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What does it mean for forecasting when past data is not predictive of the future?

We’re beginning to see the extent to which Covid has altered our behavior permanently

As we begin to see the light at the end of the tunnel after a challenging 12 months, it’s worth considering what our post-Covid media landscape will look like, and planning for the scenarios that will soon be reality. Following the vaccination rollout, we’re seeing businesses return to offices, the return to international travel and holidays, and consumers returning to window shopping and physical retail.

We’re beginning to see the extent to which Covid has altered our behavior permanently. As consumers, we’ve become accustomed to shopping, working and socializing from home, which is bound to continue to some degree post-Covid.

Data and model-based media planning for e-commerce strategies are critical to success. Ask a data science team to forecast sales for the month ahead and they’ll likely ask for at least two years of data – any less and the team will raise issues around effectively capturing year-on-year seasonality.

This is understandable given the seasons, the holiday calendar and many sales and promotions follow this pattern. The issue now given that 2020 was such an outlier in terms of performance is that the forecasting models will need to be built on more short-term seasonal effects.

Fundamentally, businesses must evaluate the extent to which past performance is useful in predicting future performance. Including too much of that history now that consumer habits have changed can result in poorer predictions than might otherwise be the case. The result for media planning is primarily about how we measure success, plan more scenarios, understand the opportunity costs of multi-channel media investment, and prepare ourselves to react quickly when demand changes.

For some firms, the idea of a month-ahead forecast of performance under different budget scenarios can often seem unachievable. It’s important to understand where and when to spend your multi-channel paid media budget. Critical to achieving this view is up-to-date telemetry on the recent past and a clear understanding of how changes in one channel can impact others, and continually evaluating and reviewing performance for business. Try Bosco for free or get in touch to book a demo.

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