Every time I teach a course in digital media, marketing or advertising with digital folk and bring up the point that, yes, one can buy online media using a Cost per Point, I get asked, “What’s a point?”
Let’s start by stating that a “point”, in the CPP model, is in fact a GRP or gross rating point.
Yes, you can in fact plan an online campaign with GRPs and relate it to your offline broadcast components. Yes you can in some rare cases buy online media using the CPP pricing model. Yes as well to the fact that you can actually report online campaign performance in actual GRPs.
What is a GRP?
A GRP is a math equation where you multiply “reach” by “frequency”. Not clear enough? Ok, here’s the full length explanation.
You must start with a “universe”. A universe is a defined geographic region within which resided a population. For example, a universe could be the Montreal French Central market (difference from the Montreal French Extended market). This includes fixed geographical boundaries.
You then need a “population” to target. Statistics Canada knows how many people live within the fixed geographical boundaries of the Montreal French Central market. Further, it can break down that population by gender and age groups.
How you calculate your reach is by identifying the % of people reached within your target audience (age and gender, for example Adults 18-34) within the said market.
Let’s say your campaign calls for you to reach 75% of your target audience 8 times. You’d take the 75 times 8 = 600. That’s 600 GRPs you wish for your campaign to generate. That could be a three week campaign.
You should realize that to total GRP count included duplication, because of the frequency.
GRPs from another angle
Digital differs from offline media in that each one ad exposure only generates one ad impression. That is for each banner ad, social media post or video that appears online is assumed to be viewed by one person. Offline ads are seen by many people. One television spot in the evening news can generate 50,000 impressions because that program reaches 50,000 viewers (whom we hope also watch the ads). One ad in a magazine can generate 100,000 impressions over 2 months if it is a bi-monthly publication with a 100,000 strong readership. You get the picture.
How you’d end up with GRPs is by using 3rd party research (Numeris / BBM in Canada for television for example) to know what percentage of your target audience was actually reached by that one spot in the evening news. Out of the 50,000 impressions, maybe only 8,000 were against your target audience of Adults 18-34. Your research tools will calculate that 8,000 impressions against the known population of your target to determine what percentage of it were reached just then, with a frequency of 1. That percentage, times the frequency of 1 = the points (GRPs generated by that TV spot). It might very well be 0.5 or 2 (a small number to be sure). This is also known as a rating point (you know when you hear about Television ratings?). Add up the points from all your TV spots and you get your campaign GRPs.
GRP Pricing, or CPP
Using GRPs as a pricing model involves assigning a dollar value to individual points, for each demo and market that are commonly bought through your organization. These would involve Adults 25-54 years old (A25-54), A18-34, A18-49 and could also include specific genres such as M18-34 or W25-54. If you know your spot cost, and your audience for each, then you can calculate how much each individual point is worth per demo group.
A buyer using the CPP to buy his media will only pay for the indented target demo. The cost per point for that demo will in some way compensate for all the impressions the advertiser is getting but not paying for, all of those reaching people outside the intended demo.
Does this clarify for you what a GRP is? Do you have any other questions about it? I’ll have one or two more posts on this topic coming in the next week explaining first why does this have any significance to the digital world and how to actually establish pricing for this (if you can in fact measure it).
Don’t hesitate to reach out or comment if you have comments or questions, I welcome them all.