Media Measurement Mistakes: Chapter 1

Buying advertising is a lot like buying diamonds.

Allow me to explain.

Anyone who talks to a jeweler will be told that diamonds are graded according to the 4 C’s: Color, Clarity, Carat weight, and Cut.

Customers ask the jeweler, “Which of the 4 Cs is most important?”

This seems like a perfectly reasonable question, but the truth is that the 4 C’s cannot be compared to one another. There is no rubric, no metric, no algorithm that can equate them. The 4 C’s are distinctly separate from one another. They are not interchangeable.

Advertising is like that. Each of the characteristics of highly effective advertising are distinctly separate from one another. They are not interchangeable.

Natural diamonds can be an infinite number of shades of yellow, grey, brown, green, blue, red, or a mixture thereof. Diamonds can also be colorless.

The only thing more valuable than a colorless diamond is an extremely colorful one.

Color is a measurement of rarity, not beauty.

Clarity is another measurement of rarity, not beauty.

“Flawless” clarity refers to a diamond which is free of inclusions under 10x magnification. But under 40x magnification every flawless diamond is swimming with inclusions that cannot be seen under 10x. So get this idea of “flawless” out of your head, okay? It is a myth.

Seven clarity grades below flawless is another clarity known as SI2, which looks flawless to the naked eye. Not even a jeweler can tell the difference without 10x magnification. But there is a huge difference in price between flawless and SI2 because Clarity is a measurement of rarity, not beauty, remember?

Carat weight is how the size of a diamond is measured. We’ll come back to this in a minute.

Cut does not refer to the shape of the diamond, but to the ability of the diamond to gather light, bounce it between the facets, and then shine it upward toward the eyes. When diamonds are cut perfectly, they do not leak light out of the bottom of the diamond. A perfectly cut diamond returns 100% of internalized light upward and outward in a wild spectacle of sparkles.

You want sparkles, but you also want carat weight.

When you cut a diamond crystal perfectly, you lose more than half of that diamond’s Carat weight. But if you cheat the cut a little, the diamond won’t sparkle as much but it will weigh more and sell for more money.

If you cut the diamond with a thick girdle and a deep pavilion, the diamond will be dull because its internal mirrors will be misaligned, but it will be much heavier than if it were cut properly.

A Carat is a unit of weight. There are 141.748 Carats in an ounce. This means that a small pouch of 1-Carat diamonds worth just $4,000 each will cost you $567,000 an ounce.

Pure gold is less than $3,000 an ounce.

Are you beginning to understand why diamond cutters are loath to grind away precious carat weight in the quest for maximum sparkle?

Your logical mind tells you that it should be possible to create a diamond algorithm that says, “one colorgrade = 0.05 carats = 0.78 of a clarity grade = 2.13% excess weight above the projected carat weight for a perfectly cut diamond of this diameter.”

Your logical mind tells you this because you continue to believe that dissimilar properties such as color, clarity, carat weight, and cut can be quantified, codified, and reconciled.

In truth, they cannot.

Buying advertising is even more complicated than buying diamonds.

The rubric used to calculate the Gross Rating Points achieved in media schedules makes perfect sense until you realize it equates dissimilar properties and treats them as though they are interchangeable:

Reach = the total number of different people who experienced your ad within a specified period of time.

Frequency = how often the average person experienced your ad.

If half the people experienced your ad only once, and the other half experienced it twice, your ad campaign would score a Frequency of 1.5 in your specified window of measurement.

How Gross Rating Points are calculated. (And they will always automatically be calculated by the media sellers.)

STEP ONE: Reach x Frequency (repetition) = Gross Impressions

STEP TWO: Gross Impressions

cast as a percentage of the Nielsen population of your trade area

= Gross Rating Points. (GRP’s)

STEP THREE: Cost Per Gross Rating Point or CPP (Cost Per Point) is calculated by

A: the cost of the schedule

B: divided by the number of Gross Rating Points it delivers.

If the population of your trade area is 765,432 people and your ad schedule delivers 765,432 Gross Impressions in the specified window of time, your schedule achieved 100 Gross Rating Points, (the mathematical equivalent of having reached 100% of your trade area 1 time)

But is that really what happened? Of course not.

Perhaps you reached 50% of the city twice.

Maybe you reached 33.3% of the city 3 times.

You might have reached 25% of the city 4 times.

Or 10% of the city 10 times, 5% of the city 20 times,

Or 1 sad bastard 765,432 times.

Do you believe that each of those schedules will deliver the same result?

Of course not.

But each of them delivers 100 Gross Rating Points.

Gross Rating Points give you no insights that can help you, yet hundreds of billions of dollars are spent each year choosing media schedules according to their Cost Per Point.

The fatal mistake was made in Step One. Reach and Frequency (repetition) are not interchangeable. You cannot multiply one times the other to get “Gross Rating Points.” That’s just stupid.

Any local business that evaluates ad schedules based on their Cost Per Point will always reach too many people with too little repetition.

Reach is easy to achieve. Frequency is hard to achieve unless you bite the hook of broad rotators which are added to your schedule at little or no cost. If you allow this “added value” to be included in the calculation of your reach and frequency, you are going to be deeply disappointed in the results of your ad campaign.

You do not want to reach 100% of the people and convince them 10% of the way when the same small ad budget will let you reach 10% of the people and convince them 100% of the way.

Repetition is what you’re after. You need an absolute minimum frequency of 2.5 per week, every week. If you accept the logic that “on a week, off a week” is all that you can afford, your schedule is going to fail.

The Nielsen schedule report you want to see is a report that no one wants to show you. (Did I say Nielsen? Yes, I said Nielsen. I did not say another name.) You want to see Net Persons and Frequency for a ONE WEEK schedule, Monday through Sunday. And no broad rotators – zero – can be included in this calculation. And you must buy this ONE WEEK schedule 52 weeks per year.

You can buy Net Persons that equal about 25% of the population of your trade area extremely efficiently, especially in larger cities.

But the second 25% – giving you Net Persons that total around 50% of the city – will cost you nearly twice the amount you spent to buy the first 25%.

The problem you run into is the declining efficiency of achieving new Net Reach due to cume duplication, or “shared audience.” But if you schedule that first 25% of the population correctly, you will soon be able to easily afford the price of reaching and owning that second 25%. Because you will have grown monster big.

You are fooling yourself if you believe you can efficiently reach more than 50% of your city.

And when I say city, I mean the 18+ Nielsen Population of your trade area.

Like I said, buying advertising is far more complicated than buying diamonds.

Roy H. Williams

Next Week: Media Measurement Mistakes: Chapter 2

By the way, the Tiny Tribe and I have prepared an exceptional rabbit hole for you today. To enter the rabbit hole just click the image of me at the top of this page. And once inside, each image you click will take you one page deeper. – Indy Beagle

Israel Duran shows people how to transform their businesses. And then he shows them how to leverage that success to impact, inspire, and influence their communities. Israel describes himself as an “impact architect” who helps business owner make money, make a name, and make a difference. Learn how to do it at MondayMorningRadio.com