A metric used to measure the exposure of a television advertising campaign. Gross rating points (GRPs) are used to help media buyers determine the return on their investment by measuring how many individuals within their audience saw their ads.
Television ads are expensive, so every business, regardless of size, must determine whether purchasing advertising space is right for them. Gross rating point is the most important metric in television advertising because it can help you estimate the number of households within your target audience you've reached as a percentage.
Think of GRPs like impressions or reach on a digital ad. Ultimately, this number tells you how many people might have seen your ad. GRPs work the same way, telling you the percentage of individuals or households within your target audience that may have seen your ad.
Of course, gross rating points don't ensure your ad campaign is effective and can't tell you how many sales your television ads brought in. Yet, it can help you determine when and where to buy commercial ad space to ensure a successful campaign.
To grow your audience, you may consider investing in television ads to reach hundreds of thousands of households with a single commercial.
Gross rating points measure the impact of a campaign, helping media planners and ad buyers compare different options and measure results. It's important to understand that they do not measure the effectiveness of a campaign. While it's more likely someone who sees an ad will buy the product or service advertised, it's not guaranteed.
Gross rating point doesn't tell us whether someone saw the ad, just that the ad reached their television screens. For instance, someone might leave the television on for their dog while they're away at work, so that person didn't actually engage with the ad.
Unfortunately, there's no completely accurate way to measure the performance of traditional media campaigns. You can monitor customer behaviors and learn about them to uncover which television network and time to show your ad, but you can't automatically measure who visited your website or purchased your products after seeing an ad unless you ask your customers.
Despite its flaws, gross rating point is still the leading metric for advertising on television and can help buyers determine whether to purchase ad space based on their target market. Advertisers pay publishers based on their rating points for a particular ad, so understanding this metric is crucial if you're considering purchasing ad space.
So, while GRP can't help you calculate your campaigns' effectiveness, they can compare the impressions versus the number of people within an audience for a given ad campaign to tell you the potential number of viewers an ad might receive.
How to calculate GRP
To calculate GRP, you'll need to determine your reach and frequency. Your reach is the percentage of the largest measured population the ad reached, while the exposure frequency is the number of times the ad was seen or shown, also known as impressions. Here's what the formula looks like:
Gross Rating Point = Reach (expressed as percentage) × Average frequency (ad impressions)
To help walk you through it, let's take a look at an example campaign. Let's say your ad campaign has an average of 2 impressions by 200,000 viewers, with the total number of potential viewers being 1,000,000.
Your reach is the percentage of your audience reached by the ad. In this case, the equation looks like:
Reach = (200,000/1,000,000) x 100 = 20%
In this example, you've reached 20% of your target audience.
Now, we know your ads have an average of 2 impressions, so we can calculate your gross rating point:
Gross Rating Point = 20 x 2 = 40
If you're advertising using multiple networks, you can use the gross rating point to compare your campaigns and help determine whether purchasing advertising space is worth it. For instance, you may target different customer segments on different media outlets or channels. In these cases, you can use GRP to determine which advertising opportunities help you reach your target markets.
Whether or not your GRP is good depends on several factors. One of the most important is the total population. The "population" or total number of potential viewers with access to a media source.
For instance, if you decide to advertise during a particular television show, you can use estimates of past performance from a channel and market research to determine the total number of viewers they usually get during that time slot.
A high GRP does not necessarily mean your campaign was effective or seen by your target market. Since gross rating points can't tell you how many people purchased your products after seeing an ad, you'll have to use other metrics to determine the effectiveness of a specific campaign.
For instance, you can track sales figures after airing the commercials to determine if television, billboards, radio, and other forms of traditional media advertising are right for your business.
In most cases, you should try to reach at least 50% of your target market, which may take at least three or more impressions for someone to take action. If you're a new brand, you may need a higher level of frequency to make a viewer act on your advertisement.
Let's take another look at an example of how gross rating point works:
Let's say you use segmentation and want to reach men between the ages of 20 and 50. Based on market research, you've discovered that 60% of your target audience likes to watch the History Channel on Saturday mornings.
You should plan to run the ad at least three times during your desired time slot. In this case, your GRP would be 180 (60 x 3). You can then use this same formula to discover if another time slot or channel is best suited for your campaign goals and compare costs to ensure your ads fit within your budget.
Right now, you might be wondering how you're supposed to know what percentage of your target market watches certain channels or networks at specific times.
Almost all advertisers use Nielsen to find estimates of the total viewing public and the percentage of viewers within more specific demographics that watch a network or specific show.
Again, it's important to remember that GRPs don't measure performance. It won't tell you how many people actually watched your ad or whether they purchased your products or services because of an ad. However, many people believe it's currently the best metric for measuring the impact of this traditional advertising method.
Why are gross rating points important for business owners?
The main purpose of GRP is to help advertisers determine the cost-effectiveness of campaigns based on real data from market research and television viewing.
However, it can also help bridge the gap between traditional and digital advertising, allowing you to compare similar metrics across channels and various media formats. Here's why you should care about gross rating points if you plan to invest in television commercials:
Measure the effectiveness of advertising
Gross rating points help you determine how effective your advertising campaigns are. While they can't tell you how many people purchased your products after seeing a commercial, they can give you a quantitative figure to determine how many people or households may have seen your ad.
While GRP is typically used in television, you can compare other forms of traditional advertising campaigns, such as radio and billboards. Once you know your GRP for various media types, you can consider which is best for your budget and target market.
All marketers know the importance of determining their return on investment (ROI). Ultimately, the higher your ROI, the more you stand to make from various marketing and advertising activities. GRP won't tell you exactly how much it costs to acquire new customers from television advertising, but it can help you determine your overall cost.
Many publishers set their rates based on rating points, so the higher your GRP, the more you'll pay. However, the more you spend, the more you stand to gain since it means reaching a higher percentage of your target market.
Inform media buying decisions
Knowing your GRPs can help you allocate various resources and determine which approaches are best for creating ad campaigns with more personalization. For instance, if you sell air fresheners and know your target market watches primetime television, you can directly target instead of using a more generalized shotgun approach.
Simply put, GRP helps you compare the size of different marketing campaign audiences with a standard metric you can use across channels. Comparing your GRP to the total campaign cost can help you determine which platforms or mediums offer the best value.
For example, if your television campaign has a GRP of 500 and your billboard campaign has a GRP of 700, your billboard campaign reaches a larger audience than your television ad, even with the same exact audience.
Gross rating points are used to determine advertising pricing by publishers and advertisement efficacy by advertisers.
However, there are several factors that influence your gross rating points, which is why a high GRP doesn't necessarily mean an effective ad campaign. Factors that can affect your GRP include the following:
Remember, your reach is the percentage of your audience the ad reached. Your target audience could include any information about your customers, like age ranges, job titles, interests, and so forth.
So why does the target audience influence gross rating points? Ultimately, the more targeted your ads are, the more successful they'll be.
For instance, if you sell toothpaste and know that 50% of your target audience likes to watch a certain television network or show, you can choose when and where to advertise.
Of course, to make effective use of your customer data, you'll have to learn more about them through market research. Nielsen data can provide you with demographic information, but you may want to go above and beyond to ensure you're targeting the right types of customers.
Advertising during primetime television doesn't necessarily mean you'll have a more successful advertising campaign; instead, you might choose a specific network and time slot based on your audience's viewing behavior.
Market size and reach
Your GRP is dependent on the market size and reach of the publisher. For example, 500,000 cars might pass a billboard once every day on average, but how many cars actually pass the billboard during the timeframe of your ad will only be a percentage of the total market size. Let's say you have a billboard advertisement for ten days.
Your reach is only a percentage of the total number of potential viewers or cars on the road during that time, which is 5,000,000 (500,000 x 10). To calculate your actual reach, you'll need to know how many cars actually used that road during the ten days your billboard was up. Unfortunately, GRP is only an estimation.
Billboard campaigns can be measured using traffic counts and circulation to estimate the total number of people within an audience exposed to an ad by measuring traffic that passes by it. If, for some reason, there's a road closure or construction, you can expect a much lower reach during that time.
The same factors are true for television ads. Ultimately, you can find out how many people watch a television show on average and compare it to how many people actually tuned into that show on a specific night to give you your reach.
Many publishers use GRP to determine pricing for commercials, and the top competitors will all be vying for the same spots. Unfortunately, the more competition you have for a specific slot, the more you'll pay.
As a general rule of thumb, repeated ad exposure results in more favorable outcomes for brands. The more consumers see your ad, the more they'll remember your brand, making them more likely to purchase your products. Unfortunately, you'll need a higher advertising frequency if you're in a competitive space.
If you're in the crowded food and beverage market and sell soft drinks, you already have a lot of competition both on and off the television. Therefore, customers are less likely to truly "hear" your messages. More exposure, however, can help them along the way.
Time of day and day of week
Most top-name brands aim for primetime slots, which are between the hours of 8 and 11 pm EST, Monday through Friday. This is when television is most watched, so of course, you'll want these slots.
However, your GRP is influenced by the specific time and day more than you know. Ultimately, if you target times when more people are watching television, you'll have a higher GRP, but a higher GRP means spending more money on advertising space.
While gross rating point is the primary metric for measuring the exposure of a television ad campaign, we must recognize its flaws.
This metric can't tell you how effective your campaign was; it doesn't measure sales or actual views — it's only an estimate. Since you can't truly know how much of your audience actually saw an ad, it's more important to focus on enhancing your marketing campaign rather than on a flawed metric.
A few ways to enhance your commercial campaigns and improve gross point ratings include the following:
Target the right audience
Every major brand aims for primetime slots because that's when the most people are watching television. Yet, that doesn't necessarily mean it's the right time for your business to advertise. You may have a narrowly defined target audience, which doesn't necessarily mean you should advertise during primetime. Instead, your media schedule might require you to purchase advertising space at 3 pm when your ideal customer is actually watching television.
Choose the right time and place to advertise
As we've mentioned, your target audience and their television viewing behavior will determine the right time and place to advertise. In your market research, you might find that your audience prefers one network over another or watches television at a more specific time. Knowing this information can help you effectively target the right viewers at the right time.
Create compelling advertisements
Unfortunately, there's never any guarantee your audience will actually watch your ads. They might keep the television on in the background or turn the channel when your ad comes on. Whatever the case, creating compelling advertisements can increase the number of people that actually pay attention to your ad.
Track and analyze results
GRP isn't everything. Instead, it's an estimate you can use to make better media purchasing decisions and compare campaign results. You may find that one network yields better results than another for the same time slot, or you might use your GRPs for budgeting effectively for various media campaigns.
What business owners can learn from GRP
GRP isn't just used to measure television advertising campaign exposure; it can be used for all types of traditional media ranging from magazines and newspapers to billboards. Many advertisers also use it to help compare digital and traditional advertising approaches to build effective media plans.
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