Guessing Game: Why Ad Forecasts Are Meaningless

Figures May Not Lie, But That Doesn't Mean They Tell the Truth

By Published on .

For many many years, Bob Coen of (what is now) Universal McCann was essentially the ad industry's forecasting guru, never mind that his predictions often had to be revisited and revised. Then others got into the fortune-telling game, and now there are at least three industry soothsayers vying for attention. And they're getting it, from the business and from the media, Ad Age included.

But these forecasts are about as valuable, accurate and relevant as your daily horoscope (with apologies to those who set their schedules by the stars). As we've seen the last few weeks, the forecasts are regularly changed mid-year, which means the predictions made at the start of the year were wrong. There's a reason for that: those predictions were based in part on year-earlier predictions that themselves turned out to be inaccurate. Which means the mid-year number gets revised, and if (when) they miss the mark, the cycle starts over.

Even on-target, at best these forecasts have value only as directional signals. If I sell network TV time, do I really care whether the forecast is for 1.7% growth in my segment, or 1.6%? Of course not, I care about my own numbers. And if I'm a marketer, I'm trying to do what's best for my brand, not invest more in one medium and less in another because of a forecast. Those that do want/need directional signals are just as well-served looking at quarterly and annual figures on actual spending. While flawed, they provide a more realistic benchmark than crystal-ball gazing.

Ad Age recently reported that ZenithOptimedia is sticking by its forecast of 3.7% ad-spending growth for 2007. That follows a gloomier TNS Media Intelligence forecast of 1.7%. Bob Coen, meanwhile, downgraded his 4.8% growth call to 3.1%, noting, "Things are pretty bad."

Not surprisingly, most of the forecasts call for aggressive online growth and slower growth or small declines for most traditional media segments. "Clearly, we're living in a digital age," said ZenithOptimedia's forecaster. I guess we couldn't have figured that one out for ourselves, or had it confirmed by watching actual spending patterns.

Topping it all off, as our own Brad Johnson brilliantly reported last month, measured-media ad spending doesn't give anything close to the real picture on total marketing spending. Smart marketers these days employ a broad range of tools to drive growth, many of which (paid search and promotion, among them) these forecasters don't consider when predicting the "industry's" future.

For those out to reinvent their business, for those trying to make their trains fly, this is one more distraction from a focus on the true trends. I know Ad Age Editor Jonah Bloom is always looking for ways to give our audience truer measures of the health and direction of the marketing business. My forecast: Some time in the not-too-distant future, we won't care about these ad forecasts at all.
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