Paid, owned and earned are not interchangeable budget lines.
Paid, owned and earned are not interchangeable budget lines. Paid buys exposure or action; owned converts an accessible audience on controlled assets; earned comes from external actors whose distribution and final message are not directly bought. Their value also lies in interactions: paid can create earned, owned can convert that attention and earned can change paid efficiency.
Decision and method.
Allocate resources by the causal role and horizon of each family, measuring direct effects, assisted effects and interactions separately. For each action state population, mechanism, horizon and expected decision; reject vague visibility objectives without behaviour or measurement. Map paid exposure, owned visit, sign-up, CRM follow-up, external mention and conversion, locating double claims. Use experiments for paid incrementality, journey tests for owned, time series or events for earned, then test interaction. Compare marginal cost, capacity, saturation and time lag. Earned has no media cost but requires product, relationship, content and response.
Worked example.
A system produces 900 incremental paid sales, 280 owned, 120 earned and 90 additional when paid and earned occur together. Unit contribution is €85; costs are €70,000, €12,000 and €18,000. Gross contribution: (900 + 280 + 120 + 90) × 85 = €118,150. Costs: €100,000. Net contribution: €18,150. Ignoring the interaction understates results by €7,650; crediting it to both families overstates by the same amount. Preserve the interaction while testing if the 90 sales persist when paid is reduced.
Checks and limits.
Each action has explicit role, population and horizon; direct and assisted measures are not added without deduplication; paid-owned-earned interactions are estimated separately; marginal cost and capacity guide allocation. Earned is difficult to assign and may react to the same events as sales. Fragmented identities make sequences incomplete, and isolated experiments poorly measure long-term reputation effects.
Resources and sources.
Download the paid-owned-earned matrix. Related: trade reach and frequency, measure creative, triangulate evidence. Sources: Stephen and Galak (2012); Batra and Keller (2016); Gordon et al. (2019).