Dividing spending into 25% Paid, 25% Earned, 25% Shared, and 25% Owned may create a balanced chart. It does not establish that the business has funded the work required to achieve its goal.
The right allocation depends on the customer, the commercial objective, the buying process, existing assets, and the constraints on execution.
The organizing principle is purpose: fund the activities needed to move the business toward its objective, then use PESO to understand how those activities work together.
The model is intended to integrate paid, earned, shared, and owned media—not make them compete for equal budgets or isolated credit.
This article provides a step-by-step framework for turning that principle into a practical budget.
Step 1: Define the Business Outcome
Start with the result the business needs, not the channels the team wants to use.
An objective such as “increase awareness” leaves too much unresolved. Specify:
- The audience.
- The desired commercial outcome.
- The planning period.
- The starting position.
- The portion of the outcome assigned to this program.
For example:
“Generate $500,000 in additional revenue from new mid-market customers during the next six months, without exceeding the approved acquisition budget.”
That creates a planning problem you can evaluate.
If the objective is retention, category education, or market validation, define it accordingly. Do not force every initiative into an immediate lead-generation target.
Step 2: Translate the Goal Into Customer Requirements
For a simplified acquisition program:
Customers required = Additional revenue required / Revenue per new customer within the periodSuppose the assumptions are:
| Planning input | Illustrative assumption |
|---|---|
| Additional revenue required | $500,000 |
| Revenue per acquired customer within six months | $5,000 |
| New customers required | 100 |
| Lead-to-customer conversion | 5% |
| Leads required | 2,000 |
The lead calculation is:
100 / 0.05 = 2,000This establishes the commercial requirement. It does not mean each PESO category must produce 500 leads.
A customer may encounter several activities before purchasing. Some activities generate identifiable inquiries; others provide information, credibility, or follow-up that helps those inquiries progress.
Allocate responsibilities according to the customer journey—not an artificial four-way quota.
Step 3: Diagnose What Prevents the Outcome
Before choosing a mix, identify the main barriers.
| Observed barrier | Planning implication |
|---|---|
| Too few relevant buyers encounter the offer | Test additional distribution |
| Buyers arrive but cannot understand the offer | Improve messaging and the owned destination |
| Prospects question credibility | Strengthen relevant evidence and third-party validation |
| Interested prospects do not progress | Investigate qualification, follow-up, offer, and sales friction |
| Customers do not return | Examine the product experience and lifecycle support |
| The category is unfamiliar | Fund education, demonstrations, and market validation |
These are diagnostic starting points, not automatic channel prescriptions.
Weak conversion does not always require more website content. Limited awareness does not always require advertising. Investigate the mechanism before funding the response.
Step 4: Assign Each PESO Category a Specific Job
Once the barriers are clear, define how each category will contribute.
| Category | Possible role in the plan | Example activity | What must be funded |
|---|---|---|---|
| Paid | Reach selected audiences or capture buying intent | Search campaigns and sponsored distribution | Placement fees, creative, management, tracking |
| Earned | Introduce independent editorial attention | Research-led media outreach | Research, PR expertise, preparation, monitoring |
| Shared | Enable discussion and circulation | Expert social publishing and community participation | Content adaptation, moderation, community management |
| Owned | Explain the offer and support progression | Landing pages, case studies, email, demonstrations | Production, development, technology, maintenance |
The categories should reinforce one another. Spin Sucks describes owned media as a source of truth, earned media as corroboration, shared media as a way to move the signal, and paid media as an accelerator.
These roles are useful guidance, not rigid funnel stages. Paid media can educate; owned media can capture existing demand; shared discussions can reveal customer objections.
Step 5: Separate the Full Budget From the Media Purchase
A practical PESO budget needs two connected views:
- A resource view showing what the business pays for.
- A PESO view showing which activities those resources support.
The resource view might include:
- People and agency services.
- Content and creative production.
- Website and technology.
- Purchased distribution.
- Research and measurement.
Do not subtract the people budget from the total and then describe all earned, shared, and owned activity as “free.”
Equally, do not include salaries in a department subtotal and add them again inside each PESO allocation.
Maintain one underlying ledger. Use tags or documented allocations to create the different views.
Step 6: Cost the Work Before Calculating Percentages
Consider the six-month acquisition program outlined above.
Assume its approved funding envelope is $150,000. The following budget is illustrative—not a recommended allocation.
| Activity | PESO classification | Included costs | Budget |
|---|---|---|---|
| High-intent acquisition campaigns | Paid | $30,000 media, $5,000 creative, $5,000 management | $40,000 |
| Sponsored educational distribution | Paid | $10,000 placements, $5,000 adaptation and coordination | $15,000 |
| Research-led media outreach | Earned support | $15,000 PR services, $5,000 preparation and monitoring | $20,000 |
| Expert publishing and community participation | Shared | $10,000 management, $5,000 content adaptation | $15,000 |
| Conversion and proof assets | Owned | $15,000 production, $10,000 web development | $25,000 |
| Lead nurture and educational sessions | Owned | $5,000 content, $5,000 implementation and delivery | $10,000 |
| Shared measurement infrastructure | Cross-PESO | Reporting setup and allocated analytics support | $10,000 |
| Planned expenditure | — | — | $135,00 0 |
| Unallocated reserve | Not yet assigned | Released only after approval | $15,000 |
| Total funding envelope | — | — | $150,00 0 |
The same budget can be summarized by PESO category:
| Budget view | Allocation | Share of planned expenditure |
|---|---|---|
| Paid | $55,000 | 40.7% |
| Earned support | $20,000 | 14.8% |
| Shared | $15,000 | 11.1% |
| Owned | $35,000 | 25.9% |
| Cross-PESO measurement | $10,000 | 7.4% |
| Total planned expenditure | $135,000 | 100%* |
Percentages may differ slightly from 100% because of rounding.
The proportions emerge from the work. They were not selected to make the chart symmetrical.
Notice another distinction: the paid program costs $55,000, but only $40,000 is purchased media. The remaining $15,000 funds its production and management.
Label those scopes clearly when comparing channel costs.
Step 7: Test the Allocation Against Constraints
A budget can reconcile mathematically and still be impossible to execute.
Evaluate at least five constraints.
Financial capacity
Suppose the $500,000 revenue objective carries a 60% gross margin.
That produces $300,000 in gross profit before the program costs modeled separately.
If the entire $150,000 envelope is spent, $150,000 remains before additional sales costs and other expenses not already included.
This is a preliminary contribution check—not a complete profitability assessment.
Cash timing
Can the business fund production, retainers, and media payments before customers pay?
Model the payment schedule and peak funding requirement. An approved total does not guarantee sufficient liquidity at every point.
Execution capacity
Do the named owners have enough time to deliver the work?
Confirm agency scope, internal responsibilities, production capacity, and any hiring delays.
Market capacity
Is there enough relevant audience or buying intent to support the acquisition requirement?
A budget does not create an unlimited supply of suitable prospects.
Time to impact
Can each activity contribute within the six-month period?
Some assets may support future revenue even if they do not materially affect the current deadline. Show that distinction rather than forcing all benefits into the same window.
Step 8: Build a Delivery Case, Not Just a Cost Table
The illustrative program needs 2,000 leads at the assumed 5% conversion.
The next task is to explain how the integrated plan could deliver them.
For direct lead sources, document:
- Expected volume.
- Qualification criteria.
- Acquisition cost.
- Conversion assumptions.
- Supporting evidence.
For supporting activities, document:
- The barrier they address.
- The audience they serve.
- The behavior they are intended to influence.
- The measurement approach.
- The evidence needed to continue funding them.
Do not assign invented lead volumes to PR or community activity simply to complete the spreadsheet.
Also avoid summing overlapping reports. A prospect who encounters a sponsored article, visits the website, and attends a webinar is not three separate leads.
Step 9: Create Decision Rules for Reallocation
A PESO budget should be adjustable without becoming arbitrary.
Define what would justify a change before results arrive.
| Evidence | Potential budget response |
|---|---|
| Paid volume rises but qualified-opportunity rates deteriorate | Limit expansion and investigate audience quality |
| Owned pages receive relevant traffic but fail to support progression | Test messaging, offer, usability, and follow-up before buying more traffic |
| Media outreach produces little relevant editorial interest | Reassess news value, evidence, targeting, and spokesperson availability |
| Shared activity attracts interaction from the wrong audience | Revise community selection and subject matter |
| A validated program needs additional capacity | Consider releasing reserve funding |
| Results remain immature or inconclusive | Avoid treating uncertainty as either success or failure |
Do not move money solely because one dashboard reports a lower cost per click.
Compare performance against each activity’s job, while keeping the commercial objective visible.
A Reusable PESO Budget Template
Use one row per funded activity.
| Field | What to enter |
|---|---|
| Business objective | The commercial result the program supports |
| Audience | The segment and buying situation |
| Customer barrier | What currently prevents progress |
| Activity | The specific work proposed |
| PESO role | Paid, Earned, Shared, Owned, or cross-category |
| Deliverable | What the team will produce or operate |
| Resource costs | People, production, technology, distribution, and other relevant expenses |
| Total cost | Reconciled amount, without duplicate allocations |
| Timing | Delivery dates and payment schedule |
| Owner | The accountable person |
| Primary measure | The outcome appropriate to the activity |
| Guardrails | Quality, margin, capacity, and other limits |
| Evidence | Historical performance, pilot results, or labeled assumptions |
| Review decision | Continue, change, expand, pause, or stop |
At the summary level, track:
Funding envelope = Planned expenditure + Unallocated reserveWhen reserve funding is approved for an activity, transfer it into that activity’s budget. Do not leave it in both places.
Build for Coherence, Not Equal Shares
A strong PESO budget does not prove its quality by giving every category the same amount.
It demonstrates that the business has funded a coherent customer journey, covered execution costs, respected financial and operational constraints, and established rules for learning and reallocation.
A scenario tool such as PlotGTM can help visualize the resulting mix and compare alternatives. The allocation becomes meaningful when the team can explain what each amount funds and why that work matters.
Start with the business goal. Identify the barriers. Cost the necessary activities. Then let the PESO proportions reflect the plan—not dictate it.