If you have decided to outsource work, then which of the two options is better? A reasonable question indeed, the following criteria is a good beginning to help answer this question:
Value the Work
Place an internal value on the work being outsourced, regardless of whether it is SEO, PPC etc. What I mean by value is simply, is the service part of many marketing activities taking place or the only one? If it is the only one, then it is critical that the service is as good as it gets as all of your eggs are in one basket. If the value is high, my advice here is simple, select a freelancer who has extensive experience in the field. Anyone with a lack of experience will simply be working to build their experience off your back. If such a freelancer cannot be located, then an agency is always best as the experience is collective.
Support Infrastructure and Availability
This is very important regardless of how good the freelancer/agency is; can you get hold of them when you need them most? Are they always busy? Does the acquisition of new projects seem to make your work less important to the agency or freelancer? Do they take multiple holidays or have many personal engagements? An agency comes into its own here as you deal with a set of people, not an individual. They are setup to deal with multiple projects to pre-arranged deadlines.
Where is the freelancer / agency based, the UK or abroad? You have far greater rights when dealing with a UK company than one abroad, does this even matter?
Were they referred to you by someone who has worked with them? This provides important insight from a trusted source.
Price Work Value
Whether they are based in the UK or abroad, if their prices are extremely cheap, how much time do you think they are able to spend on your project per month? Based on some really good deals, these cheap prices warrant perhaps a couple of hours a week at most. Will this be enough to make the difference to your business?
It is quite unnerving, the number of people who put all of their eggs in one basket thinking that business is really that easy. Basically you get what you pay for. This does not mean that you have to be paying through the nose, but in my opinion, a good SEO firm will charge anything from £300.00 upwards per month. Firms that charge around this figure usually have better track records as they are able to place an experienced team on your project. Please note however, some industries have extremely competitive key phrases and the costs will go up accordingly for such work.
The debate surrounding whether freelancers are better than agencies will always rage on. It is more important to step outside of this argument and understand what your business requirements are. Once you have fully understood your personal requirements, you can use some of the questions posed above to help you arrive at an answer that is right for your business.