Gross Ratings Points
Gross Ratings Points (GRP)
Almost everyone you personally know has at some point encountered an Out-of-home advertisement. And though most of us might not even recognize it, the placement of any particular OOH advertisement requires strategy, planning and forethought. What’s more, advertisers have to keep track of whether or not these advertisements are having any impact at all on the public or selected target market. Here, we’ll explore how advertisers trace the influence of their OOH advertising campaigns.
Gross ratings points, can essentially be described as a metric advertisers use to gauge the impact of their advertising campaign. This system of measurement was developed in the 1950’s, and is also the primary metric used for TV advertising buys.
When it comes to OOH advertising, the unfortunate reality is that it doesn’t come cheap. The cost of advertising at a particular location is calculated via impressions. Gross ratings points is based on the number of impressions made by an advertisement at a particular location. Locations are assigned rating points, and this determines there rank or value. 1 rating point equals 1 % of the market population; this is calculated after considering various factors like traffic, size, visibility etc. So for example, if your company advertises at a location with 60 rating points, and thus engages about 60% of the population, this undertaking will most likely cost a lot of money. That’s why it’s very important to wisely choose the location and message of the advertisement. For a company or small business that’s just starting out, consulting certain specialist agencies about the design and placement of the ads is incredibly valuable.
How do we measure GRP?
GRP can be calculated via this formula:
To demonstrate how this works, let’s look at an example using TV advertisements. Let’s say a particular company would like to run an ad on TV 7 times a week during a particular TV show. Nielsen, a global media data and insights provider, will likely inform the company of how many households watch that particular TV show every week. For this example, let’s say 20 million. Now, if the company wanting to run the ad is based in the US, they’ll have to consider the percentage of households watching the show out of the total number of TV watching households. In the US there are around 119.9 million TV watching households. Thus, the ads expected reach can be found like this:
(20M household/119.9 households) x 100 = 16.6 % audience reach
After this, the GRP can be calculated by multiplying this percentage by the frequency with which the ad is run, which is:
16.6 x 7 = 116.2 GRP
The significance of GRP!
GRP plays a significant role in the negotiation of ad buys, especially when it comes to TV advertising. Generally, depending on the ratings points received for a particular ad spot, advertisers are able to work out their payment rates.
Traditionally, GRP has been centred on TV advertising, and Out-of-home media. Some advertisers agree that GRP can potentially be used to bridge the gap between traditional and digital media. If the GRP metric is adopted into the digital advertising world, advertisers claim that campaign performance over a wide range of media formats will be easier to compare. By using these comparisons, an argument can be made for allocating larger sums of advertising budgets to the digital format.
As mentioned, GRP is used to give advertisers an estimate of how much their campaign is being exposed to the public.
At the end of the day, GRP is still only an estimation, and though it is widely used, it cannot state with absolute certainty whether the target audience has been reached.
