6 Useful Tips To Get Closer To Accurate SEM Forecasting

Updated on: 11 July 2019

SEM forecasting is often rife with uncertainty. It’s tough not to harbour doubts about the accuracy of your guess at times – especially when it has the potential of directly impacting your bottom line.

With so many unknowns, is it actually possible to predict what’s going to happen?

The thing is — you have far more information at your disposal than you think. Much like playing a guessing game – SEM forecasting requires you to make a series of educated guesses based on past and present data, sometimes without even having all the relevant knowledge at hand.

No matter if you are just a beginner, or an experienced Digital Marketing Agency – SEM forecasting can no doubt be a tough nut to crack. However, there are certain assumptions that you can make when forecasting to boost your accuracy and results.

Before we go into the details, make sure that you first segment your audience into segments where conversion rates and CPCs (cost-per-click) significantly differs — you will be using the data on hand to come up with more precise estimates for each unique group of customers.

1. CPMs & CPCs go up year-over-year

You may be questioning why you’re forking out a higher amount for marketing every year, but having little to no results to show for it. Well, attribute it to inflation and the economy. If your account comes with some history, try and map out your CPCs over a couple of years and spot a trend that can help with your decision.

If yours is a newer account, put your trust in Google’s planning tools and do a reforecast midway into the year. While this year has seen more fluctuation than past years, expecting a 10% increase in CPC or CPM (cost-per-mille) is a safe bet.

2. Conversion rate and order value

No matter what your campaign conversion rate was the previous year, it will remain the same in the next one if you don’t put in the effort to do testing. When you actually test, adjust your assumptions accordingly. An increase of 25% isn’t impossible with significant investment.

For those starting from zero, forecasting can be a little more challenging. Assume your SEM campaigns correlate with direct traffic, while non-brand ones will be closer to organic.

3. Calendar changes

Oftentimes, certain occasions and holidays fall on different days or dates each year. As the calendar changes, so should your monthly forecasts. Factor in people’s behaviour and the external environment in your forecasts by going a step further in your predictions.

4. Competitors will always be a constant

Face it, competitors come and go with an ever-changing strategy. However, with the exception of any considerable external factors, it’s safe to say that the amount of pressure from competitors won’t change much. Unless it goes absolutely viral, it’s unlikely for a competitive set to experience exponential growth overnight — there just aren’t that many ad slots to go around.

5. Inventory is limited

Who doesn’t hope to generate more traffic out of their best performing targets? The problem is, there isn’t always more to get. You are probably pretty much maxed out when you reach a high click share for your top performers, or at a 99% impression share. If there is still inventory available, you can safely assume that incremental clicks will cost more than what you’re already forking out.

The only exception to this is if you’re sticking to a budget. If your campaigns are limited by a budget, you can open forecasts at a similar rate.

6. Investment in top-of-funnel will impact your bottom line.

The hardest to quantify and likely the most vital segment, be sure to check back on past campaigns and evaluate the down-funnel effect and the direct response. Whenever you launch a major campaign, you should expect to see a major lift in retargeting and brand volume. It can be hard to tell how much influence it has, however.

Look back to previous attempts to check how much of a down-funnel effect your investment had, as well as people’s reactions to your efforts. Using your Google Analytics data can greatly support your hypothesis in making a more data-driven decision.

Forecasting is still largely based on assumptions after all – keep in mind to add a probability to each outcome you’ve predicted, assigning a value to them after weighing its likelihood. After clearly defining your assumptions, you are more than ready to bring it up to the board with a higher value than its previously ill-judged projections.

Combine this with the lessons gleaned from a Digital Marketing Course – this way, you’ll ensure that you have something to cushion the blow should your forecasting efforts go down the drain. Either way, you are better off trying.