How forecasting as part of marketing planning can help you set more accurate marketing objectives defining future opportunities
Forecasting is a key part of the process for creating marketing plans, both for annual investment and for individual campaigns. Creating more accurate forecasts of the returns from digital marketing is now essential given the growth in investment in digital marketing. Digital accounts for an ever-increasing proportion of spend and the results delivered from marketing activities.
It is important then, for the modern marketer, to learn how to use data and analytical tools to generate forecasts with sufficient rigour. In our new guide, we cover techniques for forecasting that can help improve the accuracy the basis of marketing strategies, plans and budget allocation.
Digital media give us excellent competitor benchmarking sources for digital media such as the number of people searching, visiting websites or sharing on social media, so it’s useful to exploit these tools so that we can compare our performance with other businesses in our sectors to check that we are exploiting the online opportunity. For example, planners need to review consumer adoption of new technologies such as smartphones and wearables relative to the diffusion of innovation model to see how their adoption will impact online sales and offlines sales influenced by online browsing and comparison - what Google calls the ROPO forecasting approach.
Data has revolutionised marketing. Never before has Marketing been so measurable or accountable. From a niche activity in research departments of large organisations, Marketing Analytics have moved into the mainstream. Measuring marketing performance is increasingly recognised as key to marketing success.
In contrast to the Sales function, marketing has to take a much longer term view. Sales is driven by in-the-moment demands of the Prospect or Lead. In contrast, Marketing is shaped by longer-term trends. Trends that, if not identified, can at best, impact on the performance of a marketing campaign. And at worst, damage the competitiveness or even viability of the business.
Why create marketing forecasts?
In an ideal world, your organisation should have a culture that respects data and analytics. Unfortunately, few organisations are structured this way. This is a shame. Because the benefits of developing a data-driven marketing culture are substantial, including:
- Greater influence for the marketing department - A focus on the output of marketing (awareness building, generating enquiries, leads and sales) rather than the inputs (budgets, people, resources, time) establishes marketing as a revenue centre to be supported rather than a cost-centre to be reduced.
- Greater justification for marketing spend - Data-led marketing and forecasting helps build the business case for marketing spend. Professional, evidence-based forecasts demonstrate the impact promotional activities will have on the bottom line.
- Greater accountability - When CMOs take on more direct responsibility for revenue, their renumeration begins to look more like that of their sales colleagues. Not every CMO is comfortable with this risk-reward trade-off. However, if marketers claim to be able to track and measure everything they do, then a greater focus on marketing targets is likely to become the norm.
- Strategic business advantage - Business that better predict the future are better placed to thrive in it. History is littered with organisations that failed to understand how their world was changing. By not forecasting, organisations are hindered by a ‘business as usual’ mentality. This makes them unprepared for the future and vulnerable to attack from competitors.
- Staying up-to-date - Digital Marketing is constantly changing. What is leading edge today will quickly become old-school and dated tomorrow. By forecasting forwards, marketers are less likely to miss out on “the next Big Thing” and be left behind.
How to create marketing forecasts
Continual change forces organisations to look forward and plan more frequently. Marketing analytics used to be an exercise in looking in a rear-view mirror. It is now an exercise in crystal-ball gazing. Our new forecasting guide will show you how to create and use marketing forecasts in a structured and organised way.