Performance forecasting
There are different factors that affect a digital marketing campaign, making it difficult to predict the efficiency of future campaigns.
If you want to convince someone that a marketing strategy will work, it’s imperative to show evidence of how it will.
When it comes to performance forecasting, data is the starting point to begin with.
Data should ideally be collected and analyzed before new campaigns begin to determine their success. By using data to predict the success of new campaigns, marketers can make educated decisions about their marketing strategy.
Before we can examine the future of campaigning, we need to define what it means for a campaign to be successful.
The most important metrics
When you allocate funds to a marketing campaign, there are two metrics you should always consider: your goals metric and your ROI.
Your goal metric should be defined by the client and your team. Assuming that you agreed on what goal is most important, every campaign should have an impact on that metric, whatever it happens to be.
Important data to include in your forecasting performance is the cost per click, conversion rate, monthly ad spend, and average sales. Other factors like industry trends and competitor data are also valuable.
The ROI calculation is relatively straightforward, but it may not be measured until after a campaign has ended.
A winning campaign can be judged before it even starts. Forecasting the ROI of a campaign will give an indication of how successful you feel it will be active spending any budget.
Why is ROI so important?
Many businesses struggle to understand ROI as a result of not knowing how to calculate it, as well as measure the return on their marketing investments.
Marketing needs time and money, and understanding your return on investment helps you figure out what is working and what isn’t.
So, what is Return on Investment – ROI?
The Return on Investment is when the revenue generated from investment results in a recovery of investment costs and returns a monetary profit.
In the process of marketing, some marketers only track sales. This is beneficial, but keeping track of just that instead of tallying all campaign data can’t provide a complete picture of your marketing efforts.
For example, you made total sales of new 100 products and earn $10k, but you invested $15k in ad spend. You lost money. Simple ROI calculations can tell us what we need to do.
In order to calculate marketing ROI, it really comes down to the time and money put in. But typically there are other things to consider.
Budget allocation, AdSpend adjustments and Opportunities
To calculate the ROI of marketing campaigns, it’s essential to justify your spend. You need to analyze how much each marketing strategy is worth, then see if there are any return profits.
If a campaign is not generating a return on investment, there is little justification for launching another similar campaign.
Knowing your campaign’s ROI can help you understand what is and isn’t working so that you can allocate your budget more deliberately.
Adjustments in spending are also one of the vital forecasting methods.
For example, with a Facebook ad, you could earn $50K in revenue and 50% ROI. With PPC ads on Google, you could earn similar sales, but your ROI would be 65%. Again, both types of ads yield the same result, but the PPC ads are more lucrative.
But, you don’t want to cancel your Facebook ads, despite their declining cost-efficiency. Try optimizing your ads by improving the copy or imagery. This will give you more information about ROI for your campaigns and is a great way to cut down costs in underperforming marketing campaigns.
ROI is about more than just calculating how much money you make from a campaign. It also helps you spot lucrative opportunities, and informs future business and management forecasting.
How to calculate ROI?
Most basic formula is Sales Revenue minus Ad Spend, divided by Ad Spend.
Although ROI may be more difficult to calculate when campaigns are cyclical, it is an important metric with respect to assessing success. If you have a campaign that has recurring monthly sales, subtract the average growth in the market from ROI calculations to avoid overestimating your return on investment.
Forecasting methods
There are numerous forecasting methods but this ones is most known.
Least Squares Regression
The Least Squares Regression methods based upon linear regression are linear equations that describe a straight line link between historical sales data.
The LSR line is positioned in the data selected for the purpose of maximizing the difference between the actual sales data point and the regression line.
It represents forecasting the trajectory of that straight line in the future.
This forecasting method uses historical sales information for the period represented by the number of best-fit periods plus the specified number of period records.
A minimum of three historical figures is mandatory.
These methods are useful for the prediction of demand if linear trends appear within the data.
Calculated Percentage Over Last Year
The method uses the calculated formula for percentages in the last year to compare sales for a period to sales in a previous period.
It measures the percentage increase or the decrease of the amount then divides the period by that percentage in determining its forecasting.
This forecasting method will estimate demand by calculating the sales order duration and year.
The method is useful in forecasting a short-term supply of seasonal goods that is expanding or declining.
Calculated Percents over Last Year formulas add sales statistics from the previous year to a factor determined by the systems and project that result in the upcoming calendar year.
Linear Approximation
This technique utilises the linear approximation formula for determining the trend of sales order history and projecting this trend on the future forecast.
Your Trends will be updated monthly to identify trends.
These procedures require the number of periods that fits the best plus the number of a definite period of sales order history.
Generally speaking, this method help predicts demand for new products, or products that show constant positive or negative trends that do not occur during seasonal fluctuations.
Flexible methods
It is useful when selecting the best fit number of periods in your Sales Order History that start a month before the forecast start date.
Compared with the method Percent over last year, it can also determine the number of periods used for the base.
According to the type of this method, the best fit period is required along with an indication on the number of sales periods.
This forecasting method are very useful in predicting demand for a predicted trend.
Last year to this year
The following methods use sales figures from 2021 to forecast the following years.
This approach requires a number of periods that fits well with a year of sales order history.
These methods are very good at estimating the demand for mature products if demand is steady or seasonal without trending demand.
Percent over last year
In these procedures, the percentage increase or reduction is calculated using percentage increases over the last year formula.
Forecasting demand is based on period sizes to ensure the perfect match plus one year of sales records. It helps predict seasonal demand as it grows or declines.
Campaign performance prediction
You want to create a new campaign, but you need to know how it will perform before you invest time and resources.
Learn how to anticipate campaign performance
Define goals
When you create a campaign, it should be with a clear goal in mind about what the campaign is meant to do.
Goals are often based on things like conversion rates, traffic, or click-through rates.
To determine the success criteria for your campaign, you can analyze these metrics by looking at previous campaigns.
Data collection
You should use data from similar campaigns to create projections for what your new campaign might achieve.
Having a lot of data will help give you an accurate forecast, but you need to take care to ensure the data points are as relevant as possible to your specific campaign in order to avoid inaccurate forecasts.
Data optimization
When you extrapolate, you take information about the past and assume that it will also apply to the future. Assumptions sometimes do not lead to the correct answer, but when dealing with the unknown, it is your best prediction tool.
If a campaign has been successful in the past, chances are it will be successful again. You can optimize the targeting or media format to refine this, but there is a good chance that it will succeed with some level of success when trying again.
Campaign performance prediction
You want to create a new campaign, but you need to know how it will perform before you invest time and resources.
Learn how to anticipate campaign performance
Define goals
When you create a campaign, it should be with a clear goal in mind about what the campaign is meant to do.
Goals are often based on things like conversion rates, traffic, or click-through rates.
To determine the success criteria for your campaign, you can analyze these metrics by looking at previous campaigns.
Data collection
You should use data from similar campaigns to create projections for what your new campaign might achieve.
Having a lot of data will help give you an accurate forecast, but you need to take care to ensure the data points are as relevant as possible to your specific campaign in order to avoid inaccurate forecasts.
Data optimization
When you extrapolate, you take information about the past and assume that it will also apply to the future. Assumptions sometimes do not lead to the correct answer, but when dealing with the unknown, it is your best prediction tool.
If a campaign has been successful in the past, chances are it will be successful again. You can optimize the targeting or media format to refine this, but there is a good chance that it will succeed with some level of success when trying again.
ROI for multichannel attribution
To solve the problem of not knowing where your money is going, you need to know what goes in and what goes out (attribution).
First and last touchpoint
Your customer may visit your website numerous times before they convert. To calculate ROI, you can use the data associated with their first and last touchpoint to calculate the return on investment.
Multiple touchpoints
It’s important to use a multi-touch attribution model when calculating ROI to account for all of the relevant actions.
In the customer life cycle stages, you can review every action taken before a conversion. The weight of each step determines how much it contributes to value, so 3 actions would be worth ⅓ of the total revenue.
Single attribution
Even with a long-term investment, you need to consider the financial impact it will have on your business. If your lead doesn’t convert immediately, use historical data to project ROI.
You can use data from your old events to help predict and sell future events. You can forecast the ROI for a new event based on past data. However, this is not an exact science; you will never know for certain even if your predictions are correct.
Conclusion
For the majority of people, performance forecasting methods are too complex to understand. On the other hand, UNLMTD is fully focused on these models and we can help you with accurate forecasts, forecast errors, forecasting performance measures, sales trends, market research, forecast accuracy and many other things. Feel free to contact us today and schedule a call.
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February 17, 2023 at 7:25 pm
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