Three-Bucket Paid Media Model
Classify paid media by attribution mechanism before measuring performance.
- Difficulty
- Easy
- Time to result
- ~weeks to results
- Steps
- 4
- Confidence
- 96%
The model divides paid advertising into three buckets according to how an ad produces and reveals its result. Direct-response advertising links a click to a conversion, allowing teams to calculate ROAS or LTV-to-CAC directly. Indirect conversion advertising, such as conversion-optimized video, influences customers without preserving a clean click path and therefore requires incrementality or conversion-lift studies. The third bucket optimizes platforms for engagement or awareness instead of conversion events and must be evaluated as brand investment. Classifying campaigns first prevents attribution confusion and helps teams choose the correct objective, experiment, and performance threshold for each type of spend.
Origin
Extracted from Marketing Against The Grain
Core principles
- 01Different advertising models require different measurement methods.
- 02Direct response should connect spend to customer value.
- 03Indirect conversion campaigns require incrementality testing.
- 04Awareness campaigns should not be judged like direct response ads.
How to run it
- 1
Classify the campaign
Determine whether the campaign produces directly attributable conversions, indirectly influenced conversions, or engagement and awareness.
Pro tip Classify by the optimization event and conversion path, not merely by ad format.
Watch out A video ad can belong to either the indirect-conversion or awareness bucket.
- 2
Choose the matching metric
Use ROAS or LTV-to-CAC for direct response, incrementality for indirect conversion, and engagement or brand measures for awareness.
Pro tip Include payback period when evaluating direct-response economics.
Watch out Do not demand click-level attribution from an indirect campaign.
- 3
Run the appropriate test
Inspect attributable transactions for direct response and use controlled regions, audiences, or periods to measure lift for indirect campaigns.
Pro tip Use comparable control and treatment groups for lift studies.
Watch out Uncontrolled before-and-after comparisons can mistake external demand changes for advertising impact.
- 4
Allocate by objective
Balance the buckets according to whether the business needs immediate acquisition, incremental demand, or broader awareness.
Pro tip Keep reporting for each bucket separate before presenting a combined portfolio view.
Watch out A strong aggregate result can conceal an uneconomic direct-response channel.
In the wild
A software company runs click-to-trial ads, conversion-optimized videos, and engagement-focused founder videos. It assigns ROAS to the first campaign, a regional lift study to the second, and qualified reach and engagement to the third rather than forcing all three into one last-click dashboard.
→ The team sees which campaigns acquire customers directly, which create incremental demand, and which build awareness.
Common mistakes
Using last-click attribution everywhere
Indirect and awareness campaigns can create demand without owning the final click, so last-click reporting systematically undervalues them.
Treating all video ads alike
The campaign's optimization event and conversion mechanism matter more than its creative format.
Is it for you?
Best for
Marketing teams running a mix of direct-response, video, social, and brand advertising.
Not ideal for
Businesses without enough spend or conversion data to distinguish campaign effects reliably.
From the transcript
“So I always divide paid into three core buckets, right?”
“We call that incrementality, which is hey, I put them off in, I put these on in these parts of the US. I turn them…”
From the episode
How do you build an organic marketing engine for your business? (#197)