How Do You Calculate IR, Again?
Blog | March 26, 2024
It’s Time to Align on a Key Pricing Metric
By Terence McCarron
I wrote a blog in 2016 that still rates as one of our most viewed pieces of content every year. In today’s landscape, this topic is a perfect example of a core thesis behind OpinionRoute’s purpose: Researchers and their sample vendors are not aligned in many ways.
Today, when bidding with vendors for sample, incidence rate is still the #1 price determinant. Yet, long ago, we stopped having conversations around the definition. As a result, many DIY sample platforms have quietly shifted to conversion rate formulas which align well with the sample company cost model.
The issue is that this approach passively presents a tax on the vendors’ poor quality or targeting.
As a service to the industry, I’m here to propose a unified way to do things so we better align the industry.
Formula Scenarios
- Analytical Incidence
- Formula: Completes + OQs/(Clicks- Partials- Excluded)
- How to Use: This is a helpful measure when market sizing. The main components here are that respondents that pass the screeners, but do not complete (OQs) due to a quota design are not excluded from the market read the project produces.
- Simplified Net IR
- Formula: Completes/(Completes+Terms)
- How to Use: This is a basic panel incidence rate calculation that focuses on screener outcomes. This was historically commonly used for online sample feasibility when panel targeting capabilities were/are robust.
- True IR
- Formula: Completes/(Completes + Non-Targetable Terms + Non-Targetable OQs)
- How to Use: This is an optimal formula for incidence rate in a programmatic sample environment. This focuses on what the sample firm can actually target and focuses the incidence rate on things that go beyond the demographics.
- Conversion Rate (aka Vendor IR)
- Formula: Completes/Starts
- How to Use: If you’re curious on seeing things through the Programmatic sample vendor lens, this is the best way to do that. The issue with this is that it drives price upticks on things they historically should drive: quality removals, demo terms, demo OQs, etc.
Sample Companies preferred model is #4 Conversion Rate.
Starting today, Researchers should hold steadfast to True IR on every project. This properly aligns incentives on project execution between the buyer and seller of sample.
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