Many Ways to Make a Point

Feb 23, 2004  •  Post A Comment

One of the most difficult tasks facing planners is deciding how much media weight is needed to meet media and marketing objectives. It is common knowledge that reach builds quickly at first, but beyond a certain point-the point of diminishing returns-additional GRPs yield mostly frequency.
Some planners think this point, this GRP level, is the answer to the perennial question, “How much is enough?” The following discussion shows a way to calculate the point of diminishing returns and addresses considerations that limit the value of this mathematical answer to an essentially judgmental question.
Calculating the Point
Since reach accumulation takes the shape of a smooth diminishing returns curve, there is no obvious point where GRPs start yielding more frequency than reach. At first glance, it might seem the point is where one additional GRP yields less than one additional point of reach. But this doesn’t work because the scales are so different. Reach on the Y axis is a percentage that goes from 0 to 100 percent. There is no limit to the number of GRPs on the X axis. One way of calculating the point is to assume a 10:1 ratio between GRPs and reach, allowing us to define the point as “the place on the television reach curve where 10 additional GRPs yield less than one additional reach point.”
The point of diminishing returns for national prime time and daypart mixtures is in the neighborhood of 200 GRPs-a bit more or less depending on the demo and daypart mix. For individual dayparts that have less reach potential, the point occurs at fewer GRPs.
Assumptions Affect Results
The concept is simple enough, but to use it the planner must make a number of arbitrary assumptions that directly affect the result.
* Calculation methodology. There is disagreement over how the point should be calculated. In our example, we assumed the point was where 10 additional GRPs yielded less than one incremental reach point. Others might define it in terms of changes in cost per reach point. Still others might say it occurs where the change in percent of incremental reach is less than the percent change in GRPs or dollars. Each method is equally valid, but each gives a different point.
* Number of weeks. Since all campaigns will eventually reach the point of diminishing returns, the planner must decide whether the GRP level relates to one week, four weeks, a quarter, a season, a purchase cycle, or something else.
* Commercial length/execution. If the advertiser uses a mixture of :15s and :30s, the calculation assumes they have equal communication value. If not, then the GRPs must be weighted in some arbitrary fashion. The same issue arises when looking at commercial executions in a pool.
* Daypart and venue mix. The smooth reach accumulation curve applies only to individual dayparts or to GRPs that are proportionally allocated across dayparts. Planners must decide whether the point should be calculated for each daypart or for the schedule as a whole. But to be accurate, the analysis should reflect changes in the daypart mix as the GRP level increases.
* Demographic. Since the reach curve is different for each demographic, when there are primary and secondary demos, setting the point according to the primary demo will likely put weight for the secondary demo above or below its diminishing returns point.
* Conflict with other priorities. The point of diminishing returns is a generic concept that has no connection to a brand’s media/marketing objectives that are the primary factors influencing media weight. These include the need to maintain a competitive share of voice, promotional requirements, seasonality, product introduction vs. sustaining weight, historic advertising-to-sales ratios and other considerations.
To sum up, this article was written in response to occasional planner and client requests for a point of view on the point of diminishing returns. Because the process requires so many arbitrary assumptions, it is our opinion that knowing the GRP level of that point doesn’t make a planner any smarter. It is a number in a vacuum that only complicates an inherently judgmental decision.
Roger Baron is senior VP, media research director, FCB.