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.

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.

Simply put: Funnels leak.

So, how must we think about funnels?

Learn more: The Leaky Funnel Problem

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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