Calculating Media Math 1

mathPart of what I do for a living is teaching several different courses for IAB Canada. A few of these have a segment specifically dedicated to media math such as our Introduction to Online Media Buying (online training) and our Digital Media Sales in-person course.

Why bother?

For starters, it’s important in certain contexts, namely for those beginning with a new responsibility (digital buying or selling), to recall some very basic basics. In some cases, people are presented spreadsheets with pre-set formulas and templates and told to use this or that. This however doesn’t teach the individual how the formula works, how to do it for themselves in their mind, or on a sheet of paper should they need to. Eventually, that individual gets to a point where he/she’s ashamed to ask what the formula really is.

I find it important at various points in all the courses that I teach to ensure everyone has the same basic knowledge about something.

What is media math?

Media math is the set of formulas used to calculate pricing and performance. Pricing formulas involved calculating what is the CPM, CPC, CPA, CPL, CPE, etc, of any given campaign. Performance formulas are used to calculate the ratios we use to determine the success of any given campaign such as the click through, view through, interaction / dwell / engagement rate (all three mean the same thing), conversion rate and so on.

Although all of the formulas involved in media math are very simple in nature, it is important to know which data to use when, when to multiply or divide by a thousand, and when to ask a few more questions to ensure 2 individuals actually mean the same thing. In some cases the formulas can be done differently, based on our own interpretation of a metric – which may or may not be right, but definitely wasn’t clearly defined.

An example of an ambiguous formula is the interaction rate. Did you mean a gross or net interaction rate? No wait! They exist???  Yes, they do. The formula we expect to see is impressions divided by interactions right?  My question is what “interactions” are you counting / using here? If you are counting only those impressions that recorded any interactions as one (1), then you are calculating a net interaction rate. If however you’ve tallied the sum total of all interactions recorded by the campaign, then you are calculating a gross interaction rate.

Obviously, one cannot be compared with another as they are not the same. Yet different people believe the way they calculate it is the only way to do it and assume everyone else does it the same way.

The same can be said for the conversion rate which is most often calculated by taking total conversions over total clicks. However some people calculate conversions over impressions, which necessarily yields a much smaller percentage.

You’re now starting to see the benefit to this segment in a course – a chance to validate what you think you know.

Additional references

Every once in a while, I have people asking me for additional references on media math so they can practice and feel more confident in their abilities.  Below is a list of resources I’ve compiled to that end:

IAB (US) has a put together a study guide for those attempting their Digital Media Sales Certification exam. Page 8 of the guide offers more on this topic.

Daily Blog Tips published a post on the topic of media math, explaining things slightly differently which may suite some better http://www.dailyblogtips.com/basic-mathematics-for-internet-advertising/

If you are looking for broader media math than strictly digital, the Cabletelevision Advertising Bureau of the US has put together a quick presentation for you; http://www.thecab.tv/main/bm~doc/mediamath-2.pdf

SRDS is the US’ equivalent to CARD in Canada and has media calculators here: http://www.srds.com/frontMatter/sup_serv/calculator/

Finally, Edoqs has assembled a few media math cheat sheets here: http://edoqs.com/media-math-cheat-sheet

dmsc_certified_logoTo know more about digital media sales, I teach a Digital Media Sales course through IAB Canada which is a great preparation before taking the Digital Media Sales Certification exam through IAB (US) which IAB Canada fully endorses. It is a two day program which you can attend in-public once a year (see calendar for dates — a session is coming up in Vancouver February 4-5th) or have organized as a custom session within our company. Contact me to set up training with your organization, be it in English of French, national, regional or local – I will adapt for your organization’s needs.

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