How to Calculate GRPs – Gross Rating Points

The Goal of GRPs

Gross Rating Points is a traditional metric that aims to measure the cumulative impact of advertising when broadcasting a number of commercial spots on television or radio.

Suppose you are airing 20 commercial spots on WKRP for $10,000 and 20 spots on WJOE for $30,000. As you’re media planning, you’ll want to know the impact of your $40,000 advertising investment. You’ll also want to know which works better, WKRP or WJOE. The cost per spot on WKRP is cheaper at $500 per spot versus $1,500 on WJOE. Clearly, cost per spot doesn’t tell the whole story because WKRP and WJOE have different audiences.

GRPs aim to provide a metric that answers questions like these.

First, Gathering Ratings Data

The hard part of calculating GRPs is gathering ratings data. This requires access to a ratings service, either directly or indirectly through your media vendors through RFPs. Ratings are covered in more detail in How to Calculate Ratings.

Ratings are typically expressed as a number between 0 and 100 with one decimal point of precision.  For example, 3.4 rating.  This rating number indicates the percentage of the population the station typically reaches during a given daypart. A 3.4 rating indicates you reach 3.4% of the population.

For our example, let’s assume that:

• WKRP has a rating of 0.8
• WJOE has a rating of 3.4

Then, Multiply by Spots

A “spot” in advertising is a single broadcast (or “airing”) of an advertisement.  When buying ads from a station, you typically buy a certain quantity of spots in a specified daypart at a specified rate.

In our example, we ordered:

• 20 spots on WKRP at $500 per spot
• 20 spots on WJOE at $1,500 per spot

It looks like WJOE is 3.0 times the cost of WKRP based on the cost per spot. However, this doesn’t consider the fact that WJOE has much higher ratings than WKRP. The goal of Gross Rating Points is to account for the difference in ratings.

The next step step in calculating your GRPs is multiplying the rating by the number of spots:

• WKRP GRPs = 0.8 rating × 20 spots = 16.0 Gross Rating Points
• WJOE GRPs = 3.4 rating × 20 spots = 68.0 Gross Rating Points

We now have the GRPs for each of the two placements in our media plan. How do we know the total impact of the entire media plan?

Finally, Add Up the GRPs

To calculate the Gross Rating Points of the entire media plan, you simply add up the GRPs of each of the placements in the media plan.

For our simple example with only two placements on WKRP and WJOE:

Plan GRPs = 16.0 + 68.0 = 84.0 GRPs.

The Cost Efficiency of Your Media Plan

When using GRPs, the standard cost efficiency metric is Cost per Point or CPP. Generally speaking, CPP is calculated by dividing Cost by GRPs.  However, like many things in advertising, it’s more complicated than that. See How to Calculate Cost Per Point (CPP) for the details. But let’s keep it simple here.

Here is the CPP for each of our advertising placements as well as the media plan as a whole:

• WKRP CPP = $10,000 ÷ 16.0 GRPs = $625.00 Cost Per Point
• WJOE CPP = $30,000 ÷ 68.0 GRPs = $441.18 Cost Per Point
• Plan CPP = $40,000 ÷ 84.0 GRPs = $476.19 Cost Per Point

What can we learn from this? You’d be tempted to conclude that WJOE is much less expensive that WKRP based on these CPP calculations. Doing some math it looks like WJOE is 0.71 the cost of WKRP (441.18 ÷ 625 = 0.71). You’d be wrong.

This simple CPP analysis reveals one of the fundamental problems when using GRPs to measure the cost efficiency your advertising investments.

The First Dirty Secret of GRPs

When using GRPs, it’s important to know it has some big flaws.

When calculating ratings, they are calculated within a given market. Every market is of a different size.  Some markets are huge like New York with a population of 15,997,800 people. Other markets are small like Grand Forks, North Dakota with a population of 76,700 people.

In our example, WKRP broadcasts to the Cincinnati market, which has a population of 1,865,500 aged 12 years or older. In contrast, WJOE broadcasts to the Lebanon-Hanover-White River Junction, NH-VT market, which has a population of 158,400.

Big difference, right? WJOE’s market is less than one tenth the size of WKRP’s market.

Now, we’re curious to know, “how is market size accounted for in the calculation of GRPs?” You are smart to ask this question!

The answer is, sadly… market size is not accounted for when calculating GRPs. So, CPP is flawed.

Normalizing GRPs to Market Size

I know what you’re thinking now: we can normalize the cost comparison simply by dividing CPP by the population size.

• WKRP Normalized CPP = $625.00 ÷ 1,865,500 = $0.000335 per person
• WJOE Normalized CPP = $441.18 ÷ 158,400 = $0.002785 per person

This tells a polar opposite story!

Using only CPP, we wrongly concluded that WJOE is 0.71 the cost of WKRP. Now, using normalized CPP, we conclude that WJOE is actually 8.31 times the cost of WKRP (0.002785 ÷ 0.000335 = 8.31).

So, WJOE is actually much more expensive than WKRP, right?

Given the wide margin, it’s probably true that WJOE is more expensive that WKRP. However, there’s an inconvenient truth hidden inside GRPs that sabotages these calculations.

The Second Dirty Secret of GRPs

Another problem with GRPs is it ignores the fact that the same person will likely be exposed to the same ad multiple times. In fact, it’s the goal of most media plans to reach the same person multiple times. This is what’s known as “effective reach.” See How to Calculate Effective Reach for more detail.

In our example, WJOE has a rating of 3.4 and a market size of 158,400.  This means that at any typical time during the given daypart, 5,386 people are listening to WJOE.

So, if we run 20 spots on WJOE, we would reach 20 x 5,386 = 107,720 people, right?

Wrong.

You would broadcast 107,720 advertising “impressions” but you would not reach 107,720 people.  To reach that number of people, not a single person would hear the same ad twice. Given normal human habits, this is highly unlikely.

What’s more likely is the the listening audience is going to hear your ad multiple times. This is good! Advertising is most effective with repeated exposure.

But the GRP calculation naively ignores this reality when it simply multiplies the rating by number of spots as if every spot reaches a different audience. The more spots you run, the more wrong your GRP calculation.

You might argue that GRPs is a relative measure that doesn’t attempt to count the number of unique people reached. That’s a good point. However, I would counter your argument by pointing out that GRP is not even a good relative measurement because you can’t compare a placement that runs 1 spot to another that runs 20 spots because of the overlap.  It’s only valid for relative comparison when each placement runs the exact number of spots in the same market in the same time-frame. Never happens.

As if that was not enough, GRPs have other problems.

The Third Dirty Secret of GRPs

We could write a book on this (as some have), but I will keep it brief… the ratings upon which your GRP calculation is based is probably wrong. The problems with ratings services have been well publicized, particularly recently.

Which brings us to our next dirty secret…

The Fourth Dirty Secret of GRPs

I’m starting to feel bad for GRPs as I beat it up. I’m such a cruel person when it comes to advertising KPIs! But the criticism comes from tough love. Anyway…

The fourth and final (I promise) problem with GRPs is they are becoming obsolete. As listeners and viewers move to on-demand digital formats, ratings systems break down and GRPs, therefore, break down as well.

With on-demand connected TV, there is no broadcast anymore.  No two people are watching the same thing at the same time. Even if you and I were watching at the same time, you and I would probably see different advertisements, each geared to our own taste.

As TV and radio become digital and on-demand, advertising is less broadcast and more like display advertising on the internet, with each ad impression chosen through a real-time auction using the pipes of programmatic advertising.

What To Do with GRPs?

At this point, you are probably ready to rise up and revolt against the GRP. You need to pick your battles.

Despite all the problems, GRPs are still used in advertising. GRPs have a lot of inertia from the past. GRPs are baked into processes, systems, reporting, etc. Fighting against GRPs is like fighting a riptide – don’t go right at it, it’s better to go sideways.

So, go with the flow and calculate GRPs in your media plan as if nothing is wrong. This will check the box for those in the room accustomed to seeing GRPs.

But don’t stop there…

In addition to GRPs, you should present impressions, unique reach, frequency, and other modern KPIs.

Don’t Waste a Lot of Time on GRPs

Another good piece of advice is to avoid spending too much time calculating GRPs. You can’t afford to waste hours of your valuable time calculating metrics that have little value.

In fact, you should not your waste time calculating anything. A computer should do the math and free you up to analyze plans and make smart decisions, right?

Bionic for Agencies automates the process of calculating Gross Rating Points and more than 80 (!) other KPIs. Whether you’re a media planner at an agency or working on an in-house team, Bionic can help you.

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