Conditions for Owned, Paid, and Earned Media Impact and Synergy
Ceren Demirci, Koen Pauwels, Shuba Srinivasan, and Gokhan Yildirim, 2014, 14-101
Paid online media is under fire by recent studies reporting low effects compared to own media for single, well-known brands. However, many question the generalizability of these findings. Neither the relative effectiveness of paid, owned, and earned media nor their synergy with each other and with offline marketing is currently well understood.
In this study, the authors take a contingency perspective to hypothesize and demonstrate how brand strength and the search versus experience nature of the category favors the effectiveness of different types of online media and their synergy with other marketing actions. Their conceptual framework combines source credibility with media coverage and complementarity.
Their empirical analysis on four brands uses Bayesian Vector Autoregressive (BVAR) models to estimate long-term sales elasticities.
Overall, their findings confirm the increasing importance of earned media. Earned media brings greater efficiency for all brands across category conditions but especially for familiar brands.
With regard to owned versus paid media, they find that owned media has a higher sales elasticity than paid media for both studied unfamiliar brands and for the familiar brand in the experience category. In other words, owned media becomes a credible source for consumers to decrease the unpredictable nature of experience goods and unfamiliar brands.
However, paid media has higher sales elasticity than owned media for the studied familiar brand in the search category. A familiar brand in a search category is the least risky choice for consumers and paid media can provide enough information to evaluate the quality.
Their findings also provide insights into the potential benefits of synergy in different online advertising mediums. Within-online synergy is significantly higher than cross-channel synergy for familiar brands in their data, which may mean that high and favorable awareness has already been created in traditional media for well-known brands.
- Paid media is most effective when consumers perceive little risk in their decision.
- Owned media is important for risky purchases. Brand managers for experience goods should ensure their websites provide quality information in order to decrease the consumers’ perceived risk for these types of goods.
- Brand managers of unfamiliar brands should use both offline and online marketing to build strong brand associations in consumers’ minds. Cross-channel synergy is key.
- Managers of familiar brands can generate more synergy by investing in different online mediums. They leverage the existing brand equity to get high bang for their buck in online media.
Ceren Demirci is a doctoral candidate and Koen Pauwels is Professor of Marketing, Özyeğin University, Istanbul. Shuba Srinivasan is Professor of Marketing and Dean’s Research Fellow, Boston University School of Management. Gokhan Yildirim is Assistant Professor of Marketing, Lancaster University, Management School, Department of Management Science.
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