For decades, television advertising has traded in terms of gross rating points (GRPs) – the aggregation of ratings for all commercial spots that comprise a campaign. Many advertisers have translated GRPs into target rating points (TRPs) instead, which are still defined in very broad terms, such as the number of GRPs of adults between the ages of 18 and 24.
A narrower definition of the TRP could provide a panacea for advertisers and agencies that are hard-pressed to increase budgets to match the price increases media owners have introduced in the current upfront marketplace. Better-defined TRPs will drive business outcomes more cost-effectively.
CBS and Nielsen have found that advertisements reaching a high concentration of consumers who purchase specific product categories have a significantly higher correlation with sales outcomes. Thus, advertisers facing budgetary constraints could benefit by using better-defined TRPs in their media negotiations.
By contrast, advertisers that continue to focus on broadly defined GRPs reaching audiences outside of their targets may only satisfy general awareness outcomes among audiences ill suited to becoming good customers. Advertisers who pour their media budget into better-defined, TRP-focused inventory will reduce waste. The corollary to this is that, when an advertiser's goal is increased product sales, buying GRPs without a narrow target produces significant waste.
Several steps are required to shift to more narrowly defined TRPs as a core media negotiation focus. Many of these steps were impossible to accomplish until recent advances in data collection and processing. They include:
· Aggregation of sales data, which may come from a syndicated data provider or a retailer
· Aggregation of granular viewing data, using either respondent-level or set-top box-based data sets
· Identification of best- fit statistical models correlating audiences and sales data
· Development of predictive algorithms which identify future audience behaviors
· Negotiation of units of inventory which over-index against those target audiences
Buyers and media directors alike know that the traditional response to increases in the price of media is to "downgrade" the mix of programming on a media plan, using less network inventory and more run-of-schedule cable inventory. Clearly, using better-targeted TRPs is superior at both a tactical and strategic level, although it will inevitably require different competencies, technology providers and ad sales models. But advertisers looking to manage against the very real constraints they face will work to make this model happen and significantly improve the efficiency of their media budgets as a result.
Brian Wieser is CMO of Simulmedia, an audience-targeted advertising network for linear television founded by veterans of companies including 24/7 Real Media and Tacoda. He can be reached at firstname.lastname@example.org.
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