The Effects of Traditional and Social Earned Media on Sales: A Study of a Microlending Marketplace

Abstract

Marketers distinguish between three types of media: paid (e.g., advertising), owned (e.g., company website), and earned (e.g., publicity). The effects of paid media on sales have been extensively covered in the marketing literature. The effects of earned media, however, have received limited attention. This paper examines how two types of earned media, traditional (e.g., publicity and press mentions) and social (e.g., blog and online community posts), affect sales and activity in each other. Fourteen months of daily sales and media activity data from a microlending marketplace website are analyzed using a multivariate autoregressive time series model. The authors find that (i) both traditional and social earned media affect sales, (ii) the per-event sales impact of traditional earned media activity is larger than for social earned media, (iii) however, because of the greater frequency of social earned media activity, after adjusting for event frequency social earned media’s sales elasticity is significantly greater than traditional earned media’s, and (iv) social earned media appears to play an important role in driving traditional earned media activity.