9 ADVERTISING MEDIA AND WEB METRICS Introduction Metrics covered in this chapter: Advertising: Impressions, Effective Reach and Effective Frequency Gross Rating Points, and Share of Voice Opportunities-to-See Impressions, Pageviews, and Hits Cost per Thousand Impressions (CPM) Rates Clickthrough Rates Reach/Net Reach and Cost per Impression, Cost per Click, Frequency and Cost of Acquisition Frequency Response Functions Visits, Visitors, and Abandonment Advertising is the cornerstone of many marketing strategies. The positioning and com- munications conveyed by advertising often set the tone and timing for many other sales and promotion efforts. Advertising is not only the defining element of the marketing mix, but it is also expensive and notoriously difficult to evaluate. This is because it is not easy to track the incremental sales associated with advertising decisions. For many mar- keters, media metrics are particularly confusing. A command of the vocabulary involved in this field is needed to work with media planners, buyers, and agencies. A strong understanding of media metrics can help marketers ensure that advertising budgets are spent efficiently and directed toward a specific aim. In the first part of this chapter, we discuss media metrics that reveal how many people may be exposed to an advertising campaign, how often those people have an 263 opportunity to see the ads, and the cost of each potential impression. Toward that end, we introduce the vocabulary of advertising metrics, including such terms as impres- sions, exposures, OTS, rating points, GRPs, net reach, effective frequency, and CPMs. In the second part of this chapter, we focus on metrics used in Web-based marketing efforts. The Internet increasingly provides valuable opportunities to augment tradition- al “broadcast” advertising with interactive media. In fact, many of the same advertising media terms, such as impressions, are used to describe and evaluate Web-based adver- tising. Other terms, such as clickthrough, are unique to the Web. Certain Web-specific metrics are needed because the Internet, like direct mail, serves not only as a communi- cations medium, but also as a direct sales channel that can provide real-time feedback on the effectiveness of advertising in generating customer interest and sales. Metric Construction Considerations Purpose 9.1 Impressions An impression is As a metric, To understand generated each impressions do how many times time an advertise- not account for an advertisement ment is viewed. quality of view- is viewed. The number of ings. In this impressions regard, a glimpse achieved is a func- will have less effect tion of an ad’s than a detailed reach (the num- study. Impressions ber of people see- are also called ing it), multiplied exposures and by its frequency opportunities-to- (number of times see (OTS). they see it). 9.1 Gross Rating Impressions Impressions To measure Points (GRPs) divided by the expressed in rela- impressions in number of tion to popula- relation to the people in the tion. GRPs are number of people audience for an cumulative across in the audience advertisement. media vehicles, for an advertising making it possible campaign. to achieve GRPs of more than 100%. Target Rating Points (TRPs) are meas- ured in relation to defined target populations. 264 MARKETING METRICS Metric Construction Considerations Purpose 9.2 Cost per Cost of CPM is a measure To measure the Thousand advertising divid- of cost per adver- cost-effectiveness Impressions ed by impressions tising impression, of the generation (CPM) generated (in reckoning impres- of impressions. thousands). sions in thou- sands. This makes it easier to work with the resulting dollar figures than would be possible on the basis of cost per single impression. 9.3 Net Reach The number of Equivalent to To measure the people who reach. Measures breadth of an receive an adver- unique viewers of advertisement’s tisement. an advertisement. spread across a Often best population. mapped on a Venn diagram. 9.3 Average The average num- Frequency is To measure how Frequency ber of times that measured only strongly an adver- an individual among people tisement is con- receives an adver- who have in fact centrated on a tisement, given seen the adver- given population. that he or she is tisement under indeed exposed to study. the ad. 9.4 Frequency Linear: All adver- Linear model is Learning curve Response tising impressions often unrealistic, model may sug- Functions are equally especially for gest spurious impactful. complex accuracy in an Threshold: A cer- products. imprecise process. Should be tested tain number of Threshold model for accuracy. impressions are is often used, as it needed before an is simple and advertising mes- intuitive. sage will sink in. Continues Chapter 9 Advertising Media and Web Metrics 265 Metric Construction Considerations Purpose 9.4 Learning curve: An To model the (Continued) advertisement has reaction of a pop- little impact at first ulation to expo- but gains force sure to an with repetition and advertisement. then tails off as sat- uration is achieved. 9.5 Effective Reach Reach achieved The effective fre- To measure the among individuals quency rate con- portion of an who are exposed to stitutes a crucial audience that is an advertisement assumption in the exposed to an with a frequency calculation of this advertisement greater than or metric. enough times to equal to the effec- be influenced. tive frequency. 9.5 Effective The number of As a rule of thumb To determine Frequency times an individ- in planning, mar- optimal exposure ual must see an keters often use an levels for an advertisement in effective frequency advertisement or order to register of 3. To the extent campaign, trading its message. that it promises to the risk of over- have a significant spending against impact on cam- the risk of failing paign results, this to achieve the assumption should desired impact. be tested. 9.6 Share of Voice Quantifies the Market definition To evaluate the advertising “pres- is central to mean- relative strength ence” of a brand, ingful results. of advertising campaign, or firm Impressions or program within in relation to total ratings represent a its market. advertising in a conceptually strong market. basis for share of voice calculations. Often, however, such data are unavailable. Consequently, mar- keters use spend- ing, an input, as a proxy for output. 266 MARKETING METRICS Metric Construction Considerations Purpose 9.7 Pageviews The number of Represents the To provide a top- times a Web page number of Web level measure of is served. pages served. Hits, the popularity of by contrast, repre- a Web site. sent pageviews multiplied by the number of files on a page, making it as much a met- ric of page design as of traffic. 9.8 Clickthrough Rate Number of click- An interactive To measure the throughs as a measure of Web effectiveness of a fraction of the advertising. Has Web advertise- number of great strengths, ment by counting impressions. but clicks repre- those customers sent only a step who are suffi- toward conversion ciently intrigued and are thus an to click through it. intermediate advertising goal. 9.9 Cost per Click Advertising Often used as a To measure or cost, divided by billing mecha- establish the cost- number of clicks nism. effectiveness of generated. advertising. 9.9 Cost per Order Advertising cost, More directly To measure or divided by num- related to profit establish the cost- ber of orders than cost per effectiveness of generated. click, but less advertising. effective in meas- uring pure mar- keting. An advertisement may generate strong click- through but yield weak conversion due to a disap- pointing product. Continues Chapter 9 Advertising Media and Web Metrics 267 Metric Construction Considerations Purpose 9.9 Cost per Advertising cost, Useful for purpos- To measure the Customer divided by num- es of comparison cost-effectiveness Acquired ber of customers to customer life- of advertising. acquired. time value. Helps marketers deter- mine whether cus- tomers are worth the cost of their acquisition. 9.10 Visits The number of By measuring To measure audi- unique viewings visits relative to ence traffic on a of a Web site. pageviews, mar- Web site. keters can deter- mine whether viewers are inves- tigating multiple pages on a Web site. 9.10 Visitors The number of Useful in deter- To measure the unique Web site mining the type of reach of a Web viewers in a given traffic generated by site. period. a Web site—a few loyal adherents, or many occasional visitors. The period over which this metric is measured can be an impor- tant consideration. 9.10 Abandonment The rate of pur- Can warn of weak To measure one Rate chases started but design in an element of the not completed. e-commerce site close rate of by measuring the Internet business. number of poten- tial customers who lose patience with a transaction process or are sur- prised and put off by “hidden” costs revealed toward its conclusion. 268 MARKETING METRICS 9.1 Advertising: Impressions, Exposures, Opportunities-To-See (OTS), Gross Rating Points (GRPs), and Target Rating Points (TRPs) Advertising impressions, exposures, and opportunities-to-see (OTS) all refer to the same metric: an estimate of the audience for a media “insertion” (one ad) or campaign. Impressions = OTS = Exposures. In this chapter, we will use all these terms. It is important to distinguish between “reach” (number of unique individuals exposed to certain advertising) and “frequency” (the average number of times each such individual is exposed). Rating Point ϭ Reach of a media vehicle as a percentage of a defined population (for example, a television show with a rating of 2 reaches 2% of the population). Gross Rating Points (GRPs) = Total Ratings achieved by multiple media vehicles expressed in rating points (for example, advertisements on five television shows with an average rating of 30% would achieve 150 GRPs).