This is quite possibly the least exact science there is: ad revenue forecasting. Every publisher goes through this exercise on an annual basis. Budget period comes around at different times for different companies. Most media operators either operate on a calendar year (January to December) or a broadcast year (September to August) but there are some differences. In most cases, budgets have to be proposed 4 months out and finalised a good month or 2 before the start of the new fiscal year.
How do you prepare your sales objective for the coming year? Or is it set for you?
I’ve written about this in the past when I developed a new method of forecasting for my own need. At the time I was GM of Internet at Corus Quebec, responsible for the budget (revenues and expenses) of roughly twelve modest websites, most in French but some in English. The forecasting problem there, as it is with many companies either multi-media or pure play, is that we had our own set of unique parameters which made forecasting on “popular” methods (like the “eCPM”) very difficult at best and unreliable at worst. Plus those other methods I personally believe do not base themselves on the same facts and figures ad buyers do – so how can the ever predict what the ad buyer will do?
Here are a few of the specific or unique parameters I had to deal with:
Diversity of website content & size:
The sites were all the online equivalent of a specific radio station and depending on the type of radio it was, there was either a lot of content (general news, sports news & stats) or much less (oldies, soft rock and contemporary hits). This affected the website’s potential appeal to its target audience (be it the radio listener when roaming online or anyone else that doesn’t necessarily listen to that station).
The websites single-city-focused, i.e. not necessarily of interest to a broader region (like Quebec province, French Canada or the whole French Internet community) AND were spread across multiple markets big (like Montreal) and small (like St-Jérôme, Sherbrooke and Quebec City to name but three). Some markets are Internet marketing-savvy while most simply are not.
Multiple revenue sources:
We had revenue coming in from local individual radio sales teams (per site), national ad sales teams in Montreal and Toronto (separate teams, selling for all sites) and affiliate marketing. This again brings the notion of some sellers knowing their stuff a lot better than others. The same goes for buyers. The larger advertising agencies know how to buy online media while the smaller ones, not so much. Direct local clients have even less of a clue, with their being a few exceptions of course.
So, what are the various methods out there to forecast advertising revenue for a website and why aren’t they accurate?
In my next post (next week) I’ll look at the various methods used by various media to develop their annual online media sales objectives for the coming year.