appears cheaper until you calculate total spend.

Understanding Mobile Attribution for App Growth covers why accurate attribution matters regardless of whether you're paying an agency or building in-house.

Hidden Costs (Strategy Tax, Reporting Overhead, Account Switching)

The invisible costs are often the most expensive.

Strategy tax: your team spends 15-20 hours monthly in status calls, reviewing reports, providing product context, and approving creative concepts. For a Head of Growth earning ₹25L annually, that's ₹40-50K monthly in internal time cost.

Reporting overhead: agencies deliver beautiful decks every Monday. But those decks require your team to validate data, reconcile numbers against internal analytics, and translate insights into product decisions. Add another 8-10 hours monthly.

Account switching friction: your agency manages 12 clients. When your campaign needs urgent attention on Friday evening, you're competing with 11 other priorities. The delay costs you three days of optimization opportunity during your highest-spend weekend.

Information asymmetry: agencies control campaign settings, historical data, and platform relationships. Leave the agency and you start rebuilding institutional memory from incomplete exports and transition docs.

Total Monthly Cost Example: ₹25L Spend Scenario

Let's calculate fully loaded agency costs for a typical mid-market app:

Direct costs:

Management fee (15% of ₹25L spend): ₹3.75L

MMP platform (passed through): ₹1.2L

Other tools (passed through): ₹60K

Indirect costs:

Internal oversight time (20 hours at ₹2,500/hour): ₹50K

Data validation and reconciliation (10 hours): ₹25K

Strategy and planning calls (8 hours): ₹20K

Total monthly cost: ₹5.8L

That's 23% on top of your ₹25L ad spend, not the 15% headline rate.

In-House Model: Cost Structure Breakdown

Salary Costs (Performance Lead, 2-3 Specialists, Creative Resources)

Building in-house means hiring multiple specialists. You can't run ₹25L monthly spend with a single performance marketer.

Minimum viable team for ₹25L monthly spend:

Performance Marketing Lead (5-8 years experience): ₹30-45L annually (₹2.5-3.75L monthly)

Owns strategy, budget allocation, platform relationships, and team coordination.

Meta Ads Specialist (3-5 years): ₹18-28L annually (₹1.5-2.3L monthly)

Manages campaigns, creative testing, audience targeting, and Meta-specific optimisation.

Google Ads Specialist (3-5 years): ₹18-28L annually (₹1.5-2.3L monthly)

Runs UAC campaigns, manages YouTube, handles keyword bidding for ASA when relevant.

Creative resources (in-house designer or contractor): ₹12-18L annually (₹1-1.5L monthly)

Produces static and video ads, handles creative iteration cycles.

Total monthly salary cost: ₹6.5-9.85L

This assumes Bangalore market rates for experienced specialists. Smaller cities offer 20-30% lower costs but narrower talent pools.

Tool Stack Costs (MMP, Analytics, Creative, BI)

In-house teams need the same tools agencies use, but you pay directly.

Attribution platform (Linkrunner, AppsFlyer, Branch): ₹50K-2L monthly

At ₹25L monthly spend, most legacy MMPs charge ₹1.5-2L. Platforms like Linkrunner offer transparent pricing at ₹0.80 per install, often ₹50K-80K monthly for mid-market apps.

Analytics stack (Mixpanel, Amplitude, Clevertap): ₹40-80K monthly

Product analytics and engagement platforms for cohort analysis and retention tracking.

Creative tools (Figma, Adobe Suite, video editors): ₹25-40K monthly

Design and production software for in-house creative team.

BI and reporting (Metabase, Looker, or custom dashboards): ₹30-60K monthly

Data visualisation and executive reporting infrastructure.

Total monthly tool cost: ₹1.45-3.8L

Training and Development Costs

New hires need ramp time. Experienced specialists need ongoing education as platforms evolve.

Onboarding investment per new hire: ₹80K-1.5L in lost productivity (60-90 days at reduced output), plus ₹40-60K in training resources, documentation, and senior team oversight.

Ongoing training: ₹15-25K per team member quarterly for courses, certifications, and conference attendance. For a four-person team, that's ₹60-100K quarterly or ₹20-35K monthly.

Platform-specific training matters more than generic marketing education. Meta and Google change algorithms quarterly. Teams that don't invest in continuous learning fall behind.

Recruitment and Turnover Costs

Performance marketing roles have high turnover. Expect 25-40% annual churn in growth functions.

Recruiting costs per hire: ₹1.2-2L including recruiter fees (one month salary), interview time (40-60 hours across team), and opportunity cost of unfilled roles (30-45 days average time to hire).

Knowledge transfer cost when someone leaves: ₹80K-1.5L in lost institutional memory, campaign handoff overhead, and replacement ramp time.

For a four-person team with 30% annual turnover, expect ₹2.4-4L in annual recruitment costs, or ₹20-35K monthly amortized.

Total Monthly Cost Example: ₹25L Spend Scenario

Let's calculate fully loaded in-house costs:

Core team:

Salaries (4 people): ₹6.5-9.85L

Employer taxes and benefits (15% of salaries): ₹1-1.5L

Infrastructure:

Tool stack: ₹1.45-3.8L

Training and development: ₹20-35K

Recruitment and turnover (amortized): ₹20-35K

Total monthly cost: ₹9.35-15.25L

That's 37-61% on top of your ₹25L ad spend, significantly higher than the ₹5.8L agency model.

The Cost Crossover Point (When In-House Becomes Cheaper)

In-house costs have high fixed components. Agency costs scale with spend. This creates a crossover point.

For teams spending ₹15L monthly, agencies typically cost ₹3-4L fully loaded (20-27% of spend). In-house costs remain ₹9-15L because you need the same team regardless of spend level. Agency wins decisively.

At ₹30L monthly spend, agency costs reach ₹6-8L (20-27%). In-house costs stay ₹9-15L. Still cheaper to use an agency, but the gap narrows.

The crossover happens around ₹40-50L monthly spend. Agency costs hit ₹8-13L while in-house costs remain ₹9-15L. Now the economics favour in-house, especially if you value strategic control.

Above ₹75L monthly spend, in-house delivers clear cost advantage. Agency fees reach ₹15-20L while in-house costs increase only modestly (add one more specialist, maybe expand the creative team).

But cost isn't the only variable. Consider capability depth, speed of iteration, and strategic alignment.

Capability Analysis: What Agencies Do Better

Agencies excel in specific areas that are hard to replicate in-house without significant scale.

Platform relationships and beta access: Agencies with large client books get early access to new features, dedicated platform reps, and faster support escalation. Your in-house team joins the general support queue.

Cross-client pattern recognition: A good agency has seen your problem before across other clients. They know which creative hooks work for fintech apps, which audience strategies work for gaming, which bid strategies work for eCommerce at your scale.

Specialist depth in tactical execution: Agencies hire platform specialists who do nothing but optimise Meta campaigns or Google UAC all day. Your in-house generalist splits time across strategy, creative, analytics, and execution.

Creative production velocity: Established agencies have design teams, video editors, and production workflows that can iterate 20-30 creative variants weekly. Building this capability in-house requires dedicated creative hires.

Capability Analysis: What In-House Teams Do Better

In-house teams win on different dimensions that matter more as you scale.

Product knowledge and customer insight: Your team lives in the product, talks to users, understands why features exist, and sees the full funnel from acquisition through retention. Agencies work from documentation and quarterly strategy calls.

Iteration speed and experiment velocity: In-house teams test ideas today without approval workflows. See concerning cohort data on Monday morning and adjust targeting by lunch. Agencies batch changes into weekly sprints.

Strategic alignment and company context: Performance marketing doesn't exist in isolation. Your in-house team integrates with product, retention, monetisation, and company strategy. They optimise for business goals, not campaign metrics.

Data access and analytical depth: In-house teams query databases directly, build custom analyses, and don't wait for agency reports. They answer "why did ROAS drop" in 20 minutes, not 2 days.

Long-term institutional memory: Knowledge compounds over quarters. Your team remembers why certain audiences failed, which creative themes resonated, and how seasonality affects performance. This context drives better decisions.

The Hybrid Model: Specialist Agency + In-House Oversight

The best structure for many mid-market apps isn't binary.

Hybrid model: hire one strong in-house performance lead (₹30-45L annually) to own strategy, budget, and platform relationships. Partner with a specialist agency for execution (₹2-3.5L monthly retainer for campaign management and creative production).

This structure captures agency execution velocity and creative production while maintaining strategic control in-house. Total cost: ₹5-6.5L monthly (lead salary + agency retainer + tool stack), cheaper than full in-house and more strategic than pure agency.

The in-house lead makes daily optimisation decisions based on real-time data while the agency handles the operational work: building campaigns, launching creatives, managing bids, and producing reports.

This model works particularly well during transition phases. Hire the performance lead first, run with agency support for 6-12 months while building internal capability, then gradually bring more functions in-house as budget and team scale.

Decision Framework by Company Stage

Pre-Seed/Seed (₹5L-15L Monthly): Agency or Fractional

At early stage with limited spend, agencies offer the fastest path to competent execution without overhead.

Best approach: performance-based agency at 15-18% or ₹1.5-2.5L monthly retainer. Alternatively, hire a fractional performance marketer (₹80K-1.5L monthly for 2-3 days per week) to set strategy while using agencies or freelancers for execution.

Avoid building in-house teams at this scale. The fixed cost burden (₹9-15L monthly) consumes too much capital when spend is only ₹5-15L monthly.

Series A (₹15L-50L Monthly): Hybrid or Early In-House

At Series A, you have budget to choose strategically.

If spend is ₹15-30L monthly: stick with agencies but add internal oversight. Hire one strong performance lead to own strategy and platform relationships while agencies handle execution.

If spend approaches ₹40-50L monthly: start transitioning to in-house. The cost crossover point is near and strategic control becomes more valuable. Begin with a two-person core team (lead + specialist) and maintain agency relationship for creative production.

Series B+ (₹50L+ Monthly): In-House with Specialist Partners

At ₹50L+ monthly spend, in-house delivers better economics and strategic alignment.

Build a full four-person core team: performance lead, Meta specialist, Google specialist, and creative producer. Add specialists for TikTok, influencer programs, or other channels as budget scales beyond ₹75L monthly.

Maintain relationships with specialist agencies for specific capabilities: premium creative production, international market launches, or platform-specific deep expertise when entering new channels.

When to Adopt an MMP: Budget and Scale Benchmarks for Mobile Marketers provides additional context on measurement infrastructure timing as you scale.

Migration Strategy: Transitioning from Agency to In-House

Migrating from agency to in-house requires phased execution, not abrupt transitions.

Phase 1 (Months 1-2): Hire Performance Lead

Recruit experienced performance lead who can own strategy immediately. They observe current agency operations, build platform access, and start asking questions.

Phase 2 (Months 3-4): Knowledge Transfer and Parallel Operation

Performance lead shadows agency work, gains platform access, requests campaign documentation, and builds internal dashboards. Agency continues managing campaigns.

Phase 3 (Months 5-6): Hire Specialists and Begin Handoff

Bring on channel specialists. Start migrating simpler campaigns in-house while agency maintains complex ones. Run parallel operations with clear ownership.

Phase 4 (Months 7-9): Full Migration and Agency Wind-Down

Move remaining campaigns in-house. Transition to a smaller retainer relationship with the agency for creative production only or end relationship entirely.

Critical success factor: maintain good agency relationships during migration. You might need their help during the transition or want to engage them for future projects.

Implementation Playbook: Evaluating Your Current State

Before making any changes, audit your current situation.

Calculate true total cost:

List every expense: management fees, platform costs, internal time, and opportunity costs. Compare to in-house projections using the frameworks above.

Assess capability requirements:

What do you actually need? If you're running Meta and Google only with straightforward targeting and limited creative testing, your needs differ from a company running 8 channels with complex creative experimentation.

Evaluate internal readiness:

Do you have bandwidth to recruit? Can you support junior hires or do you need senior specialists? How quickly can you ramp new team members?

Define success metrics:

What would improve with an in-house team? Faster iteration? Better ROAS? Tighter strategic alignment? Be specific about what you're optimising for.

Run a 90-day pilot:

If considering in-house, hire one strong lead and run a hybrid model for one quarter. Measure results against agency baseline before committing to full build-out.

How to Measure True Marketing ROI in Mobile Apps provides frameworks for measuring performance regardless of team structure.

FAQ: Agency vs In-House Questions Answered

When should I stop using an agency?

When your monthly spend exceeds ₹40-50L consistently and you have the internal bandwidth to recruit and manage specialists. Earlier if strategic control and iteration speed matter more than cost savings.

Can I negotiate better agency rates?

Yes, especially at ₹25L+ monthly spend. Counter standard 15-18% proposals with 10-12% if you're providing creative production, analytics setup, or strategic direction internally.

How do I prevent knowledge loss when leaving an agency?

Document everything before announcing your departure. Export campaign structures, historical data, creative libraries, and platform settings. Run parallel operations for 30-60 days during handoff.

What if I build in-house and it doesn't work?

Engaging an agency mid-quarter is always possible. The bigger risk is burning capital on ineffective in-house execution while spend continues. Start with a hybrid model to reduce risk.

Should I bring creative production in-house or keep it external?

Depends on creative volume. If you're testing fewer than 20 new concepts monthly, external freelancers or agencies offer better cost structure. Above 30-40 concepts monthly, in-house creative producers make economic sense.

Key Takeaways

The agency versus in-house decision isn't about finding the cheapest option. It's about matching capability needs to company stage and budget scale.

Agencies deliver execution velocity and cross-client pattern recognition at relatively low fixed cost. They work best at ₹5-40L monthly spend when building in-house teams would consume too much capital.

In-house teams offer strategic alignment, iteration speed, and institutional memory. They become cost-effective above ₹40-50L monthly spend and essential above ₹75L when agency fees exceed in-house fully loaded costs.

The hybrid model captures benefits of both structures. One strong in-house lead partnering with execution agencies works well during transitions and at mid-market scales.

Make the decision based on total cost of ownership, not headline rates. Include salaries, tools, training, recruitment, and opportunity costs when comparing options. Then factor in strategic priorities: control, speed, depth, and long-term capability building.

If you're evaluating team structures, you're likely also evaluating measurement infrastructure. Platforms like Linkrunner simplify attribution tracking regardless of whether you're running campaigns through an agency or in-house team, with transparent pricing that scales predictably as you grow.