Television ads let you reach millions of audience members, but they aren't cheap. One way to calculate your reach in advertising is with gross rating points, or GRP, which tell you how much of the audience you're reaching. You can use GRP analytics to calculate target rating points, or TRP, which focus on your reach to specific demographics.
TL;DR (Too Long; Didn't Read)
If 40% of the TV audience watch a particular show and you air three ads while it's broadcasting, your gross rating points are 120. If one quarter of the GRP audience belongs to your target demographic, then your target rating points would be 30.
Reach in Advertising
Currently, the average cost of a 30-second TV commercial is $104,700. Anyone spending that kind of money needs to know how many eyeballs their message is grabbing and which combination of shows and ad frequency delivers the most bang for the buck.
GRP analytics are based on Nielsen ratings. For decades, Nielsen has calculated TV ratings based on monitoring around .03% of viewers, an approach they say is statistically valid. Not everyone believes in the Nielsen ratings' accuracy, but they're uniformly accepted as the basis for calculating GRP.
Let's say you want to advertise your breakfast sandwiches on a 6 a.m. morning show to put the idea of going out for breakfast in people's heads. The Nielsen ratings show that the most popular show at that time has 35% of the audience. You buy five 30-second commercials, one for each day of the work week, giving you a GRP of 35 x 5 = 175.
What TRP Means in Media
Suppose your sandwiches are popular with Generation X, so you really want to nudge them to eat your breakfast. That's where targeted rating points come into play. What TRP means in media is a measure of a particular demographic included in your GRP.
While the audience share for the morning show is 35%, only 40% of them are Generation X. Multiply 175 by 40% and you get a TRP of 70.
Using the Metrics
TRP and GRP are more useful as comparative metrics than absolute ones. Neither measure tells you whether audiences found your commercials persuasive. However, if you're choosing between advertising plans that have a TRP of 70, 60 and 45, it's obvious that the 70 TRP plan will reach the most Generation X viewers.
If advertising on the morning show gets too expensive, you can try different approaches to achieve that 70 TRP reach in advertising. You can look for less-expensive shows with smaller audiences and advertise more frequently or try for shows with a larger TRP and air fewer commercials.
Nielsen also uses metrics roughly equivalent to TRP and GRP for calculating advertising's digital reach and frequency. Big online media companies have argued that this will help show how online ads grab viewers compared to television.
The Limits of TRP
Rather than debate the merits of GRP vs. TRP, some skeptics point out that both metrics are limited in usefulness. Both GRP and TRP measure eyeballs, but they can't tell you how engaged the viewers were or if the ads persuaded them to buy.
GRP and TRP can't even tell you whether those eyeballs are really watching, only that the TV is on, and the ads are playing. Is everyone talking and ignoring the screen? Are 10 people watching, or is one person watching? Did that one person leave the room for an hour with the TV going and miss your ad?
Despite their flaws, TRP and GRP are still standards in TV advertising, so you'll probably have to use them if television is a medium through which you want to advertise.
Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com