Forecasting television ratings
Despite the state of flux in media today, television remains the dominant player globally for advertising spending. Since television advertising time is purchased on the basis of projected future ratings, and ad costs have skyrocketed, there is increasingly pressure to forecast television ratings accurately. The forecasting methods that have been used in the past are not generally very reliable, and many have not been validated; also, even more distressingly, none have been tested in today's multichannel environment. In this study we compare eight different forecasting models, ranging from a naïve empirical method to a state-of-the-art Bayesian model-averaging method. Our data come from a recent time period, namely 2004-2008, in a market with over 70 channels, making the data more typical of today's viewing environment. The simple models that are commonly used in industry do not forecast as well as any econometric models. Furthermore, time series methods are not applicable, as many programs are broadcast only once. However, we find that a relatively straightforward random effects regression model often performs as well as more sophisticated Bayesian models in out-of-sample forecasting. Finally, we demonstrate that making improvements in ratings forecasts could save the television industry between $250 and $586 million per year.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carmen Fernandez & E Ley & Mark F J Steel, 2004.
"Benchmark priors for Bayesian models averaging,"
ESE Discussion Papers
66, Edinburgh School of Economics, University of Edinburgh.
- Smith, M. & Mathur, S.K. & Kohn, R., 1997.
"Bayesian Semiparametric Regression: An Exposition and Application to Print Advertising Data,"
Monash Econometrics and Business Statistics Working Papers
13/97, Monash University, Department of Econometrics and Business Statistics.
- Smith, Michael & Kohn, Robert & Mathur, Sharat K., 2000. "Bayesian Semiparametric Regression: An Exposition and Application to Print Advertising Data," Journal of Business Research, Elsevier, vol. 49(3), pages 229-244, September.
- Smith, M. & Mathur, S. & Kohn, R., . "Bayesian Semiparametric Regression: An Exposition and Application to Print Advertising Data," Statistics Working Paper _010, Australian Graduate School of Management.
- Jeffrey H. Horen, 1980. "Scheduling of Network Television Programs," Management Science, INFORMS, vol. 26(4), pages 354-370, April.
- Givon, Moshe & Grosfeld-Nir, Abraham, 2008. "Using partially observed Markov processes to select optimal termination time of TV shows," Omega, Elsevier, vol. 36(3), pages 477-485, June.
- Allenby, Greg M. & Rossi, Peter E., 1998. "Marketing models of consumer heterogeneity," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 57-78, November.
- Kelton, Christina M. L. & Schneider Stone, Linda G., 1998. "Optimal television schedules in alternative competitive environments," European Journal of Operational Research, Elsevier, vol. 104(3), pages 451-473, February.
- Roland T. Rust & Mark I. Alpert, 1984. "An Audience Flow Model of Television Viewing Choice," Marketing Science, INFORMS, vol. 3(2), pages 113-124.
- Nikolopoulos, K. & Goodwin, P. & Patelis, A. & Assimakopoulos, V., 2007. "Forecasting with cue information: A comparison of multiple regression with alternative forecasting approaches," European Journal of Operational Research, Elsevier, vol. 180(1), pages 354-368, July.
- Danaher, Peter J., 1994. "Comparing naive with econometric market share models when competitors' actions are forecast," International Journal of Forecasting, Elsevier, vol. 10(2), pages 287-294, September.
- Srinivas K. Reddy & Jay E. Aronson & Antonie Stam, 1998. "SPOT: Scheduling Programs Optimally for Television," Management Science, INFORMS, vol. 44(1), pages 83-102, January.
When requesting a correction, please mention this item's handle: RePEc:eee:intfor:v:27:y:2011:i:4:p:1215-1240. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.