TV GRPs: You've Had Good Run, But It's Time For New Currency

by Anto Chittilappilly, Op-Ed Contributor, Wednesday, Aug. 10, 2016

TV has drastically evolved over the past 15 years now that viewers have more choices than ever, with hundreds of channels offered by cable providers, online video, streaming services, on-demand viewing and DVRs — all delivered via connected devices like smart TVs, tablets and smartphones.   TV advertisers have been buying media the same way for over 50 years, but now they have to make sense of the new landscape.  That means TV advertising measurement needs to catch up to the new landscape, too. On one hand, TV advertising’s greatest power — the ability to reach mass audiences — has been diminished by fragmented viewing.  But on the other hand, the proliferation of connected devices has turned TV into a two-way medium.  Now viewers can see an ad and be influenced to immediately respond via a digital channel. So why are TV advertisers still only using gross rating points (GRPs) and target rating points (TRPs) to measure success based on reach and frequency alone?  They need a new metric or currency that measures business outcomes based on TV advertising’s ability to efficiently drive a response. GRP and TRP: A Measure of Delivery, Not Efficiency GRPs and TRPs are not measures of TV advertising’s efficiency in bringing more brand equity, conversions or revenue. Instead, they’re a measure of its ability to deliver impressions against an audience.  But TV buyers have been using these metrics for decades as proxies because there was no alternative up until now. The traditional TV buying process forces buyers to lock into deals a year in advance during the upfronts.  As a result, buyers have been using these metrics to gauge their buys’ ability to deliver against an audience.  As long as the network delivers as promised, the advertiser, agency and network are content because they all measure success against the GRP rather than a true measure of efficiency. Digital buyers look at this process and shake their heads.  They would never accept the idea of locking the majority of their budget into restricted deals a year in advance, or solely measuring success based on how many impressions or clicks delivered.  Instead, they have the freedom to constantly shift budget at a tactical level, and they use efficiency metrics tied to business outcomes, such as ROI or cost per acquisition (CPA) to guide their optimization decisions. Now that TV buyers have the means to measure the efficiency of their buys, why do so many still rely on outdated metrics like GRPs and TRPs?  Adoption of a new currency or metric is needed. The Future of TV Measurement is Now Marketers that embrace the new world of TV advertising and measurement think very differently.  With the advent of programmatic TV, advertisers can now buy inventory on shorter notice, and they can buy based on an efficiency metric.  In this case, efficiency measures the value of every single TV ad that runs, enabling marketers to understand how much revenue, how many conversions, and how much brand engagement each ad drives, and at what cost. Even though large portions of marketers’ TV buys are still locked in upfront deals, there are ways to make adjustments to improve advertising effectiveness.  For example, TV buyers can work with their networks to shift impressions into the programs, dayparts, days of week, spot lengths and pod position that drive the most efficient CPA.  Or they can make adjustments to the creative rotation for a given network, depending on which creatives perform best.  But in order to make these types of adjustments, marketers must use a new TV measurement methodology, as well as a metric that demonstrates TV efficiency at a tactical level.