A single rating point—up or down—can mean thousands of dollars in the selling price of a 30-second spot.
Ratings are usually expressed in terms of households, ages and genders. This system allows the advertiser to choose the programs that reach most of the target audience. For example, an automobile manufacturer advertising a new vehicle might choose as the target audience all women ages 35 to 54 who live in the U.K.
If TV is the chosen medium, the ad agency for the automaker will check the ratings for all TV programs in Britain and find those with the highest ratings among women in that age group in order to get the sales message to as many potential buyers as possible. This practice, called target marketing, eliminates waste (defined as purchasing ads that do not reach the target audience) while minimizing the marketing costs of selling the car.
The concept of rating is a measure of what advertisers call "net reach." The rating number counts as its base all households that have radios or TVs, whether or not the set is turned on. A rating of 13 for a particular radio program means that 13% of all households with radios listen to that program. Since nearly all U.S. homes have more than one radio (the average is more than four per household), this universe of households is considered to be 100%. So advertisers would say that the program "reaches" 13% of all households in the market.
Share is a different measure. It counts only those radio or TV households that are listening to or viewing a telecast. Sets that are not turned on are not counted. For a specific program, therefore, shares are always higher than ratings. Because they represent net reach in the target audience, ratings provide more useful data for the advertiser.
Ratings are related to the frequency of ads in the following equation used by advertisers: R x F = GRP. In this equation, R stands for rating or reach, F stands for frequency (number of ads scheduled) and GRP stands for gross rating points. GRP is a way to measure the cumulative effect of numerous ad messages in a single campaign.
Target ratings for the programs bought by the advertiser are multiplied by the number of ads scheduled in that program and then all are added to generate gross rating points for the ad campaign. The total is referred to as "gross" rating points because if an individual sees more than one ad, he or she is counted more than once. Hence the totals are not an estimate of "net" reach but are "gross" numbers of ad impressions.
A brief history
The concept of ratings began in the U.S. in the 1920s and parallels the growth of radio and TV. Only seven years after New York radio station WEAF aired radio's first commercial (a 10-minute spot) in 1922, Daniel Starch was hired by NBC to produce data on radio listenership.
Mr. Starch, a Harvard professor, had been providing readership information for the print media, and his pioneering study of radio was based upon more than 17,000 personal interviews conducted in 105 cities and 68 rural counties. His 1929 research showed that radios were in 34.6% of households, but the data did not include any information about listening patterns for specific stations and programs.
The Association of National Advertisers became concerned with conflicting listenership claims being made by radio networks and in 1930 commissioned researcher Archibald Crossley to conduct radio research. It was the beginning of a 16-year run for the Cooperative Analysis of Broadcasting, a joint effort that changed radio broadcasting forever.
Mr. Crossley enrolled advertisers to pay for a 12-month study of 50 cities, covering 17,000 radio-listener families. Telephone calls asked about listening during the previous 24 hours.
In fall 1934, CAB faced its first major competitor, C.E. Hooper, a former Starch researcher who had started his own company, Clark-Hooper, with Montgomery Clark, also from Starch. Mr. Hooper used a new technique for data collection, the coincidental phone survey, in which consumers are asked what they are listening to at the time of the call. These new ratings showed higher numbers for programs, and Mr. Hooper claimed the data had greater accuracy because of their immediacy.
What eventually became known as "Hooperatings" gained increasing acceptance. Trying to compete, Mr. Crossley proposed a new national survey for CAB, which was turned down because of its expense. Two years later, in 1946, the ANA disbanded the CAB and hired Mr. Hooper.
When TV came on the scene in the late 1940s, Mr. Hooper reluctantly met the demand for ratings and in 1948 produced TV's first Hooperatings, combining more than 1.7 million coincidental phone calls with 4,800 household diaries. Projections were made for all 34 million U.S. TV-viewing households. But Mr. Hooper's real love was radio and in 1950 he sold his company to a new research entrepreneur, Arthur C. Nielsen.
While Mr. Hooper's methodology of telephone calls and diaries was cumbersome and expensive, Mr. Nielsen had a solution-the Audimeter, an electronic device attached to a radio that monitored the listeners' choice of programs.
Ultimately, the fact that Mr. Nielsen's meter system allowed the continual production of ratings data was the decisive factor in advertisers' choice between Nielsen ratings and Hooperatings. Mr. Hooper was producing three rating studies per year; in September 1949, Mr. Nielsen announced his company would supply four rating reports each month. It was the end of Hooperatings.
In March 1950, Mr. Nielsen bought out Mr. Hooper. A.C. Nielsen & Co. (later ACNielsen Corp.) became the largest market research firm in the world, eventually concentrating on TV and in 1963 discontinuing local radio ratings.
As advertiser demand for ratings increased, other companies entered the scene. The first Pulse report appeared in 1941 and expanded gradually. Its success was due to expansion of the service to include all radio listening around the clock, including automotive and other "out of home" listening. By 1963, Pulse was providing radio ratings for 250 U.S. radio markets and had 150 ad agencies and 650 radio stations as clients.
In the 1970s, Pulse was challenged by Arbitron, a company that returned to the use of the diary to measure both radio and TV usage. Arbitron had strong financial support from its parent, Control Data Corp., and used new computer systems to produce speedier ratings that were less expensive than the Pulse ratings. As advertisers and agencies began to support and accept the Arbitron diary information, Pulse suffered a gradual decline in clients and by 1978 was out of business.
Arbitron took over as the king of local radio ratings, and the company retained that position into the 21st century. With Nielsen concentrating on TV ratings, Arbitron built its local radio ratings business by returning to the less expensive diary method and moving to replace monthly ratings with four-times-a-year ARB Radio Local Market Service.
No major rival to Arbitron appeared until Thomas Birch founded Radio Marketing Research in the early 1980s. Birch reports used telephone interviews to generate monthly and quarterly reports. Birch provided ratings for some smaller markets not covered by Arbitron and competed with ARB in other markets.
Another successful ratings service began in Seattle in 1982 when Willhight Research filled a niche left open by Arbitron and Nielsen—small local markets. In 1992, Strategic Radio Research in Chicago started providing AccuRatings.
Highly detailed long-term network audience information, combined with data on viewers' buying and lifestyle habits, is now provided by Mediamark Research Inc. and Simmons Market Research Bureau. Their extensive volumes offer perhaps the most sophisticated use of consumer research yet developed, covering not only broadcast media but print as well.
TV networks and local stations set their published ad rates based on audience rating surveys taken during four sample periods during the regular seasons. Each sample period is called a "sweep," and the networks and stations typically program their most attractive shows and specials during a sweeps period in order to score the largest possible audience ratings and thus set rates at a maximum level.