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This two-part series will kick-off with quite a high level introduction to the subject of forecasting, covering things such as:

• What is a forecast?

• Why is it important to forecast?

• What challenges are involved in forecasting?

In the next part, we’ll look at some practical tips and examples of how to actually create a useful, insightful forecast.

So, first things first, what is a forecast? 

Let’s start with the Wikipedia definition:

Forecasting is the process of making statements about events whose actual outcomes (typically) have not yet been observed.

It is helpful to break this short description down to help us get a more rounded understanding of what a forecast is and what it should aim to do:

‘Making statements about events’: a statement is different from a single figure, the expected outcome of many a forecast (very important, we shall come back to this).

‘About events whose actual outcomes have not yet been observed’:  predicting the future. How well is this generally done?

Using two key elements: 1) What we know has happened in the past. 2) What we ‘expect’ to happen in the future and what we ‘know’ will happen in the future.

Why are forecasts important? 

Sun Tzu, The Art Of War:

Know your enemy and know yourself and you can fight a hundred battles without disaster.

If you’ve not looked over the horizon, how can you prepare to act?

Forecasting is about knowing what to expect in the future, and goals should be what you would like to achieve in the future. Planning should be a response to forecasts and the first step in achieving your goals.

In short, a good forecast should help you set smart, achievable objectives and give you an understanding of how to achieve them (negotiating known challenges along the way). 

Common forecasting pitfalls

As would be expected, predicting future events is not free from difficulties and obstacles.

Here I wanted to highlight two of the common mistakes which can affect the quality and effectiveness of your forecasts:

Mistake #1: introducing too much bias

Whenever a forecast is required, there’s often an underlying motivation which can lead to the accuracy killer known as ‘bias’.

For example, a potential client asks you to forecast how much additional revenue you’ll drive each month until the end of the year.  

It’s a brave (but very sensible) soul who provides estimates which could be described as ‘cautious’. This scenario is common and dangerous: over-optimism at the sales stage can very often result in poorly managed expectations and the breakdown of the relationship is on the cards before the project has even begun.

As soon as too much bias is introduced you could make a case for no longer calling what you produce a forecast. Perhaps an ‘idealised vision of the future’ would be more apt.

Bias is such a problem because the nature of forecasting can lead to you making judgement calls about numerous future events: (Will this trend continue at pace or slow down? Will the Christmas uplift be as strong this year? Will the competition remain at the current level?).

There are wide margins within these judgements meaning the forecaster’s incentives start to influence the resulting outcome.

There is a great example of this related to Scotland’s upcoming Independence Referendum. Both sides have made conflicting claims of financial benefits should their side win:

• The Scottish government claims a £1,000 windfall should there be a ‘Yes’ victory

• The UK Treasury claimed Scotland’s residents would benefit to the tune of £1,400/person after a ‘No’ vote

How did they manage to differ in forecasts by £5bn? There are a number key assumptions which fall on different sides of the fence depending who is doing the forecast (nicely summarised here), the key one concerning North Sea Oil revenues.

A £4bn swing difference is introduced because of differing levels of optimism/pessimism, in the projected tax revenue (£6.9bn vs £2.9bn) 

Mistake #2: presenting a single data point, not a statement

We all know what a forecast looks like, right?

That was a loaded question.

As we’ve discussed, there are many unknowns and judgement calls involved in understanding our ‘future’. Each one of these will introduce a level of uncertainty and increase the margin for error.

This margin or confidence level is an important caveat which should be included, rather than presenting a ‘single-point’ forecast.

Not only are single-point forecasts less valuable (and in my experience, less actionable), but present a single-point forecast and the first time you miss that target, you could end up in hot water.

Recently, US food giant ConAgra’s market valuation dropped ~$1bn when it failed to hit its forecasted revenue.

An interesting article on Forbes claims that had a range forecast (allowing for best/worst case scenarios) been carried out, this would have prevented the loss in value by preparing the market/shareholders for all eventualities (thus preventing panic or the view that they’d failed to hit ‘targets’).

A range forecast should include a ‘maximum’, e.g. the case where opportunity is fully realised, and a ‘minimum’, e.g. the case where the most pessimistic predictions turn out to be true.

An illustrated forecast may look like this:

The final missing component of our ‘statement’ (which we’ll discuss further in part two) is confidence.

Not just a gut feeling (“I’m totally confident I’ll double your revenues, halve your costs”, etc.), a confidence interval is a statistical measure of how accurate an estimate is.

If a forecast is created as a result of sound statistical methods then it should be possible to put a figure on this to provide further context to what you present as a forecast.

For example, we can say ‘the chart above represents our forecasted revenues with a confidence level of 95%”. In plain English, “we are 95% certain the actual figure will fall between our maximum and minimum”.

Conclusion 

The ‘statement’ and accompanying set of figures which make up a good forecast in my opinion can provide us with a very useful starting point for planning to hit our goals.

If our target revenue sits toward the maximum prediction:

• How can we maximise the potential of predicted opportunities?

• Do we need to adjust marketing budgets in particular areas to help boost overall volumes?

• Should targets actually be revised ahead of time to ensure realistic expectations from shareholders/clients/superiors?

If actual figures are below the mean value:

• Can we identify and troubleshoot what is falling below expectation and make a plan to improve?

• Do we need to add additional activities to our existing marketing mix to get back on course?

There are, of course, many more difficulties (not enough data, unknown unknowns, etc.) and complexities to forecasting, but approaching the problem with a clear idea of what the end result should be will be very useful when it comes to overcoming the issues you come across.

Posted by Isla_McKetta

Write it and they will come. That’s the drum we’ve been beating for a long time now. We optimize our pages and our content to please search engines and cross our fingers and hope that customers will convert.

We can do better.

But to do it, we have to think beyond Google. Yes, you still need to check all your standard SEO boxes to make your site crawl friendly. Then it’s time to stop catering to the bots and start catering to the users instead.

That means we have to—no, we get to—think bigger when we think of SEO. As Rand said in his Whiteboard Friday last week, “SEO is really any input that engines use to rank pages.” That’s why we have to reexamine the way we design, the way we create, and the way we optimize. Most importantly, we’re going to have to reconsider the underlying logic we use to approach all three of those activities as we learn to think of the user first and the bots second.

This idea of blending search and user optimization isn’t new. But when Gianluca Fiorelli called for a shift from semantic to semiotic thinking on State of Digital, he got me thinking about whether semiotics are the next step in earning the audience you want.

What the heck is semiotics?

Semiotics is the study of the creation of meaning. Semioticians look at everything—words, images, traffic lights, kinship structures—and study what those signifiers (signs or anything that signifies anything) mean and how people create meaning from those signs.

Semiotics is composed of three parts: syntactics, semantics, and pragmatics. When we’re approaching user optimization from a semiotic point of view, we’re shifting from a focus on semantics to an incorporation of all three elements.

Let’s get to know them.

Syntactics (form)

Syntactics (more commonly called “syntax”) is the study of the formal relationship between signs. Think of syntax as dealing with grammatical rules, form, and spatial order. Syntax is why you place “inurl:” before the url in a query instead of after. Syntax can be as arbitrary as the order of lights in a traffic light, but it is unchanging.

In grammar, syntax is why you say “oranges are good” but Yoda says “good are oranges.”

Syntax is so embedded in search these days that we don’t even talk about it, and as long as your code is in the right order and the content on your pages is written for users who aren’t Yoda, you’ve mastered syntax. Hooray!

Semantics (meaning)

Semantics is the study of conventional meaning. Let’s take the word “orange.” It can mean either the fruit or the color.

Whether or not you use semantic markup, search engines are usually capable of reading the context on a page and returning a result for either the fruit or the color, depending on the parameters you entered. Crawlers have been using things like context, synonyms, taxonomy, and information architecture to determine the relevance of search results for a very long time. When Hummingbird came along, the semantic nature of search became more obvious because we could see that Google is looking at queries and not just keywords.

If you’re keeping score, we’re already thinking about and optimizing for two elements of semiotic thinking. And we’ve caught up with the latest algorithm updates. But syntax and semantics aren’t the whole story when it comes to how humans create and understand information.

Enter pragmatics.

Pragmatics (use)

You (and your customers) bring a whole life’s experiences into any interaction whether it’s reading a website or chatting someone up at a cocktail party. Those experiences shape the way you interpret images and words.

For example, if you’re a soccer fan, the way you fell about the word “orange” could be affected by how much you like or hate the Dutch national team whose nickname is “Oranje.”

And if you’re color blind, “orange” could mean any of these colors depending on the exact type of color blindness you have:

“Orange” also has political connotations:

Photo of Orange Revolution courtesy of Wikipedia user Irpen. 

The point is that search engines know the dictionary definition of a word. They can even learn about the associations you have by the search terms you enter. But they do not inherently understand (yet) the richness of your personal relationship with a word and the myriad other factors that go into creating meaning for you.

Pragmatics is your opportunity to create a site that engages with all of those connotations in order to create a stronger bond with your customers.

Knock, knock.

Who’s there?

Banana.

Banana who?

Banana.

Banana who?

Orange.

Orange who?

Orange you glad I didn’t say “banana?”

Pragmatics in action

Pragmatics is also a way of describing how complicated our relationship with information inputs is.

Say you see something crazy in your Facebook feed like an article claiming, “Solar Panels Drain the Sun’s Energy, Experts Say.” Your job is to decide whether to share, comment on, or ignore that link. First you have to understand what it means, which in this case is figuring out if it’s good science, bad science, or satire.

Here is the process a human might go through as you use pragmatic interpretations to figure out how not to sound like a dope when replying to this post.

1. Consider the source

The article is from the National Report, which is not a household name. If it was from The New York Times,  it might be time to panic, but in this case, you’ll want to dig a little deeper.

2. Evaluate the content

Human thought is remarkably complex and here are just a few of the signs you might consider while trying to make sense of this article:

3. Check the internet

It seems like this article is probably satirical, but to be safe, you can do what a lot of us do—Google “National Report” (and no, the irony of using to a search engine to prove that human users can make better connections than search engines is not lost on me). And then ask Wikipedia.

You could have made a decision about this article on a syntactic level (the sentences made sense even though the content seemed farfetched). You could even have interpreted it on a semantic level (both Googling the article and the Wikipedia search).

But what many readers need to fully understand this article is the pragmatics of assessing the signs.

So that’s a pretty deep dive just to decide to ignore a Facebook post. But the point is that your customers do this all the time, and the huge number of factors that go into showing us whether we should engage with your site and its content are more than search engines can currently look at. 

That’s semiotics. The whole bundle of syntax, semantics, and pragmatics. And we’re doing pretty well with two parts of it, but there’s still a lot of opportunity in pragmatics.

Incorporating semiotic thinking into your web design and content

To recap: search engines aren’t sophisticated enough to know what pragmatic associations your customers bring into a search, but your customers are naturally bringing in layers of context, preferences, and life experience. Which means there are many layers on which you can engage with a customer that search engines can’t yet understand.

Here are some examples of ways to use pragmatics to connect with your audience.

1. Use satire or other humor

As with the solar panels article, some stuff on the internet seems too crazy and stilted to believe until you put it in context. The Onion has mastered this (and they have the engagement to show it). Robots don’t get humor, but humans do, and being funny (when appropriate) makes your site memorable.

2. Build a lexicon for your content

Use a lexicon (a list of commonly used words, slang and/or jargon specific to your audience) to understand the (rapidly evolving) way that your customers speak and communicate with them in their own language. Think about your users and what the words you’re using signify for them. Are they hearing the same things you are saying? If not, fix it.

3. Consider culture in your design

Connect with your audience by designing a site that speaks to their ideas of beauty and the way they process information. See how the US version of Shu Uemura’s site is clean and spare like many American sites (or, for that matter, Wyoming)? 

Meanwhile the Japanese version showcases more information in a compact space (kind of like downtown Tokyo).

What I love about this example is that the brand aesthetic carries across cultures—only the way that brand is interpreted that changes.
Cultural considerations can include anything from views on gender to perceptions of color. For example, in parts of Asia, purple is associated with luxury, while in the US it’s associated with low prices. Check out this
excellent slide deck by Smith Prasadh to learn more about how differently humans can see the world (and how you can use that to connect with your audience).

4. Capture tangential relationships

Engagement doesn’t have to be about your product. Just take a look at what Emirates, a major sponsor of the World Cup, did in customizing their hero image for each target market. The global English version is pretty straightforward.

Things get more personal for Chilean visitors as Emirates tailors not just the flag, but also the copy (using the English version for consistency).

But the best, most customized version of this campaign is the one created for Brazilians. It’s so tailored, in fact, that I had to look up a couple of things. The stripes on the flight attendant’s cheeks are not the Brazilian flag, but instead represent the colors of the Brazilian team. And “Little Canary” is a nickname for the team.

I’ll bet that Google doesn’t care one single bit about these customizations. Even if they can read the text on the images. But my guess is that Emirates has scored a major goal in terms of customer “team” feeling with this campaign which should increase their direct traffic.

5. Incorporate metaphor into your design

Tired of the same old templates and stock photos? Your customers are too. Use images to evoke metaphor like Austin-based Write Bloody Publishing does here to capitalize on the do-it-yourself feeling of the Wild West.

Think about what makes your company unique and own that story with your design. It will make you stand out from the crowd.

Another way to do this is to reconsider your site nav with an eye toward metaphor. Maybe you’re a game company like 2K Games and you want your customers to feel like they are already immersed in your game, say BioShock, as they interact with your site. The first step would be to build a navigation that encourages that kind of feeling. Have your user enter the site as they would enter Rapture—through the bathysphere. Showcase game add-ons as plasmids. And use cutscenes to hint toward exciting features on the site just as you would in the game.

As long as you don’t throw your SEO training out the window, it’s okay to try something new and see if it speaks to your customers. If it doesn’t, try something else. As Lindsay Wassell said yesterday at MozCon, “The internet rewards innovation. Search engines reward innovation.” Be that innovator.

Those are just a few examples. The opportunity in thinking semiotically as you design, create, and optimize is to engage with your customers on a human level. This naturally builds your brand affinity, which should increase your traffic.

I’d love to hear about how you’re using pragmatics to build nuanced relationships with your customers.

Your mission

Let loose your creative team. No one wants to be an SEO copywriter or an SEO designer. When you’re optimizing a site in any way, think first about the user—the one with the most sophisticated relationship—then make sure that your standard SEO boxes are checked. Anything less is like dumbing down a parallax experience to a simple sketch to make sure Google fully understands it fully.

Now go off and use pragmatics to relate to your customers in such a way that so many customers come to your site and engage in such great numbers that the search engines chase you trying to figure out how you did it. You’ll be prepared if Google’s algorithm ever learns how to account for pragmatics, and it beats you chasing rankings any day.

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