Why We Forecast – How to Minimise Waste from the Outset
Marketing is one of the least trusted business functions. Every department produces forecasts, but this is less associated with marketing. How can we change this? To build trust and communication between marketing and your key stakeholders, accurate forecasting is the key. It also helps to minimise risk, cut waste, improve outcomes and credibility.
There are some challenges and limitations you may experience when forecasting. Digital marketing (and the world at large) is changing faster than ever; automation is becoming more prevalent, and measuring and tracking user behaviour is more difficult as users are presented with better, clearer privacy/tracking options.
This does present some amazing opportunities to set yourself apart from the competition. What mix of channels can help you grow? How do the marketing channels work together? It also helps to ensure that you do not pursue any channels which are unprofitable, whilst maintaining focus on the ultimate outcome of revenue/profitability. Ensure your tracking & measurement are correct and identify opportunities to improve it. Fundamentally, this encourages long-term thinking, considering retention and loyalty, customer lifetime value and other valuable measures of success.
How do we forecast?
Audit current activity and assess what opportunities there are to improve performance to provide context to your forecast. Use the off-the-shelf tools available to you and look at a longer date range to understand both performance fluctuations and seasonality pre- and post-COVID. If you do not have any data (start-ups, etc.), look at industry benchmarks for guidance.
For paid social and display/video channels, think about audience size. Consider the first-party data the client has access to, and the amount and quality of the creative you will have available for the campaigns. Apply forecasting for organic search and uplifts from conversion rate optimisation if relevant.
This all culminates in a 12-month forecast, which then takes into account seasonality, offers and other key trading patterns and periods.
Guidelines & Hurdles
To make a forecast as successful and accurate as possible, use pre-existing data to check its validity and be conservative – try where possible to under promise and over deliver. Don’t forget to take the time to understand your client’s business and consider seasonality, and know how accurate the conversion rates are (for example, lead to sale CR%).
We have had a lot of success doing this; sometimes we have been too conservative, sometimes we have been too bold. The longer you work with a client, the more accurate a forecast you will be able to produce.
So why not have a go yourself? We’d love to know how you forecast outcomes from your campaigns and marketing plans.