What Is Paid Media? Definition, Examples & 7-Step Guide

Turning paid ads to profit is a tested route to sustainable, scalable revenue. 

If you can make paid media work, you’ll generate a supply of customers that isn’t dependent on the whims of Google, the shifting priorities of social media algorithms, or unpredictable referrals. 

But which channels are right for you? How can you weave them together into an effective strategy? And what’s the best way to measure your performance?

Let’s answer all these questions and more. 

Key Takeaways

• Paid media is any form of paid advertising on a platform you don’t own.
• There are three main paid channels: display ads, native ads, and traditional media. 
• Influencer and search ads are the first and second most trusted channels. Traditional print media and social platforms come in third and fourth. 
• An effective strategy has seven stages: obtain internal stakeholder buy-in, set clear goals, set your budget, know your audience, choose channels, create compelling ads, and optimize going forward. 
• There are five key metrics to track when running paid media campaigns: return on ad spend (ROAS), return on investment (ROI), cost per click (CPC), impressions, and click-through rate (CTR). 

What Is Paid Media?

Paid media is any form of promotion that meets both of the following criteria: it happens on a platform you don’t own, and you pay for it.

Perhaps the best-known examples of paid media are banner ads like the ones shown in the Wired article below. 

Paid media is a big revenue driver—for SMBs right through to global enterprises. Research conducted by me and my team found that it accounts for a significant portion of income across the whole spectrum of company sizes. 

How Does Paid Media Differ From Owned and Earned Media?

The digital marketing channels you use to promote your business can be split into three categories: paid, earned, and owned.

Earned media is unpaid publicity that your business receives from other people and websites. It is a response to something worthy of attention. Examples include an editorial write-up on a news website, a blog post created by an influencer, and social media shares and mentions from your customers.

Owned media is content that your business manages and controls. This includes your website, blogs, social media accounts, newsletters, and any reports and PDFs you create.

Categories and Examples: Paid Media in the Wild

There are dozens of paid media channels, with more emerging every year (LLM interfaces will likely offer paid ads soon, for example). That said, they all fall into one of three categories, with a degree of overlap between them. 

• Display ads: These are visually distinct image, video, and text ads that appear alongside content on the web. Website banners, YouTube ads, and interstitial pop-ups are all examples. 
• Native ads: These are ads that fit within the flow of content and are often indistinguishable from it at first glance. Influencer recommendations, advertorials, and sponsorships are well-known forms of native advertising. 
• Traditional media: Commercials, billboards, and direct mail are examples of traditional media. Though they often work in a similar way to display ads, they are distinguished from online media because they lack precise tracking and targeting. 

Now that you have a good high-level overview, let’s look at some specific channels, with real examples from the wild. 

Search Engine Advertising (Search Engine Marketing)

Search engine advertising, more commonly known as search engine marketing (SEM), involves promoting your ads on the results pages (SERPs) of search engines like Google, Bing, and Yahoo. 

We found that search ads on Bing and Google drive among the highest conversions of any paid channel, second only to LinkedIn and Amazon (where product-specific ads are highly targeted). 

Here’s what the advertising process looks like on Google Ads, the world’s biggest search engine ad platform: 

1. Open an account with the ad network (in this case Google Ads)
2. Choose the keywords you want to appear for, such as “gardener in Arizona”
3. Set your maximum bid for those keywords (top bidders receive priority)
4. Create your advertisement, which will be text-based
5. Sit back and let Google serve your ad on relevant SERPs

SEM targets specific keywords and phrases. As a result, you can go after people who are ready and eager to buy, significantly increasing your chances of a successful sale.

If you’re willing to bid enough money for a keyword, you can also appear right at the top of the first page, above the competitors you outbid and the organic search results.

Here are some examples of search engine ads for the keyword “paid media consultant.” Note the “Sponsored” label that appears before the ads to distinguish them from organic results. 

Third-Party Banner Ads

Banner display ads are shown on a third-party online property, usually a website or app. 

Contrary to what a lot of people think, banner ads don’t always appear at the top of a page. Inline banner ads also show in the flow of content. A banner ad is simply a square or rectangular display ad (an ad that is distinct from surrounding content).

My research shows that banner ads are the least trusted of all paid media formats, underperforming search and influence ads significantly. Influencer marketing has a trust score of 75 compared to 16 for banner ads. 

That said, banner ads are good at raising brand awareness. As customers see the same ad repeated across different websites, “brand memory” strengthens. The average person needs to see a brand at least seven times before they make a purchase.

Here’s an example of a fairly conspicuous banner ad on UK news site the Daily Mail: 

The Google Display Network, the world’s biggest display network, consists of over two million websites and mobile apps that businesses can display their ads on—reaching 90 percent of web users worldwide. When someone clicks on an ad, Google Ads and whoever hosted it share the spoils.

Paid Social Media Advertising

Social media advertising is big business. The global market was worth an impressive $252.95 billion at the end of 2024, and this is set to grow in the future.

My team and I conducted research into the web’s most popular social media platforms and found that Facebook generated the most ad revenue in 2024, with over $100 billion in earnings. Instagram comes second at $70.9 billion.

Here’s an example of paid media advertising on Facebook. This sponsored post is by McDonald’s and appears in relevant customers’ newsfeeds, enticing them to try their $8 Chicken McNugget Meal. 

Social media ads aren’t just for B2C brands, either. In the LinkedIn ad below, Microsoft prompts users in the banking space to download an eBook. 

Paid social advertising is an easy way to teach people about your business as they’re catching up with friends and family or checking out the latest viral trends. Nearly 60 percent of the world’s population has at least one social media account.

Plus, paid social media allows you to drill down and target a specific audience. Most platforms let you target people by age, gender, and location, as well as their hobbies and other social media accounts they follow.

Video Advertising

There’s one thing that people love to watch online, and that’s videos. We conducted a study at NP Digital and found that video dominated when it came to engagement. Short-form and long-form videos accounted for 31.38% and 15.51% of all engagement in the sample we studied. 

Video advertising takes advantage of this high engagement by showing short ads before original content. The top platforms are YouTube, Facebook, and Instagram. Viewers simply watch the ad and click on a call to action to learn more.

The advantage of video advertising is that it holds attention better than any other format. Create a stylish, funny, or cool video, and people will naturally want to discover your brand. Like display ads, videos are great for capturing people’s attention on mobile.

Sponsorships and Advertorials

Sponsorships, advertorials (paid articles), and influencer marketing are the most prominent examples of paid native advertising. 

Native advertising resembles the look and feel of original content on the publisher’s site or social media channel. 

Here’s an example of a paid article. It’s been written by a company executive who’s part of Forbes Council, a paid program that entitles members to publish a set number of articles every year. 

Sponsored posts are also popular forms of paid media, too. The Instagram post below is clearly labeled as a “Paid partnership with Gymshark.” However, given that the influencer has a loyal, engaged following—the post has over 140,000 likes—the ROI will likely be positive for the advertiser. 

How to Create a High-ROI Paid Media Campaign: 7 Steps

When working with paid media for the first time, it might be tempting to dive straight in and get started. This is rarely a good idea. 

Because large amounts of money are involved, caution is your ally. Many businesses burn through cash before giving up on paid media, wondering what went wrong. 

Your paid media strategy should clearly cover the following:

• Which internal stakeholders you need to include
• Goals you want to achieve
• Characteristics of your audience
• Platform-specific budgets
• Viable paid media channels
• Products and services you want to promote
• Metrics for gauging success 

Let’s look at how to put together a rock-solid plan. 

1. Obtain Internal Stakeholder Buy-In

When stakeholders understand exactly why paid media is worth pursuing, everything becomes easier. Budgets are assigned quickly, timelines are more flexible, and micromanagement is less likely. 

Highlight the following benefits of paid media to ensure corporate leadership is aligned: 

• You get immediate visibility. Search engine optimization (SEO) costs less than paid media, but it can take three to twelve months to see optimal results. With paid media, if you’re happy to pay, you can appear in front of prospective customers in hours.
• You can measure results. Paid ads platforms offer detailed analytics so you can see how your ads are doing. Some even provide a quality score so you know which campaigns you need to optimize.
• You can tailor your ads. You can target your ads to specific groups of customers and even tailor content toward a location. Similarly, you can pick who you don’t want your ad to show to.
• You can implement automation. You can be as hands-on or hands-off with your advertising as you want. For example, Google Ads offers an automated bidding feature that finds the most competitive ad prices without your intervention. 

2. Set clear goals and KPIs

It’s vital that you know what you want and when you’ve achieved it. Metrics are important (we’ll come to those later), but goals lay the foundation. 

Most paid media campaigns focus on one or a mix of the following: 

• Website visits
• Leads and inquiries
• Social media followers
• Brand awareness
• Revenue

Pass your goals through the SMART test: are they Specific, Measurable, Attainable, Relevant, and Timely? The more detailed you make the goals, the easier they will be to achieve.

3. Determine budget

With paid media campaigns, it’s essential to set a budget and stick to it. Many paid media platforms let you set a definite upper limit for your ad campaigns. If you exceed this budget, the platform stops showing your ads.

As well as budgeting for your paid media ads, you must also consider additional costs. These include ad copywriting, graphic design, and videography. If you use an agency, you’ll have to cover ongoing account management fees. 

4. Know Your Audience

Audience research is important because you use it to set targeting parameters on ad platforms. If you’re paying for media on a publication or newsletter, you can compare your ideal customer profile (ICP) to the audience specs.

Research all the following points for your ICP:

• Industry
• Company size
• Location (specific region if appropriate)
• Budget
• Decision-maker roles
• Pain points
• Current solutions and tech stack
• Buying timeline

5. Choose Channels

Which paid media channels are right for your needs?

It might be that one paid media channel will do the job. Or you may need a strategy that encompasses dozens of channels. 

Take the following into consideration when choosing where to advertise:

• Which paid media channels are your competitors using? 
• What is your overriding goal from step one? 
• What is your budget, and which channels are viable on this basis? 
• Which channels cater to your ICP?
• Which channels present opportunities for some quick and easy wins?

6. Create Compelling Ads

Here are some of my top tips for designing paid media ads that drive clicks:

• Don’t be afraid of being “loud”—you want an ad that customers stop and look at.
• Keep your ad copy clear and concise. 
• User-generated content and testimonials show prospects why existing customers love your brand.
• If you’re using search advertising like Google Ads, take advantage of assets that tell customers more about your business for no additional cost. 
• Run multiple variants of your ads from the get-go for some quick A/B test wins. 

In addition, some paid media platforms have ad libraries where you can see examples of paid media ads from your competitors. Meta (Facebook and Instagram), TikTok, LinkedIn, and Google Ads all have libraries. They’re fantastic sources of inspiration. 

7. Optimize Your Campaigns

Like all digital marketing campaigns, paid media is not something you can set and forget. When it comes to optimization, little and often wins the race. 

I recommend checking your paid media accounts at least once a week, even once a day if you’re running a short-term campaign.

Paid media is excellent for running multivariate and A/B testing. You can create multiple ad versions with small differences—such as CTA texts or color schemes—and test them against statistically significant sample sizes. 

Top 5 Paid Media Metrics for Paid Media

There are lots of metrics you can use to track the success of your paid media campaigns. The risk is that you get lost in a sea of data. 

I recommend a simplified approach. One that lets you hone in on channels with potential, drop those that aren’t working, and demonstrate a clear ROI throughout. 

Here are my top five metrics for paid media:

• Return on ad spend (ROAS): ROAS is a sub-metric of ROI. It measures the return on ad spend without associated costs, only what you’re spending for the ad spot itself. It’s important to measure this separately because it’s the first thing you need to remedy if you’re not achieving a positive ROI overall. 
• Return on investment (ROI): This is the big one. If you’re generating more from your paid media campaigns than it costs to run them, you’re on the right track. Account for everything—creative costs, time managing ad accounts, A/B testing, etc.—and not just the ad platform fees. 
• Cost per click (CPC): This is the average amount you pay whenever someone clicks on your ad. Ideally, this should be as low as possible. It’s a ripe area for optimization. 
• Impressions: This is the total number of times users see your ads. A high reach shows that you’ve chosen a channel that gives you exposure to a large audience, which is important for brand building. Low impression count? It might be time to evaluate the reach of your chosen channel. 
• Click-through rate (CTR): This is the percentage of people who see and click on your ad. A high CTR shows that people find your ad interesting and valuable.

Paid Media and AI: Trends You Need to Know

AI is the topic on everybody’s lips. There’s a lot of uncertainty around how it will change digital marketing, and paid media is no exception. While it’s still too early to make definitive claims, a picture is starting to emerge. 

My team and I ran research looking at AI vs. human-generated ads, for example, and found that AI ads converted at 1.28%, less than half a percentage point below human ads, which converted at 1.54%. Yes, human ads performed better. But not by a huge margin. 

I would urge digital marketers to keep the following four points in mind when it comes to paid media and AI: 

• Paid media isn’t going anywhere: Most paid media channels will remain viable. People will continue to read their favorite publications, open newsletters, follow influencers on social media, listen to podcasts, and so on. Even if traditional SEO and search ads vanish, LLMs like ChatGPT will need to monetize at some point. 
• Revenue from ads provides stability: As AI changes the way people consume content online, revenue from ads can actually provide more stability. Unlike organic traffic, they’re not dependent on algorithms over which you have no control. 
• Paid media helps you build brand citations: Branding will be more important than ever in the age of AI. Citations around the web are one of the ways LLMs identify and measure the relevance of your business to a particular query. For example, if “NP Digital” appears often in AI training materials next to “advertising agency,” my brand is more likely to be referenced in response to related questions. 
• Now is the time to start experimenting with AI: As was shown in the research by me and my team, AI can perform nearly as well as humans. For a head start when AI is truly ready to assist with paid media campaigns, you should start experimenting and learning now. 

Should You Focus on One or All Channels?

I’m a big proponent of omnichannel digital marketing. 

It seems obvious. When you’re everywhere, you reach more of your prospects. Yet you would be amazed at how many businesses fail to grasp this simple fact. 

However, with paid advertising, I have a caveat. 

I still advocate an “everywhere approach.” But with large amounts of money at risk, you need to do two things: research and test.  

First, it’s important to understand how paid channels work at a deep level. Then, you need to test, test, and test some more to verify they’re a fit. 

Can’t generate a positive ROI? It’s fine to move on.

Seeing results? Great. You’ve added a long-term revenue generator to your promotional mix.