GRPs For Digital Marketers
As an undergraduate marketing major at NYU, I took a class called Advertising and Media Planning. There was a question on one of the written tests in that class: “What are Gross Rating Points?” I answered, “Reach times average frequency.” For some unknown reason, my answer was marked incorrect – an event that apparently still scars me 30 years later, because this is the second time I’ve written about it here. Every couple of months, I turn a corner and find myself smack dab in the middle of a debate about the efficacy of the GRP as an online metric. It usually goes like this. On the one side: “Advertisers need GRPs to place digital media in holistic media context.” On the other side: “Dude, whatever. GRPs are, like, totally last century. We can’t shoehorn the power of the Internet into an old metric.” I’m going to try and get us all past this. GRPs are a necessary, but in no way sufficient, metric for evaluation of online advertising. If you’re in a hurry, you can stop reading now. If not…Gross Rating Points originated in broadcast media. First radio, and then television, had audiences measured at the program level: how many listeners or viewers were in the audience for a specific show? The result was a program rating. On January 19, 1953, for example, for the episode “Lucy Goes to the Hospital,” “I Love Lucy” garnered a 72 household rating — 72% of all TV households in the U.S. were tuned to the program (at least, according to Art Nielsen.) Advertisers, of course, ran schedules, which were simply collections of spots. Each spot ran in a program, and so could be associated with that program’s audience rating. The GRP emerged as a way to express the audience to an aggregate of spots, which is to say a schedule, and its calculation couldn’t have been more simple: the sum of the program ratings for all the spots in the schedule. If an advertiser bought 10 spots across 10 different programs, and each program had a 7 rating, then the Gross Rating Points — the sum of the ratings of the spots in the schedule — would be 70. If an advertiser had run two spots in that landmark episode of “I Love Lucy,” they would have bought 144 GRPs (which would be parsed as a reach of 72, with a frequency of 2.)
Read More: blog.comScore.com
There Will Be 4,000 DSP’s
People used to say that there were 400 ad networks out there in their hey-day. I think there will be an order of magnitude more DSPs. Here is why: Building a DSP is easy. Ad networks were vertically integrated examples of our marketplace. To build an ad network, you had to build an exchange, sign up publishers, and build a DSP. The market has evolved to a point now where getting dramatic reach and scale at a level unimaginable 5 years ago just takes 10 lines of PHP (so that is like one line of Python?) with Right Media’s PHP library: Fearsome. I used to tell people all the time that starting an ad network is the easiest thing someone can do: Get some inventory, call 20 agencies and tell them you have a new algorithm to drive performance, and they each give you a $20k test budget! Voila, you did $400k in your first quarter. Agencies felt pressure to find test budgets for everybody because, if a client were to ask them “What do you think of X”, you can’t say, “Well, we never tried X”. Agencies felt an almost fiduciary responsibility to try new stuff. Now, if you didn’t perform, the next chunk of dollars was tougher, but you had runway instantly. We are seeing the exact same dynamic in DSPs today. If you mix the data and inventory a little differently (and it would be hard not to), voila, you are worthy of a test. Agencies are playing the field today, the great rollup of DSPs that everyone is so looking forward to has not yet happened, and agencies expect to and are prepared to try lots of different things. All you have to do is perform after that and you have a business. If you eat your margins early on, offer layered in retargeting, etc., the odds that you can artificially inflate performance in a way that makes your business look interesting is high and this gives you more runway to work. Convert 25% of your test budgets to $200k renewals and you have a Q2 business doing $1m in revenue. Building a DSP is cake. Locking in data or inventory or building an algorithm that creates great performance for advertisers over time by arbitraging data and inventory is what will separate the winners from the losers, but it will be non-obvious in the first 6 months of working together who those guys are for agencies. Remember when Glam spent millions of dollars of VC money buying inventory at a loss to lock in exclusive access to inventory, then when they had the advertiser base, they crushed payouts to pubs? There are a lot of the same kinds of problems that get slathered over early on in this market. Building a DSP that can look at 10 billion impressions a day vs. 1 billion cost-efficiently is interesting, but no one will need that scale for a year, so no one will know who can do it better/faster/cheaper.
Read More: cogmap.com
News Websites Discuss Life Without Google
The Web 2.0 Expo kicked off in San Francisco on Tuesday with a discussion that would be unthinkable without social media: How Web publishers can be successful without Google. The panel, moderated by the Journal’s Jessica Vascellaro, noted that many news websites today are addicted to Google’s search engine, which in many cases is their single-largest driver of traffic. Yet the traffic they get from social media sites such as Facebook and Twitter is growing much more quickly these days. For example, newspaper and magazine publisher Hearst is seeing traffic from social media sites grow at a 250% annual rate, said Heidi Perry of Share This, a company that integrates sharing capability into thousands of big and small publishers, including Hearst. Moreover, traffic from Google tends to take a U-turn, said Tristan Harris from Apture, a company that helps sites figure out how to hold onto traffic once they get it. Some 30% of top news sites’ traffic comes from Google and about 30% of it goes quickly right back to Google, he said. “What good is all of this investment you make in driving traffic to your site from Google if it goes right back to Google?” he asked.
Read More: blogs.wsj.com
