This time, we’ll be exploring the concept of integrating metrics for TV commercials and digital advertising, providing a glimpse into this approach.
What is TV viewership rating?
When we refer to “viewership rating,” we’re talking about the percentage of viewers who tuned in to watch a particular program. It’s a standard measurement in the Japanese television industry, and for years, Video Research Ltd. has been the go-to source for such data. On their website, they describe “viewership rating” as follows:
Viewership rating data measures how much television programs or their broadcast time slots are being watched.
This data is gathered from surveys conducted in 32 regions across the nation.
It provides information on how many households or individuals watched TV programs or commercials,
serving as a key metric to gauge the media power of television and the effectiveness of advertisements.
Viewership rating data is utilized for various purposes, including understanding the level of public interest and societal trends, as well as for conducting social surveys.
Additionally, it is used by advertisers, television stations, and advertising agencies when negotiating advertising deals.
Source: https://www.videor.co.jp/service/media-data/tvrating.html
Having confirmed the definition of viewership rating, I’d like to delve a bit deeper. For a long time, viewership ratings were calculated based on “households.” For example, in the Kanto region, it represents the percentage of households out of approximately 20 million households that watched a particular program. The “10% viewership rating” that you often see typically refers to “household viewership ratings.”
However, nowadays, there is a transition towards viewership ratings calculated based on “individuals.” In the Kanto region, for instance, it represents the percentage of individuals out of approximately 40 million people who watched a particular program. In some regions, advertising transactions for television commercials are based on these “individual viewership ratings.”
Viewership ratings are measured based on sampling surveys. According to information on Video Research Ltd.’s website, in the Kanto region, they install People Meters (PM) in 2,700 households to collect logs of who watched which program, and then calculate the viewership ratings.
In the world of television commercials, transactions between advertisers and broadcasters are conducted using a concept called “GRP” (Gross Rating Point).
GRP is an abbreviation for Gross Rating Point and is an index obtained by adding up the viewership ratings of each individual commercial.
Ultimately, the cost is calculated by multiplying the desired GRP, which represents the viewership ratings per 1%,
by the cost per rating point, also known as “per cost,” and then the ordering process takes place.
The sum of “household viewership ratings,” as mentioned earlier, is referred to as “GRP,”
while the sum of “individual viewership ratings” is designated as “PRP,” indicating a distinction between the two metrics.
Source: https://www.videor.co.jp/service/media-data/tvrating.html
The problems with viewership ratings
In fact, rating is calculated separately for each television broadcasting area. For instance, in the Kanto region, sampling surveys are conducted with 2,700 households, while in the Kansai region, there are 1,200 households sampled. Since the number of households varies, the denominator of the viewership rating, representing the total number of households, also differs.
Does it make sense? For example, let’s say we have 1,000 GRP (Gross Rating Points) for advertising in each of the Kanto, Kansai, and Chukyo regions. Even if we add the GRP for Kanto and Kansai, or for Kansai and Chukyo, the total remains the same at 2,000 GRP.
However, even with the same 2,000 GRP, the actual number of households and individuals who watched the commercials varies, as does the advertising expenditure. Therefore, combining or comparing them doesn’t make sense.
(Figure 1: Don’t add the GRP)
Conversion of TV commercial metrics to impressions
Therefore, we propose converting the indicator for television commercials to impressions. This concept, advocated by Mr. Takaharu Yokoyama※, has not yet gained widespread acceptance in the industry for various reasons. However, since many client companies, including ourselves, are also involved in digital advertising, we have found that converting to impressions rather than relying on the concept of GRP leads to better understanding.
*Ryuji Yokoyama: Representative Director of Yokoyama Ryuji Office (Sixsight), Author of Industry Human Bem
The basic idea is that if three people are sitting in front of a television and a commercial is aired once, it counts as three impressions. So, if a commercial is displayed once for one person, it equals one impression.
Now, how do we convert viewership ratings to impressions? To convert to impressions, we use the “individual viewership ratings” explained earlier. For each commercial, we multiply the “individual viewership ratings” by the “potential viewership population” to determine how many people watched it. We simply add up these numbers for all commercials. Ultimately, the impression count is calculated by multiplying the “PRP” (Personal Rating Point) by the “potential viewership population” of the area.
For example, in the Kanto region, if the PRP of a particular commercial is 500%, and the potential viewership population is 40 million people, then 40 million multiplied by 500% equals 200 million impressions. If the approximate cost per 1% individual viewership rating in the Kanto region is 140,000 yen, then the advertising cost would be approximately 70 million yen (140,000 yen multiplied by 500).
Once you have impressions and costs calculated, you can determine the CPM (Cost Per Mille). In the example above, the CPM would be 350 yen, which gives you an idea of the cost-effectiveness of television commercials.
Converting to impressions allows for the aggregation and comparison of different areas, as well as comparisons with digital advertising.
(Figure 2: Adding and comparing made possible by converting to impressions)
And with the site traffic calculated by the “Time-series Statistical Model“, if we consider it equivalent to “clicks” in digital advertising, we can also calculate metrics such as CTR (Click-Through Rate) and CPC (Cost Per Click).
What are the benefits of calculating CTR and CPC? For example, while the GRP (Gross Rating Point) may be nearly the same in the Kanto and Chukyo regions, there may be a significant difference in CPC. Previously, analysis would have ended with the GRP being the same, but by analyzing the factors behind the increased CPC in the Chukyo region, it becomes possible to delve deeper into planning for the next steps. This is also considered one way to visualize effectiveness based on “action and results.”
Utilization in programmatic digital-mass advertising
In addition, there is a trend where TV viewing time is decreasing while the viewing time on TVer (a Japanese ad-supported video on demand service) is increasing. Previously, television had viewership ratings, while TVer had different metrics such as impressions. However, by converting the indicators for television commercials to impressions, it becomes possible to aggregate them.
By leveraging this, it is now possible to report metrics for TV commercials + TVer advertisements in terms of CPM, CTR, and CPC.
(Figure 3: Case study of a television commercial and a connected TV ad)
Figure 3 presents a case where TV commercials and TVer advertisements were conducted in the Kanto region, while only TV commercials were conducted in other regions. In the Kanto region, a total of 200 million impressions of commercials were aired through TV commercials and TVer, while in the Chukyo, Fukuoka, Hokkaido, and Hiroshima regions, a total of 170 million impressions of commercials were aired by aggregating across areas. By converting TV commercials to impressions, we were able to calculate and compare the CPM, CTR, and CPC for each.
In this comparison, it was found that the Kanto region had better efficiency in terms of CTR and CPC. Therefore, by conducting TVer advertisements in addition to TV commercials, it was hypothesized that it would have a greater impact on site traffic.
Continuing with demonstration experiments while changing approaches, it has been decided to conduct TVer advertisements concurrently with TV commercial campaigns.
Summary
This article explored the benefits of converting television commercial figures to impressions. If you are interested in TV commercial advertising in Japan, please feel free to contact us.
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