Investment Management Certificate (IMC) Practice Exam

Which of the following best describes a measurement of median effectiveness in advertising?

1. Gross rating point measurement

2. Customer life cycle measurement

3. Cost per thousand impressions

4. Click-through rate

The correct answer is: Gross rating point measurement

The correct choice highlights the concept of Gross Rating Points (GRPs), which is a widely used metric in advertising effectiveness. GRPs measure the total exposure to a particular advertising campaign, combining both reach (the percentage of the target audience exposed to the ad) and frequency (the number of times that audience sees the ad). This metric provides insight into how effectively an ad campaign can reach its intended audience over time, allowing advertisers to assess the overall impact of their efforts. In contrast, the other options focus on distinct aspects of advertising effectiveness. Customer life cycle measurement pertains more to understanding the stages of customer engagement rather than directly assessing ad effectiveness. Cost per thousand impressions (CPM) measures the cost efficiency of an advertisement based on how many individuals see it, but does not directly address the effectiveness in terms of audience engagement or sales. Click-through rate (CTR), while relevant for digital advertising efficiency since it measures the ratio of users who click on a specific link to the number of users who view the ad, does not encompass the broader audience reach and frequency considerations that GRP offers. Therefore, GRPs emerge as the most effective means to measure the median effectiveness of advertising campaigns by providing a holistic view of audience exposure.