Editorial: Futility of forecasts

by Craig Smith, editor, Marketing 18-Oct-06

There is a parlour game, popular in households that still know where the parlour should be found, that is loosely based on the rules of Consequence or Exquisite Corpse. In the modern version, the first player writes a few lines of a story on a sheet of paper, obscures all but the last line and passes it on for the next player to make their own contribution, and so on.

When everyone has had their turn, the first player then reads out the
entire disjointed story to such hilarity that Uncle Hugo falls off the
chaise longue.

Curiously, this recollection has been prompted by the publication of the

Institute of Practitioners in Advertising's latest Bellwether Report, it

being October and time for another quarterly report on the state of the
market.

It's rosy, apparently, although in traditional form bets are hedged with
quotes such as: 'Confidence in marketing and advertising is returning,
yet with a high degree of caution', from Starcom's Jim Marshall, who
chairs the IPA Media Futures Group and is regularly rolled out to make
some sense of the reported budgetary intentions of leading British
advertisers.

The problem is, there isn't any sense. Were random Bellwether findings
from the past two years to find their way into a parlour game (unlikely,
we know), they would read something like this: 'The market is the most
optimistic it has been since the dotcom boom ... in marketing spend
since 2000 ... marketing spend is set for its biggest ... upward
revision since 2000 ... budgets cut for the first time in nearly two
years ... growing more slowly than any time in past four
years ... reduced as companies seek to lower costs ... budgets have
risen for the first time in 18 months.'

So, just like the game - except without the comedy value. Probably the
funniest thing about it is that these statements appear chronologically.
Don't try to re-read it in an attempt to make sense of it - it would be
a fruitless task, which is rather the point.

It is not that there is anything wrong with the IPA's Bellwether Report.
On the contrary, the figures and findings are generally accurate. The
same could be said for a host of forecasts, from Martin Sorrell's graph
plotting to ZenithOptimedia's expenditure predictions - although
forecast 'revisions' seem rather like changing a bet after your horse
has pulled up lame.

It is the purpose of them that is confounding. Bellwether has appeared
without fail every quarter since 2000. So what can it actually tell us
about what has happened, let alone where things are likely to go from
here?

There is really only one conclusion of worth to be drawn, which is that
the marketplace for media and marketing services is a basketcase, and
charting its behaviour is a bit like trying to predict the flight path
of a fly.

There was briefly a fashion for this kind of thing; industry luminaries
used to chat about our 'economy' over preprandial drinks before they
realised they risked equal ridicule for either asking or attempting an
answer. For similar reasons I suspect, I have yet to meet anyone, from
an advertiser or agency, who has ever based a significant decision on
the findings of one of these reports.

I predict an ongoing shrinkage of demand for forecast services, matched
by a fiercely resistant supply side.