If I offered to trade you three feet of gold for six kilos of silver, what would you say? How about 10 million online impressions to W18-49 in DFW for 100 GRPs of TV in DFW? If you chose “not enough information” as your answer, no need to read further.
The conversation about whether online should embrace GRPs, or Gross Ratings Points, befuddles me. GRPs are the fundamental “unit of trade” for most marketers – especially brand marketers. Our reticence to adopt them (as an industry), is somewhat like the shopkeeper who keeps selling feet of gold in exchange for pounds of other metals. Sometimes they might make out like a bandit, and sometimes not. Generally, though, business will be slow.
A gross rating point is a unit of marketing reach equivalent to 1% of the total US population (of a particular demographic, e.g., women 18-49) reached with one impression. 100 GRPs of W18-49, then, might be 50% of the US audience of W18-49 reached 2 times…or 25% reached 4 times. Typically, GRPs are cited along with average frequency, e.g., 100 GRPs of W18-49 with an average frequency of 3 (which implies 33% of the US population of W18-49, reached 3 times).
Now, why is a GRP important? The obvious reason is that for a lot of marketers – especially brand marketers who need millions of buyers to have business success, optimizing reach and frequency are the most significant factors in campaign success. With a single simple metric (or set of metrics if you include average frequency), they can define a target for and measure media planning success.
The non-obvious importance is the derived benefits of having such a simple standard for campaign success. Imagine if you know that campaign A reached 200 GRPs of your targeted audience at an average frequency of 4 and campaign B reached 300 GRPs of your target audience at an average frequency of 5, that there are many things you can easily answer:
-
given the price you paid for campaigns A and B, which was / is a bigger bargain? Divide cost by GRPs to get the “cost-per-point” of each campaign
-
given the sales lift you saw for campaigns A and B, which is more important to optimize: reach or frequency? Correlate reach and frequency of campaigns to sales and take the higher r-squared.
-
if A was an online campaign and B a TV campaign, do results justify moving money from online to TV or vice-versa? Divide sales by CPP…and move to the higher ROI medium
This last point is the critical non-obvious insight. Today, online sells impressions while print sells reach. Which performs better? I don’t know. Would you like a meter of gold or a pound of platinum?
Much as you would expect given that they’ve had 50-plus years to refine their approach, the Big Dogs of media have built their entire way of doing business around this standard unit of measurement (or unit of success). TV salespeople price their media based on reach – the higher the reach (which enables the most efficient spend) the higher the price per point of reach. This works because reach is so important to marketers’ success. Online literally does the opposite: the more impressions you buy, typically the lower the cost per impression. Why is this? If larger buys correlated to more (per capita) success (as they do in reach-based marketing mediums), prices should be higher. Because online buys typically have higher frequency at higher impression levels, though, larger buys often don’t correlate to more per capita success.
This simple example is just the tip of the iceberg, though. Almost all decisions in traditional media come back to GRPs. The best example of this is that GRPs and average frequency are the fundamental inputs to the media mix models that determine media spend allocation (radio spend vs. TV spend vs. print spend). These models predict the downstream (sales) performance of brand media spend based on historical input-output analysis. This is only possible because 1 GRP of TV at frequency of 1 has historically performed (in terms of sales) in a relatively predictable way when compared to 1 GRP of print at a frequency of 1. Media mix models are very sophisticated models that look at many different spend scenarios…but are fundamentally possible because all forms of media are measurable in a standard way: the GRP.
The decision to embrace the GRP is a simple one. Online can keep its (lucrative) corner store selling impressions, or it can start selling (pricing and delivering) on GRPs and average frequency and let marketers determine if what we sell is good enough for the mainstream market. I say we measure up.
