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Posted by Jim Nail on February 13, 2014
Gross rating points (GRPs) have been debated in the digital world for years — census level impressions should crush a panel-based measurement like GRPs — until you run into the raft of pesky technical issues: bots, viewability, server-side versus client-side measurement, et al. Meanwhile, the big money (i.e., TV) continues to be traded on GRPs, and with the advent of Nielsen OCR and comScore VCE, it appeared that digital was ready to throw in the towel and trade on GRPs, at least for online video.
But the story doesn't end there. GRPs, being a panel-based metric, have become more and more vulnerable as audience fragmentation decreases the number of viewers for any individual show: first small local broadcast markets, then low-rated cable networks, and now the general decline in audience size across the TV spectrum. This leaves a lot of audience unmeasured by Nielsen but still with intrinsic value to the advertiser, if only you could find another "currency."
MAGNAGlobal's most recent Media Economy Report takes one of the most direct stabs into the heart of this venerable metric, as reported in this Mediapost article: MAGNA calls for shifting to impression-based trading for local TV ad inventory.
I believe this is a harbinger of the end of GRPs. As I said in my April 2013 report Digital Disruption Rattles the TV Ad Market, disruption won't likely be a sudden, massive event but will begin at the margins in areas like spot advertising, which are smaller dollars and thus less risk to the advertiser's campaign results if a new technique isn't successful.
But I'll put my money on impression-based trading being successful. And once it's proven, it will migrate up to the higher-value tiers of TV/video inventory.
And not a moment too soon, since the growth of streaming, TV Anywhere, and mobile devices adds another powerful force propelling the audience fragmentation trend.
Combine this with the addressability of these digital-based viewing sources and the rise of programmatic audience-based buying, and impression-based trading is within sight (my report on programmatic buying for video, "How Software Is Eating Video Ads and Soon TV," will be released soon).
Is this the future you envision? Are you experiencing some early signs of its emergence? I'd love to hear your stories!