The Three-Headed Monster of Earned, Owned and Paid Media

Scott: Posted on Wednesday, October 24, 2012 10:38 AM

Cerberus in Greek and Roman mythology, is a three-headed hound which guards the gates of the Underworld, to prevent those who have crossed the river Styx from ever escaping.  Sure, he’s tough on the outside.  But you just know, like all dogs, at the end of a hard day of protecting the gates of Tartarus, he likes to curl up with his favorite chew toy and probably eat his own…well, you know.  

Equally scary to many companies is the Cerberus of media today made up of a wild combination of paid (advertising), owned (social media channels) and earned (media impressions through PR) which all had better equal some kind of sales/revenue or its going to be a short trip across the river Styx for sure.

A new study just came out from two groups — The Jordan, Edmiston Group Inc (JEGI) and the Interactive Advertising Bureau (IAB) to take a snapshot for its “Social Media Ecosystem Report — Rise of Users, Intelligence and Operating Systems.”  The study has a lot of awesome infographics and gooblty gook, but the main takeaway is this:

“The high level analysis for media effectiveness takes all of earned and owned divided by paid. Earned is all the impressions generated divided by average CPM, owned includes all channels, and paid is the overall media spend. The higher the ratio, the more earned amplification is generated from paid.”

Lemme break it down for ya. Everything counts.  And should be coun-ted together in order to determine if your marketing is really delivering a solid ROI.  Sounds obvious, but in the silo-intensive world of large companies, there are separate departments hiring separate agencies to do separate projects with separate budgets and so on….  And would it surprise you that in some companies the various elements doing marketing and communications work don’t TALK to each other on a regular basis.  I know, shocking., but it happens.  And in this hyper-news cycle, changing-every day type of media world in which we live, that approach is pretty old school.

Like a diet, everything counts.  You can’t be on a diet, eat a piece of cake and say “Well I won’t count that.”  Because unfortunately your body does.  Same with your marketing and branding.  Every single little thing you do moves the needle for a percentage of your target audience in some way and you can’t just not count some of it because that department or function doesn’t report to you.  Not anymore.  I’ll give you a moment to come to terms with that.  Ok, let’s move on.

Now I’m not a math guy per se, but according to the latest thinking in the field, the way to calculate your return on investment for marketing activities is this:

E + O

E = Earned Media Value (Impressions divided by CPM)
O = Owned Media Value (Impressions divided by CPM)
P = Paid Media Spend

And again — it all counts.  All of it.  So figure out a way that works best for your company and count it.  And walk your dog.  It’s good for you, good for the dog and keeps at least one of its heads busy.