The Leaky Funnel Problem

Attention is invaluable, even if your funnel says otherwise.

Cover photo: @jerrysilfwer

tl:dr;
Marketing funnels are tools to be used strategically, not best practices on how to approach online communication in general. Unfortunately, the latter and not the former is establishing itself as the industry standard.
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Be mind­ful of the leaky fun­nel problem.

Most organ­isa­tions are blind to the leaky fun­nel prob­lem. Counting con­ver­sion rates back­wards makes atten­tion under­val­ued and falsely cor­rel­ated to sales.

With a fun­nel-cent­ric mind­set, organ­isa­tions will not only sys­tem­at­ise the mis­treat­ment of mil­lions of non-con­vert­ers by under­valu­ing their atten­tion but also fail to meet their stake­hold­ers’ inform­a­tion needs.

Here we go:

The Leaky Funnel Problem

The leaky funnel problem.
The leaky fun­nel problem.
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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.

  • Remember: cor­rel­a­tion does not equal causation.

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.

  • In the eyes of advert­isers and fun­nel spe­cial­ists, we are demo­graph­ic entit­ies stripped of our essence, mere pup­pets of con­sump­tion with wal­lets in place of hearts.

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 = External and intern­al pub­lics, busi­ness journ­al­ists, reg­u­lat­ory insti­tu­tions, part­ners, sup­pli­ers, vendors, etc.
  • Investor Relations (IR) = Shareholders, fin­an­cial mar­kets, mar­ket ana­lysts, fin­an­cial insti­tu­tions, trade journ­al­ists etc.
  • Media Relations = Journalists, edit­ors, influ­en­cers, etc.
  • Digital PR = Inbound web traffic, brand com­munit­ies, sub­scribers, fans, fol­low­ers, influ­en­cers, social net­works, etc.
  • Public Affairs (PA) = Voters, polit­ic­al journ­al­ists, polit­ic­al ana­lysts, colum­nists, interest groups, etc.
  • Lobbying = Politicians, legis­lat­ors, gov­ern­ment offi­cials, com­mit­tees, influ­en­cers, etc.
  • Internal Communications = Coworkers, poten­tial recruits, etc.
  • Crisis Communications = Crisis vic­tims, wor­ried pub­lics, the gen­er­al pub­lic, cowork­ers, journ­al­ists, influ­en­cers, cus­tom­ers, share­hold­ers, etc.
  • Marketing PR = Potential cus­tom­ers, exist­ing cus­tom­ers, trade journ­al­ists, mem­bers, affil­i­ates, etc.
  • Industry PR (B2B) = B2B cli­ents, B2B pro­spects, trade journ­al­ists, trade organ­isa­tions, niche influ­en­cers, etc.

Simply put: Funnels leak.

  • The fantasy of acquir­ing one con­ver­sion out of one mil­lion impres­sions through a fun­nel is some­thing. The exper­i­enced real­ity of those 999,999 who “leak out” along the way is — everything.

So, how must we think about funnels?

  • Avoid “fun­nel-vis­ion”. Always remem­ber that a fun­nel is a power­ful yet unbal­anced and nar­row mar­ket­ing tool. It’s a user-flow visu­al­isa­tion, not a descrip­tion of how the world works.
  • Experiment with non-trans­ac­tion­al fun­nels. A fun­nel must­n’t sell products or ser­vices; it can estab­lish and main­tain rela­tion­ships, man­age per­cep­tions, change beha­viours, or spark word-of-mouth (i.e. vir­al loops).
  • Don’t com­pare apples with oranges. Be mind­ful of put­ting a price on the atten­tion of oth­ers based on your abil­ity to hold their interest.

Learn more: The Leaky Funnel Problem

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PR Resource: The PESO Paradox

PESO Model - Doctor Spin - The PR Blog
The PESO mod­el in pub­lic relations.
Spin Academy | Online PR Courses

The PESO Paradox

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

  • Paid media chan­nels. Example: Advertising.
  • Earned media chan­nels. Example: Third-party pub­li­city.
  • Shared media chan­nels. Example: Social media publishing.
  • Owned media chan­nels. Example: Website publishing.

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

Function: Marketing

  • Paid media chan­nels. Example: Advertising.

Function: Communications

  • Earned media chan­nels. Example: Third-party publicity.
  • Shared media chan­nels. Example: Social media publishing.
  • Owned media chan­nels. Example: Website publishing.

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

Brand Experience: Full Control

  • Owned media chan­nels. Example: Website publishing.

Brand Experience: Partial Control

  • Paid media chan­nels. Example: Advertising.
  • Shared media chan­nels. Example: Social media publishing.

Brand Experience: No Control

  • Earned media chan­nels. Example: Third-party publicity.

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

Value: Awareness

  • Paid media chan­nels. Example: Advertising.
  • Earned media chan­nels. Example: Third-party publicity.
  • Shared media chan­nels. Example: Social media publishing.

Value: Transactional

  • Owned media chan­nels. Example: Website publishing.

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:

  • Should we invest in social media advert­ising to boost the algorithm for increased organ­ic con­tent success?
  • Should we pri­or­it­ise our web­site, where we con­trol the brand exper­i­ence, or social media, where our key pub­lics reside?
  • How do we com­pare the return on invest­ment (ROI) of dif­fer­ent media chan­nels when they are pro­foundly dif­fer­ent and seem to defy any such comparisons? 
  • How do we value aware­ness-type media chan­nels if the long-term cost is pro­por­tion­al to cut­ting away pieces of our busi­ness in a way that will weak­en the organ­isa­tion and strengthen the social networks?
  • How do we fun­nel organ­ic aware­ness into trans­ac­tion­al value when third-party plat­forms work against us and the pub­lic is unwill­ing to switch media channels?

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

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ANNOTATIONS
ANNOTATIONS
1 Zinchenko, A., & Kolosova, V. (2019). Research of the mar­ket­ing instru­ments of adop­tion of man­age­ment decisions in the field of plan­ning and busi­ness devel­op­ment. Vestnik Universiteta. https://​doi​.org/​1​0​.​2​6​4​2​5​/​1​816 – 4277-2019 – 2‑24 – 27
Jerry Silfwer
Jerry Silfwerhttps://doctorspin.net/
Jerry Silfwer, alias Doctor Spin, is an awarded senior adviser specialising in public relations and digital strategy. Currently CEO at Spin Factory and KIX Communication Index. Before that, he worked at Kaufmann, Whispr Group, Springtime PR, and Spotlight PR. Based in Stockholm, Sweden.
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The Cover Photo

The cover photo isn't related to public relations; it's just a photo of mine. Think of it as a 'decorative diversion', a subtle reminder that there is more to life than strategic communication.

The cover photo has

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