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Measuring Mass Media ROI: Methods & Tools

Instructor: Mary Matthiesen-Jones

Mary has worked around the world for over 30 years in international business, advertising, and market research. She has a Master's degree in International Management and has taught University undergraduate and graduate level courses .

Billions of dollars are spent every year on mass media advertising in the United States. Learn how companies determine whether their investment in mass media is generating the desired return.

Investing in Advertising

How does a company know whether their advertising is working? Every dollar spent on advertising is a cost of doing business and affects a company's bottom line. Companies that want to stay in business need to evaluate their ROI, or return on that investment.

Any ROI measurement is really about the question ''Did it work?'' The answer to this question starts with the objective, the goal of the advertising. Advertising objectives are expressed in two different ways:

  • Quantitative objectives are goals that can be measured in terms of numbers, or things that can be counted. They can be dollar sales goals or traffic to a website.
  • Qualitative objectives are about attitudes and beliefs. Sometimes they can be expressed in numbers, like a percentage increase in favorable opinions, but they are about measuring feelings and attitudes and how these change.

There are many methods to measure whether objectives are met, and therefore ROI. In advertising, there are a few core approaches that are used to assess different types of objectives.

Advertising Quantity

Advertisers want to get the best value for their money. How much advertising coverage do they want from their ad dollars?

In non-digital advertising, GRPs, or Gross Rating Points, are a core method. GRPs tell us what level of media coverage can be purchased with a specific budget. GRPs are calculated using a simple formula:

Reach x Frequency = GRP

Reach is the percent of the target audience that the advertising is reaching, and frequency is how often advertising reaches them in a given period, normally measured in periods of four weeks. Combine the two and you get GRPs, which allow you to compare the ROI for advertising on different types of programs.

Say an advertiser wants to spend $250,000 to advertise sunscreen to women ages 25-49 on TV. The station might say that program X will potentially reach 50 percent of women in that age group an average of two times over four weeks. If we plug that into our formula, it gives us 50 x 2 = 100. That means it delivers 100 Gross Rating Points. The advertiser gets 100 GRPs for a $250,000 investment.

Reaching 50 percent of a desired target audience sounds good. But spending on program Y might deliver 50 percent of women an average of four times, or 200 GRPs. GRPs help to compare and evaluate the ROI of the spending.

In the world of digital advertising, the key planning measure is impressions, the number of times a web server is requested to display an ad. One click on an ad link on a website equals one impression. So, the more popular a website, the more chance of generating higher impressions.

Measuring quantity through GRPs and impressions enables advertisers to compare the relative volume of advertising they can get from an investment when they are planning their advertising campaigns.

However, whether online or off, there is no guarantee that people will actually pay attention to an ad or act on it. So, advertisers do not rely just on GRPs and impressions.

Monetary Results

The monetary results method focuses on the desired financial return from advertising spending. This can be stated as a formula:

(Advertising Monetary Objective - Advertising Cost) / Advertising Cost * 100 = ROI

For example, say the advertising objective is to generate $1,000,000 in sunscreen sales after spending $250,000 in advertising. Using the formula, the ROI should be 300, or 300 percent, because the $250,000 investment should result in three times that amount in sales.

($1,000,000 - $250,000) / $250,000 * 100 = 300

Brand Awareness Changes

Another advertising ROI method is to look at changes in brand awareness, the percentage of a target who can identify a brand. If an ad is running, quantitative studies, usually using telephone surveys, can measure the level of awareness of a brand before and after the advertising appears. The difference is another gauge of ROI. A pre-ad level of 20 percent for the sunscreen and a post-ad level of 28 percent means a 40 percent increase.

For online advertising, website traffic levels are a common method to measure brand awareness and thus ROI. The assumption is that people remembered a brand enough to find it. Services like Google Analytics help businesses analyze website data.

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