As promised last month, here are the formulas for our Broadcast section of MLS. Please note; these formulas are a work in progress and we are more than willing to hear suggestions.
Rating – Given by Nielson or Arbitron or Provided by User
Share – Given by Nielson or Arbitron or Provided by User
Gross Rating Points (GRPs) = Rating % x the number of spots in an advertising schedule
Gross Impressions (000) = GRPs (%) x Universe (000)
Cost Per Thousand = Cost of Schedule/Gross Impressions x 1,000
Cost Per Point = Cost of Spot/Rating
Rating expressed in People (for calculation purposes) = (Rating/100) x Universe
Reach – The software applies a normal distribution over the frequency of seeing an ad to find the percent of the population that sees at least 1 ad. This is done by determining the probability that zero ads will be seen by a person in the show’s Rating. Once the percentage of people seeing zero ads is determined, the formula assumes everyone else saw at least one ad. This new percentage is applied to our Rating, expressed in people, to give us a total number of people that have seen at least one ad. This is then divided by our Universe and we are left with Reach.
Frequency= GRPs/ Reach (If this number is less than 1, software assumes minimum Frequency of 1)
Combined Reach Formula
1-((1-Reach A)x(1-Reach B))
The formula for combining reach attempts to look at overall reach, without duplicating reach audiences. To do this it multiplies the percent of people not reached from two ads. Since this number is less than one for all ads, it will shrink when multiplied. Once the new percent not reached is found, this is subtracted from 1 to find our total percent reached. Using this formula, reach will never exceed 100%.