Is social media marketing free?

"We don't need a marketing budget, we'll use social media to market our service, Skype never had a marketing budget". I've heard teams of clever people say this. Most of them were engineering teams that had developed a service or a product. When they got the issue of marketing, this line would make it's way through their lips. Initially, I thought this was reasonable. But then a friend of mine got a job in a marketing agency as an expert in social media. I put the two together and saw a gap between the "free" of the founding teams and the "a years salary" in the marketing agency. At this point, it's important to add that the marketing agency is a small company with less than ten employees. As they are selling marketing there is naturally a big difference in the need for competence in social media marketing. But it got me thinking; when can a start-up justify the economic burden of heiring services or maybe even a person to do their social marketing? Can they just do it themselves? What's the effort-value ratio, that is; how much time should they put into social media marketing? Is social media marketing really free?