Editorial: Futility of forecasts

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.


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