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The efficiency of online advertising campaigns is determined by most advertisers on the basis of performance indicators such as cost-per-order (CPO), cost-per-lead (CPL), cost-per-click (CPC) or return-on-ad-spent (ROAS). The ability to track conversions has made it possible to assess the efficiency of advertising campaigns in real time. This is a major advantage of digital advertising compared to offline advertising options (posters, print, etc.). 

However, what many advertisers fail to consider when assessing campaign efficiency is the classification of campaigns into paid, earned and owned media. The classification of marketing measures into paid, earned and owned media not only serves as a nice presentation on PPT slides, but also as a strategic decision-making aid in the prioritization of marketing measures. 

But first I would like to answer the question of what actually lies behind earned, owned and paid media.

What is earned media?

Earned media refers to earned attention in various communication channels. As this is earned attention, every company that includes earned media in its marketing mix is dependent on a third party to assess what it has "earned". A typical channel for earned media is search engine optimization. SEO falls under earned media, as a company must first earn its placement in organic search results through optimized web content. But the sharing of content such as videos and blog posts by users is also referred to as earned media, as the company first has to earn the sharing through good and entertaining content. 

What is paid media?

Paid media includes all types of paid advertising - from Google Ads ads and ads in social networks to paid influencer collaborations. The major advantage of paid media over earned and owned media is that the marketing measures can be implemented quickly. This usually means that start-ups in particular focus on paid media channels at the beginning of their life cycle, as it can take some time to set up earned and owned media channels. The main disadvantages of paid media are the dependency on payment and the rejection of obvious advertising by online users.

What is owned media?

Owned media refers to communication channels that are controlled by the respective company. These include the company's own website, the company blog and podcast as well as the weekly newsletter. Content marketing is the main component of any owned media strategy and is essential for its implementation. The main advantage of owned media is that distribution does not incur any variable costs and the company retains complete control over content and message. The development of owned media also requires lead time and can therefore not be used ad hoc. In practice, owned media strategies are supported with paid media in order to increase the initial reach of a message.

Dependence on paid and earned media 

Once your own marketing measures have been sorted into earned, paid and owned media, an evaluation of the current traffic and revenue distribution should also be carried out. After the evaluation, many companies are surprised to find that a significant proportion is generated by paid and earned media.

As already mentioned, the main disadvantage of paid and earned media is their dependence on a third party. Rising advertising costs (e.g. CPM on Facebook) and decreasing advertising efficiency over time mean that excessive dependence on paid media cannot be a sustainable and independent strategy.

During account audits, I regularly see that one type of media is overrepresented - usually it is either paid media (Facebook Ads, Google Ads or Amazon Ads) or earned media (especially search engine traffic). In every lifecycle of an online business, there is one type of media that is over-represented. However, it should be the goal of every company to also work on the development of owned media, because only communication channels that a company controls itself allow it to plan for the long term.

The challenge of the owned media approach is that it requires a relatively long lead time and usually incurs fixed costs for employees. All successful online companies have a strong owned media component and also use paid and earned media to further accelerate company growth. 

Conclusion - Paid, earned and owned media:

From a short-term perspective, the use of paid media is often more efficient than the long-term development of owned media channels. However, too one-sided a focus on paid media leads to an overestimation of short-term success. For this reason, an exclusive focus on short-term return on investment via paid advertising campaigns is not a sustainable strategy and only leads to increasing advertising revenue for Facebook, Google and Amazon.  

Tobias Dziuba

My name is Tobias and I am the founder and managing director of the Amazon agency Adsmasters GmbH based in Düsseldorf.

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