What is a Rating in advertising?

A rating is a measurement of an advertisement’s audience, recorded as a percentage of the original targeted audience. For example, if the target audience for an ad is 100 households, but only 30 households tune in for the ad, the rating percentage is 30%. A rating differs from a share in that it measures against all possible households – those connected to a TV, whether it is on or not – as the baseline target audience, whereas a share measures against all households that were actually watching televisions during the time an ad was aired.

Ratings effectively define how many people tuned in against expectations – a sort of ‘audience meter.’ Ratings have traditionally been used by TV networks to show advertisers the level of engagement their programming achieves, making a greater case in negotiations when selling ad slots.

What to know: How Nielsen TV ratings work

The most well-known and widely used rating system is a legacy rating system: the Nielsen TV audience measurement system. Nielsen tracks and analyzes the viewing preferences of audiences by specific traits, presenting thousands of demographic-specific data on a very granular level, in what Nielsen refers to as ‘panels.’ They then release aggregated ratings based on geographic scope, broken down by these traits. Ultimately, advertisers use gross rating points (GRPs) based on this system to determine how effective an ad campaign was. They also use gross rating points to calculate cost per gross rating point (CPP) to determine the cost efficiency of a campaign. 

It’s important to know that the ratings are only indications of habits or patterns, and cannot with complete accuracy predict any one person’s viewing habits. One strong use-case for measuring the rating of an advertisement is if the goal of the ad campaign is to gain exposure for a new product. In this case, the target audience should be wide, in order to increase opportunities for reach as much as possible. Rating would be an effective way to measure how far and wide an ad was served against all total households with a TV. When going to scale, re-targeting those households who did not turn on their television when the ad was originally served is one possible strategy. 

With connected TV (CTV) and over-the-top (OTT) streaming services, Nielsen tracks ratings differently and sends the results directly to the platforms. The reporting is expected to change in coming years to accommodate the need for transparency to advertisers, as these platforms become more and more a part of everyday video consumption.

While Nielsen was the first data aggregation company to measure the rating point system for television back in the early 1950’s, many new players have entered the market since – and brought valuable insights with them.

In order to adapt to the changing ways viewers consume TV and streaming, as well as compete with alternative measurement initiatives, Nielsen announced a solution called “Streaming Signals” in early 2022, which is intended to help advertisers predict who is watching a specific TV program within a household of multiple people, so that more relevant ads can be served in real time.

Meanwhile, Nielsen’s competitors are also crafting their own tools for better measuring viewership in the cross-channel landscape. Comscore, for example, has created “Comscore Everywhere,” an effort to count unduplicated audiences across various media and screens. iSpot.tv and VideoAmp are also working on new solutions, among others.

Simulmedia has partnerships with both Nielsen and iSpot, and also works with MRI, Experian, LiveRamp and other data-first audience measurement companies who gather highly detailed first and/or third party data from television viewers to offer specific insights into who is watching an ad, and when. Combined, their capabilities offer massive reach across U.S. households and offer real-time measurement.

The benefits of Simulmedia’s partnerships with these newer audience measurement technologies is twofold. The advertiser first and foremost gets more tactical measurement capabilities, with the ability to measure across many different media channels and to observe how user behavior with ads on one platform impacts the behavior on another. This ability to track attribution from being new prospects, casual researchers of your product across devices, to paying customers – the full customer journey – revolutionizes the ad campaign planning process.

This is where the second benefit comes in. Armed with this level of detail about the customer journey, advertisers can optimize their campaigns along the way and in real-time, as these new audience data partners provide moment-to-moment measurement that allows advertisers to pivot.