What are GRPs, Ratings, Reach, Frequency, and Impressions in advertising? How are they calculated? And how do they relate to each other? When creating a media plan, it’s important to have a firm grasp of these often misunderstood advertising terms, even if they are built into your media planning software.
This article aims to give you clear, concise definitions and examples of important advertising terminology: Media Market, Population, Rating, Reach, Frequency, Gross Rating Points (GRPs), Impressions, Cost per Point (CPP), and Cost per Thousand Impressions (CPM).
Media Cost is the price you pay to present your advertisement. There are many different ways to price media including points, impressions, clicks, leads, actions, days, weeks, months, etc. However, it ultimately boils down to the amount you pay to present your advertisement, which is Media Cost. Media Cost excludes the cost to create the advertisement and other costs.
Media Market or Market describes the set of people that could potentially be exposed to your advertisement. The media market is often described using Designated Market Areas or DMAs, which are trademarked by Nielsen. However, Media Market can be any market you define. More on Media Markets…
Population is the total number of people in your Media Market.
Rating is the percentage (0 to 100) of the Media Market that will likely be exposed to your advertisement. Rating is an estimate based on past performance often sourced from surveys. More on Ratings…
Reach is the number of people in the Media Market that will likely be exposed to one advertisement. Reach is calculated by multiplying the Population by Rating then dividing by 100. More on Reach…
Frequency is the number of times the advertisement will be presented to the Reached Population.
Gross Rating Points (GRPs)
Gross Rating Point (GRP) is a measure of the size of an advertising campaign by a specific medium or schedule. GRP is calculated by multiplying Rating by Frequency. More on GRPs…
Impressions are the total number of exposures to your advertisement. One person can receive multiple exposures over time. If one person was exposed to an advertisement five times, this would count as five impressions. Impressions are calculated by multiplying Reach by Frequency.
Cost per Point (CPP)
Cost per Point (CPP) is a measure of cost efficiency which enables you to compare the cost of this advertisement to other advertisements. CPP is calculated as Media Cost divided by Gross Rating Points (GRPs)
Cost per Thousand Impressions (CPM)
Cost per Thousand Impressions (CPM) is another measure of cost efficiency which enables you to compare the cost of this ad to other advertisements. CPM is calculated as the Media Cost divided by Impressions divided by 1,000.
Example – Broadcasting 5 Radio Spots in Chattanooga
Here’s an example of all of the above advertising terms in action. In this example, we’re broadcasting 5 radio spots at a cost of $500 each to the Chattanooga market.
|Quantity||5||Number of Spots|
|Rate||$ 500.00||Cost Per Spot|
|Media Cost||$ 2,500.00||= Quantity * Rate|
|Media Market||Chattanooga DMA||The name of your market|
|Population||827,900||From your research|
|Rating||2.10||From ratings service such as Nielsen|
|Reach||17,386||= Population * ( Rating / 100 )|
|Frequency||5||In this case, number of spots from Quantity|
|Gross Rating Points (GRPs)||10.50||= Rating * Frequency|
|Impressions||86,930||= Reach * Frequency|
|Cost per Point (CPP)||$ 238.10||= Media Cost / GRPs|
|Cost Per Thousand Impressions (CPM)||$ 28.76||= Media Cost / ( Impressions / 1,000 )|