Alex Schultz: APIs: Part 3 Median vs Mean: Cume vs GRP in offline media and what it means for internet marketing

One thing has been true for as long as marketing has been around: It doesn’t matter how good your ad is if no one sees it.

Dave Goldberg (CEO Surveymonkey) gave a great talk at an event I was at recently and shared an anecdote about MTV’s audience on 30min shows vs 5min music videos that is worth repeating and set me thinking a lot more about reach and frequency in internet marketing.

GRPs vs Cumulative Audience Rating

In television measuring how many people see your ad is done using set top boxes and often a combination of “gross rating points” (crudely: what % of the possible TV audience sees a given show, detailed description linked below) and cumulative audience rating (similar but what % watched a show in 15minute segments of that show).

In the 1980s MTV did great on GRPs because people would tune in to catch a 5minute video. The problem for MTV came when cumulative audience became a big measure in the 1990s, people just weren’t sticking around for 15minutes. If you followed a Stone Roses track with Madonna the two audiences were not the same and so the stone roses people switched off and by the time you reached the break (where the ads which funded the show were) MTVs audience was a fraction of it’s GRPs because the cumulative audience (who watched for a full 15minutes up to the break) was small since you just don’t like every video in the hot 40.

The following slide (from this presentation: http://www.scribd.com/doc/3046688/ANALYSIS-Audience-Cross-Rating) shows even today how rapidly the audience figures drop off with time on a given channel (MTV, MTV2 and CBS).

With 30minute shows like Beavis and Butthead MTV managed to get an audience that stuck around through the commercial break giving the ads greater exposure and making marketers really happy. Not only that but their audience seemed to love them too and their total GRPs went up too which led in many ways to the Hills etc… etc… and a lot more revenue for MTV.

MTV optimized to drive up their median user by changing their show format. They did not optimize to drive up their mean user by making their 5minute videos so perfect that the folks watching 1hr a day would watch 2hrs. This was a great decision.

So how does this apply to Internet marketing

In display media for internet marketing people buy impressions but this is really nuanced. You should not be just buying “impressions” you should be focusing hard on what the reach of those impression are and ensure whoever you buy from gives you a frequency cap. Below is the distribution of visits on my paper airplanes site in the last 30days.

As you can see if you want to hit 160k people with my site you can BUT after the first impression you will only be reaching 90k people and by the 4th impression you will only be reaching 54k people. I could make total delivery of impressions huge while still only giving you a small reach by not giving you the first 4 impressions. Frequency caps matter a lot.

Conclusions

In order to maximize the chance of your ad doing well you have to maximize it’s audience.

Understanding the data you are using to determine reach is therefore very very important.

Anyone who can offer great reach and high frequency will make a killing in advertising sales and THAT is a challenge of optimizing for the median user (in paper airplanes case the person who see 2 page views) and not the mean (who in paper airplanes sees 6 page views).