Data Vs. Ratings: Making a Real Impression with TV Advertising
By: Rebecca Lerner
Tags: Programmatic, TV, OTT, Advertising

TV advertising revenue is expected to exceed $70 billion this year, and the majority of that spend from brands and agencies will be transacted with Gross Ratings Points (GRPs) in mind. The GRP is how advertisers determine where to run commercials, and what TV networks use to prove their spots are worth the price. In the age of data-driven machine learning and AI, should we still be using a metric that has been around since a computer took up more space than most New York City apartments?

How GRPs Work

GRPs are calculated as a percent of the target market reached, multiplied by the exposure frequency. For example, let’s say you want to reach men between the ages of 18 and 49, and Nielsen informs you that 40% of that group watches NBC’s primetime programming on Monday nights. If the advertiser ran 3 ads during that primetime programming block, they would have a GRP of 120.

So, How Does Nielsen Determine GRPs?

Nielsen provides viewing estimates based on relatively small“panels”. A panel is a group of households that have agreed to participate and connect a Nielson box to their TV. The box monitors what they watch. Then Nielson combines that data with the demographics they know about each Neilson household, reporting TV viewing patterns — or GRPs on a daily basis.

However, Nielsen panels are small. Ratings are based on less than 1% of the country’s TV viewing households, which makes it almost impossible for the panels to accurately represent the (much) larger TV viewing public.

The GRP is essentially a branding metric, meaning that if a consumer was exposed to your TV ad a certain number of times you may be able to assume it drove them to point of purchase, but actually linking it to specific sales or attribution is near impossible. And buying based on GRPs doesn’t mean that the target market actually saw your ad. The audience could have simply went to the bathroom or gotten up to grab a snack from the kitchen. What it comes down to is that GRPs are not a precision targeting tool — or a measurement metric, but the industry now has the technology to deliver those capabilities.

Shifting To A Truly Data-Driven Narrative

Though GRPs are still the dominant metric in how TV advertising is bought and sold, the convergence of TV and digital in over-the-top TV (OTT) has resulted in not only much more granular measurement capabilities, but also more precise targeting. TV advertising on OTT looks more like traditional digital advertising — and is reported like that as well. You no longer need to use tiny (and questionably) representative samples. With OTT you can precisely target individual households based on metrics that matter. Couple that with glass-level viewing data from companies like Inscape, and suddenly TV advertising strategy starts to take on new life.

Today linear TV ad spend trumps OTT by leaps and bounds. According to a recent study, up to 29% of audiences have moved of linear to OTT, but only 3% of ad budgets have followed. And as cord-cutter and cord-never numbers grow, advertisers and publishers alike will follow the eyeballs.

Data-driven TV advertising will eventually all but transcend the traditional GRP metrics by enabling granular targeting on the TV screen, along with new forms of delivery verification and fraud protections. The smart money is betting that data is the future of TV advertising — and we’re with them.