The PESO Paradox

Organisations are strug­gling with the PESO paradox.

Allocating media budgets has nev­er been trickier.

“The chal­lenge in attrib­ut­ing media budget alloc­a­tion to pur­chase prob­ab­il­ity is that the true prob­ab­il­ity of pur­chases is extremely small and dif­fi­cult to accur­ately mod­el.“
Source: Ranking and Calibrating Click-Attributed Purchases in Performance Display Advertising ¹Chaudhuri, S., Bagherjeiran, A., & Liu, J. (2017). Ranking and Calibrating Click-Attributed Purchases in Performance Display Advertising. Proceedings of the ADKDD’17. … Continue read­ing

Why is it so dif­fi­cult to set up a reli­able frame­work to accur­ately determ­ine how to dis­trib­ute your invest­ments across paid, earned, shared, and owned media channels?

Here we go:

The PESO Paradox

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

These four types of media chan­nels are:

How do you cat­egor­ise these four types of media channels? 

Categorisation = Corporate Function

A pop­u­lar approach is to divide them based on cor­por­ate function:

Marketing (Corporate Function)

Communications (Corporate Function)

Categorisation = Corporate Control 

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

Total (Corporate Control)

Partial (Corporate Control)

Indirect (Corporate Control)

Categorisation = Corporate Value

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

Awareness (Corporate Value)

Transactional (Corporate Value)

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?

Typical PESO Considerations

Here are some typ­ic­al con­sid­er­a­tions 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

The Leaky Funnel Problem

By defin­i­tion, busi­nesses have a bot­tom line:

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 ²Zinchenko, 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.

When count­ing con­ver­sion rates back­wards, organ­isa­tions often find that one trans­ac­tion at the bot­tom of the fun­nel requires one mil­lion social media impres­sions at the top.

The Cost of Wasting Attention

Simply put: Funnels leak.

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.

So, how must we think about funnels?

Learn more: The Leaky Funnel Problem

The PESO Model

I often use the PESO mod­el to under­score the crit­ic­al dif­fer­ences between mar­ket­ing (paid media) and pub­lic rela­tions (earned, shared, and owned media). 

The PESO mod­el divides the media land­scape into four dif­fer­ent media chan­nel types: 

Don Bartholomew, vice pres­id­ent of digit­al research at Fleishman Hillard, presen­ted a ver­sion of the PESO mod­el in 2010. According to PR blog­ger and PR meas­ure­ment expert Heather Yaxley, his 2010 art­icle is likely to be the earli­est men­tion of the model:

In 2013, PR blog­ger Gini Dietrich pop­ular­ised the PESO mod­el on her blog and later trade­marked her heav­ily pro­moted and widely spread infographic.

“In June 2013, Gini Dietrich presen­ted the first iter­a­tion of the PESO mod­el you may recog­nise in a blog post: The Four Different Types of Media. It was fol­lowed in August by the post Mobile Marketing: Use the Four Media Types in Promotion, where she talked about integ­rat­ing paid, earned, owned, and shared.”
Source: PRConversations​.com ³Yaxley, H. (2020, June 28). Tracing the meas­ure­ment ori­gins of PESO. PRConversations​.com. https://​www​.prcon​ver​sa​tions​.com/​t​r​a​c​i​n​g​-​t​h​e​-​m​e​a​s​u​r​e​m​e​n​t​-​o​r​i​g​i​n​s​-​o​f​-​p​e​so/

“It is also worth point­ing out this 2010 McKinsey Quarterly art­icle by David Edelman and Britan Salsburg that includes sold and hijacked media along­side what used to be called POEM (paid, owned and earned media). Both of these con­cepts still have value even though their exe­cu­tion has changed in the past dec­ade.“
Source: PRConversations​.com ⁴Yaxley, H. (2020, June 28). Tracing the meas­ure­ment ori­gins of PESO. PRConversations​.com. https://​www​.prcon​ver​sa​tions​.com/​t​r​a​c​i​n​g​-​t​h​e​-​m​e​a​s​u​r​e​m​e​n​t​-​o​r​i​g​i​n​s​-​o​f​-​p​e​so/

Learn more: The PESO Model: Paid, Earned, Shared, and Owned Media