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As an in-house SEO, I would like to point the numerous flaws with working with agencies, which I believe many have failed to point out here. I am aware of these facts because I actually have to work closely with the management team, and hence I am right in the middle of the "action".
1. You have no idea what they're doing, but the bill keeps coming every month. The weekly reports will always paint you a silky white smooth progress of the way the fan-base is progressing, as well as fan-engagement.
2. The blame game. If something goes wrong, it's always a new guy that happened to be here, or the other guy from a never-heard-of department.
3. No follow-up. If you happen to end your partnership with them, then god save you; i hope you had your facebook, twitter and pinterest account password saved well beforehand, else you will have to go through serious "procedures" to retrieve them - it includes dozens of mails. Not to mention that, critical questions about the state/health of your fan page would be left unanswered, and you might be left with 10,000 "fake" fans in your hands - good luck cleaning that up.
4. Someone still needs to devote some of their time to provide the agency with updates about the company's products or status. Usually, that involves time off the in-house graphic designer's time and 1 or several managers' time.
These are but a few I could remember right away, but, of course, this in no way means that all agencies work that way.
I'm playing the devil's advocate here.
I'll conclude by saying that if an entrepreneur/CEO does find an honest agency, then the advantages outlined by Jacques far outweighs the risks of hiring one.
Thank you for your time.