The concept of GRP in advertising is still not understood by many business owners. Unfortunately, many advertisers are still using the old CPM model to calculate their return on investment (ROI). This ancient method was used decades ago to determine how much it cost for a newspaper or magazine publisher to print an ad and distribute it.
However, today’s digital world has changed dramatically since these methods were first introduced over 50 years ago. With the introduction of online marketing platforms like Google Ads, Facebook Ads Manager, and LinkedIn Ads Manager. We now have access to tools that enable us to measure our ROI more accurately than ever before through Return On Investment (ROI) calculations based on Gross Rating Points (GRPs.) These new digital media platforms allow you to track your real-time return on investment while controlling your costs at the same time! No other platform gives you this kind of flexibility!
What is a GRP?
GRP stands for gross rating points. A GRP is a measure that represents the number of target customers reached by one advertisement or promotion, expressed as a rate. A single GRP is equivalent to a percentage of the total target audience, either qualified or unqualified, that will have been influenced by a given campaign.
For example, if 30 exposures were delivered in a given schedule to 100 target audience members, the grp is calculated by multiplying 30 times 100, or 3,000.
Why is a Gross Rating Point Important?
U.S. consumers are spending more time watching videos on the Internet due to changing trends in social media, connectivity, and consumer behavior. Marketers are shifting ad dollars to match that change with similar shifts in media spending. Video ads accounted for nearly 32% of total digital ad spending in the U.S. in 2012, up from just 6% of ad spending in 2008, according to recent data from the Interactive Advertising Bureau (IAB). Marketers are looking at new ways to reach consumers with video ads using function-rich digital ad formats such as GRPs. GRP, or Gross Rating Points, is an industry term used to describe the potential exposure to a given audience that can be achieved by running an ad campaign.
How is a GRP calculated?
In the advertising industry, a media plan defines which audience demographics are being targeted and how those demographics are expected to be reached. A GRP is usually calculated based on the percentage of that target audience that will be exposed to ads (i.e., 100 GRPs will reach 10% of the target audience).
The following formula represents how to calculate a GRP: Reach multiplied by frequency.
GRP= (Reach (% of Audience Reached) × Frequency (# of ad impressions)) × 100
An example:
Your business launch a campaign, with the target audience is 80 million of its population aged 20 to 35 years old. And the results deliver an average frequency of 6 impressions to 2,000,000 young people. So, using the formula to calculate GRP for your business
GRP = (2,000,000 / 80,000,000) * 6 = 2.5% * 6 = 15
How are GRPs used?
GRPs can be used in comparisons between different media vehicles or within the same vehicle. For example, a marketer might compare GRPs from TV, print, and online ads. In that case, the reach would be the total number of people reached by the TV ads, print ads, and online display ads. Alternatively, the marketer might compare GRP in an ad campaign in which all display ads run online. In that case, the reach would be the total number of people reached by all display ads in the campaign.
What’s a good GRP in advertising?
Well, to be frank, I don’t know. It all depends on how you measure it. Ratings, Reach, and Frequency charts are all over the place. And they’re constantly changing.
How does GRP affect ad pricing?
How much is that ad space worth? That’s a very common question and one advertiser, publisher, and brand all want the answer to. But it’s not as simple as it sounds.
There are a variety of factors that impact pricing for TV inventory, such as the number of viewers a show receives, the demographic the advertiser wants to reach, and the sort of content.
And, of course, GRPs play a part — all influence ads inventory pricing. GRP is used to measure advertising exposure over an ad campaign, typically expressed as the number of exposures per target audience member.
Does the GRP measure whether ads worked?
GRP is a statistic for determining the value of a brand. The purpose of a GRP is to estimate and measure an ad’s total exposure among a target population.
The problem with measuring active viewability is that there’s no way of knowing whether the person who saw the ad actually looked at it. GRP doesn’t review how many people are in the room or switch channels during ads breaks.
Depend on your ad target, a smaller audience with greater frequency or a larger audience with less frequency. The planner determines which suitable network to achieve GRP that they want.
Conclusion
The GRP is not an absolute measure of advertising effectiveness, but it does provide a benchmark for comparing one campaign’s reach with another. Knowing the difference between your average and gross rating points can help you get more efficient about how you spend time on content creation in order to maximize ROI.
Remember that every dollar spent should be evaluated based on its potential return, rather than just looking at numbers alone. Do any of these factors I mentioned change this conclusion?
