Recent research findings on small business owners found that 80 percent are looking forward to strong business performance through 2019. These business owners pointed to several success factors including the strength of their customer base as well as the quality of their product or service.
However, when asked about what was really keeping them from true success, 36 percent of business owners pointed to lacking in-house marketing expertise, making it the most-frequently reported skill area missing from small business environments.
A major driver of this is owners not understanding the full scope of marketing activities available to them, let alone knowing which ones to prioritize. This is why understanding the difference between owned, earned and paid marketing is so critical. Having a strong grasp on these marketing basics lets business owners target where to focus their attention to achieve their business goals.
Understanding the Difference Between Owned, Earned & Paid Marketing
First, let’s understand exactly what defines each of these categories:
- Owned Marketing: This category of marketing efforts includes activities you do on the channels or properties that you own. As a result, it refers to activities that you have full control over, including how they look, how they sound and how customers interact with them. Typical examples of owned channels include websites, social media, blogs and email.
- Earned Marketing: This category of marketing activities refers back to marketing that you receive as a result of actively working to make it happen. While you can’t control whether or not it happens, you have the ability to influence it with targeted efforts. This encompasses everything from PR to SEO to ratings and reviews.
- Paid Marketing: This last category includes all marketing activities that you pay for. This includes sponsored ads on Facebook and Instagram, search ads on Google or Bing and paid influencers.
At a high level, the table below helps illustrate exactly how each of these channels are different.
The Business Implications of Owned, Earned & Paid Marketing
Each marketing category helps build awareness and interest in a business. However, they each have implications on key business fundamentals include budgeting, customer acquisition costs and customer acquisition speed.
- Owned Channels: Remember, this marketing category refers to activities that you own and have full control over. This means that generally you won’t need to spend money to make them happen, helping keep budget needs low. Since you’ll need less money for these tactics, it also means you’ll be able to drive down your customer acquisitions costs. However, these tactics are slower-moving so it’ll take more time to get in front of customers and get them interested.
- Earned Channels: As a grouping of activities that you influence, but don’t control, these channels require a low-to-moderate budget. Some of it can be done internally, though you may need to allocate money for PR and other contractor support. This moderate budget helps keep the costs of acquiring customers in-check, but makes it higher than Owned channels. It also means customer acquisition speed is moderate too. These tactics help get you in front of broader audiences at a slow and steady pace.
- Paid Channels: As their name implies, paid ads require a budget to run so they have hefty implications of budgetary needs. This also means they increase your customer acquisition costs. However, because they can go live as soon as you start paying, it lets you get in front of customers faster and acquire customers sooner.
Picking The Right Marketing Channels
No one marketing channel is better than the other. Instead, knowing which one to choose is a reflection of a business’s unique circumstances. For business owners with limited financial resources, you naturally have to stay away from Paid Channels and accept slower business growth. On the flip side, businesses with stronger financial resources can allocate budget to test the efficacy of paid efforts for driving more customers to their business.
Regardless of which channels you choose, the key is being targeted and deliberate. Rather than sprinkling time and energy across a wide range of channel, focus your efforts in one core category. It ensures that those activities are done extremely well and have the best chance of drawing in new customers.