The Definitive Guide to Media Jargon – Part 2: Math Behind the Media

Note:  This is the second installment of a two-part blog post covering basic terminology, acronyms, abbreviations and definitions used in media planning and buying.  In case you missed it, read the first here.

As any of my high school math teachers would tell you, becoming an astrophysicist was not in the cards for me.  Just when I thought algebra was my kryptonite, I discovered calculus.  Ouch! Fortunately my love of all things media took me down the road to a communication degree in college – minimal math credits required.

Well it turns out, you can’t hide from math.  Such is true when it comes to media planning and buying, and what I thought was once my kryptonite has found its way to the very heart of everything I do.  Okay, maybe I’m not launching rockets to Mars, but it’s not just bean counting either.

[vc_column width=”2/3″][vc_video link=”https://www.youtube.com/watch?v=1AdWvHI6TWA”][/vc_column][vc_column width=”1/3″]As Gunny so eloquently explains, we deal with “CP-whose” and “RT-whatevers” more than the average person can imagine.  To follow-up on my last post, here’s the rest of the list – the “math behind the media” so to speak.[/vc_column]

 
 

Term Common Acronym or Abbreviation Formula Definition
Ad to Sales Ratio A/S = Advertising Cost / Sales Revenue The ratio of the cost to advertise to the total sales revenue generated – typically reported as a percent.
Average Revenue Per User ARPU = Total Revenue / Total Number of Users The average revenue per user is a calculation that allows advertisers to stay apprised of per-user revenue. The ARPU is calculated by taking the total revenue and dividing it by the number of users in a given timeframe for a given platform (mobile app, website, software, etc.).
Click-Through Rate CTR = Clicks / Impressions The ratio of clicks to impressions reported as a percent.
Commission None = Net Cost / (100% – Commission Rate) A fee based on the percentage of total sales.  For example, determining gross cost using a 15% commission on $1,000 would be calculated as such:  $1,000 / (1 – 0 .15) = $1,176.47.  The commission is $176.47.
Conversion Rate CVR = Key Metric / Conversions Reported as a percent, the CVR is the average rate of conversions to the number of times a given key metric is delivered.  Key metrics used are often site visits, impressions or clicks.
Cost Per Action/Acquisition CPA = Cost / Actions The average cost for a defined action or acquisition.  Examples of actions include sales, leads, calls, etc.
Cost Per Assist CP-Assist = Cost / Number of Assist Events The average cost in ad spend to obtain an assist within a conversion funnel.  This is a metric defined within an attribution funnel.  There can only be one assist within a path to conversion, and this takes place just prior to the last touch or converter in the path.
Cost Per Call CP-Call = Cost / Calls The average cost in advertising to obtain one phone call.  This is a pricing unit for some ads as well as a performance indicator.
Cost Per Click CPC = Cost / Clicks The average cost to gain a click on a digital ad.  Some ad placements are bought using CPC as the underlying rate basis.
Cost Per Completed View CPCV = Cost / Completed Views The average cost in ad spend per completed video view.
Cost Per Install CPI = Cost / Number of Application Installs Specific to mobile applications, Cost-per-Install (CPI) is the price an advertiser pays whenever the consumer installs the advertised application.
Cost Per Lead CPL = Cost / Leads The average cost in ad spend to acquire a lead.
Cost Per Mille CPM = (Cost / Impressions) x 1,000 The cost to serve one-thousand impressions.  Most display ads are sold based on CPM rates.
Cost Per Origination CPO = Cost / Number of Originating Paths to Purchase The average cost in ad spend to initiate a conversion funnel or path to purchase.  This metric is defined within an attribution funnel and is the first touch in the path to purchase.
Cost Per Roster CPR = Cost / Number of Roster Events The average cost in ad spend to generate roster events within a conversion funnel or path to purchase.  Roster events occur after an origination, but before the assist and converter.  There can be multiple roster events within a funnel, and this is generally a measure of cost to build relevant frequency.
Cost Per Sale CP-Sale = Cost / Number of Sales The average cost in ad spend to generate a sale.
Cost Per View CPV = Cost / Views The average cost per view for video ads served.
Frequency None = Impressions / Reach The average number of times an individual or household is reached by a brand over a given amount of time.  It can be applied to paid media, non-paid media, or a combination of both.  For example, an average frequency of ten may be referred to as 10x.
Gross Rating Point GRP = Percent of Market x Frequency Used in broadcast media (TV/radio), GRP is a percent of the total market reached multiplied by the frequency.  Total market is generally determined by ratings providers, and a ratings point is equivalent to one percent of the market.  For example, if 30% of your market is reached and you run an ad 5 times, the resulting GRP would be 150 (30% x 5 ads = 150 points).
Mark-Up None = Net Cost x (100% + Mark-Up) An amount added to a cost of goods or services.  For example, determining gross cost using a 15% mark-up on $1,000 would be calculated as such:  $1,000 x 1.15 = $1,150.00.  The mark-up is $150.
Return On Ad Spend ROAS = Sales Revenue / Cost The sales revenue resulting from corresponding advertising.  A positive return on ad spend is reported as a percentage above 100%.  ROAS = Sales Revenue / Cost
Target Rating Point TRP = Percent of Target Market x Frequency Used in broadcast media (TV/radio), TRP is a percent of the target market reached multiplied by the frequency.  For example, assuming your target audience is women, if 30% of your total market is reached, and half of that market are women, running an ad 5 times would result in a TRP of 75 (15% x 5 ads = 75 points).
Targeted Frequency None  = Targeted Impressions / Targeted Reach The average number of times and individual or household is reached that fall within a specifically targeted demographic.  Examples include household income, gender or age.

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