The Leaky Funnel Problem

Spin Academy | Online PR Courses

The Leaky Funnel Problem

By defin­i­tion, busi­nesses have a bot­tom line:

Making money.

The most wide­spread approach to solv­ing the PESO para­dox of alloc­at­ing resources between dif­fer­ent types of media chan­nels is to trace each mar­ket­ing and pub­lic rela­tions activ­ity to a final transaction.

This is done via a funnel.

“Digital fun­nels of sales, com­bin­ing search optim­iz­a­tion and web ana­lyt­ics, are key com­pon­ents in digit­al mar­ket­ing, pro­mot­ing web­site advance­ment and increas­ing sales volume.“
Source: Research of the mar­ket­ing instru­ments of adop­tion of man­age­ment decisions in the field of plan­ning and busi­ness devel­op­ment ¹Zinchenko, A., & Kolosova, V. (2019). Research of the mar­ket­ing instru­ments of adop­tion of man­age­ment decisions in the field of plan­ning and busi­ness devel­op­ment. Vestnik Universiteta. … Continue read­ing

Suppose your fun­nel aims to attract social media aware­ness to pro­duce inbound traffic to your web­site. There, you con­vert vis­it­ors into email sub­scribers who are primed to con­vert into trans­ac­tion­al cus­tom­ers over time. In that case, it’s pos­sible to cal­cu­late the mon­et­ary value of a single social media click based on the aver­age order value — or cus­tom­er life­time value.

Counting con­ver­sion rates back­wards, it’s not uncom­mon for organ­isa­tions to find that one single trans­ac­tion at the bot­tom of the fun­nel requires one mil­lion social media impres­sions at the very top.

In the eyes of fun­nel-cent­ric organ­isa­tions, the value of an indi­vidu­al’s atten­tion gets dimin­ished to a frac­tion of a mar­ket­ing dol­lar — when atten­tion is argu­ably an invalu­able resource.

This approach is a “100% pure mar­ket­ing mind­set” — and extremely problematic.

Consider all the vari­ous types of stake­hold­ers. A sub­set of these might be inter­ested in being pushed through the organ­isa­tion’s fun­nel — but far from all of them.

Corporate com­mu­nic­a­tions = an organ­isa­tion’s stra­tegic use of mes­saging to shape its repu­ta­tion, artic­u­late its vis­ion, and engage with key audi­ences across intern­al and extern­al chan­nels.

Targets: External and intern­al pub­lics, busi­ness journ­al­ists, reg­u­lat­ory insti­tu­tions, part­ners, sup­pli­ers, vendors, etc.

Investor rela­tions (IR) = an organ­isa­tion’s delib­er­ate com­mu­nic­a­tion efforts to build trust and main­tain trans­par­ency with investors, ana­lysts, and the fin­an­cial com­munity.

Targets: Shareholders, investors, mar­ket hubs, mar­ket ana­lysts, fin­an­cial insti­tu­tions, trade journ­al­ists etc.

Media rela­tions = a brand’s tar­geted use of com­mu­nic­a­tion to foster pos­it­ive inter­ac­tions with journ­al­ists, edit­ors, and media out­lets and to gain favour­able cov­er­age.

Targets: Journalists, edit­ors, influ­en­cers, etc.

Digital PR = the stra­tegic use of online com­mu­nic­a­tion to build brand com­munit­ies, foster engage­ment, and man­age repu­ta­tion in the digit­al space. ²Silfwer, J. (2017, November 20). What is Digital PR? Doctor Spin | The PR Blog. https://​doc​tor​spin​.net/​w​h​a​t​-​i​s​-​d​i​g​i​t​a​l​-​pr/

Targets: Inbound web traffic, brand com­munit­ies, sub­scribers, fans, fol­low­ers, influ­en­cers, social net­works, etc.

Public affairs (PA) = a brand’s inten­tion­al use of com­mu­nic­a­tion to engage with gov­ern­ments, poli­cy­makers, and com­munit­ies to influ­ence pub­lic policy and social impact.

Targets: Voters, polit­ic­al journ­al­ists, polit­ic­al ana­lysts, colum­nists, interest groups, etc.

Lobbying = the focused use of advocacy and com­mu­nic­a­tion to dir­ectly influ­ence legis­lat­ive and reg­u­lat­ory decisions in favour of spe­cif­ic interests or causes.

Targets: Politicians, legis­lat­ors, gov­ern­ment offi­cials, com­mit­tees, influ­en­cers, etc.

Internal com­mu­nic­a­tions (IC) = an organ­isa­tion’s delib­er­ate use of mes­saging to align, inform, and motiv­ate employ­ees while fos­ter­ing a pro­duct­ive work­place cul­ture.

Targets: Coworkers, poten­tial recruits, etc.

Crisis com­mu­nic­a­tions = a brand’s rap­id, stra­tegic deploy­ment of com­mu­nic­a­tion to mit­ig­ate repu­ta­tion­al dam­age, address urgent chal­lenges, and restore pub­lic trust dur­ing crit­ic­al situ­ations.

Targets: Crisis vic­tims, wor­ried pub­lics, the gen­er­al pub­lic, cowork­ers, journ­al­ists, influ­en­cers, cus­tom­ers, share­hold­ers, etc.

Marketing PR = a brand’s tac­tic­al integ­ra­tion of com­mu­nic­a­tion and pro­mo­tion­al efforts to enhance product aware­ness, drive sales, and sup­port mar­ket­ing object­ives.

Targets: Potential cus­tom­ers, exist­ing cus­tom­ers, trade journ­al­ists, mem­bers, affil­i­ates, etc.

Industry PR (B2B) = a busi­ness’s pur­pose­ful use of com­mu­nic­a­tion to build cred­ib­il­ity, foster trust, and estab­lish thought lead­er­ship with­in its pro­fes­sion­al sec­tor.

Targets: B2B cli­ents, B2B pro­spects, trade journ­al­ists, trade organ­isa­tions, niche influ­en­cers, etc.

Simply put: Funnels leak.

So, how must we think about funnels?

Learn more: The Leaky Funnel Problem

Spin Academy | Online PR Courses

The PESO Paradox

According to the PESO mod­el, there are four types of media channels:

How do you cat­egor­ise these four types of media chan­nels? A pop­u­lar approach is to divide them based on cor­por­ate function:

Function: Marketing

Function: Communications

Another approach is to divide the PESO media chan­nels based on cor­por­ate UIX control:

Brand Experience: Full Control

Brand Experience: Partial Control

Brand Experience: No Control

A third but cent­ral approach to the PESO media chan­nels is based on conversion/​monetisation strategies:

Value: Awareness

Value: Transactional

The vari­ous above per­spect­ives force organ­isa­tions to face prob­lem­at­ic paradoxes:

The PESO para­dox = paid, earned, shared, and owned media chan­nels can be grouped in dif­fer­ent ways that are equally and sim­ul­tan­eously true but also stra­tegic­ally con­flict­ing, which cre­ates a meas­ure­ment prob­lem (com­par­at­ive valid­ity) for organisations.

How do you set up a reli­able pro­cess to accur­ately determ­ine how to dis­trib­ute your media chan­nel investments?

Applications of the PESO paradox:

Please note: The PESO mod­el has “fuzzy edges” due to vari­ous hybrid media forms. For example, you can run cam­paign ban­ner ads or social for­ums on your web­site or add advert­ising spots with­in edit­or­i­al social media content.

Learn more: The PESO Paradox