Why Revenue Forecasting Is a Top Priority for Media Finance Teams
Media CFOs have kept an even closer eye than usual on their revenue projections in the last year. Optimism is currently up, but outlooks have fluctuated as rapidly as subscriber growth and churn rates. Media finance executives are looking for ways to more accurately forecast revenue. In fact, forecasting is the skill that CFOs most want to improve right now (right along with data analytics).
Unfortunately, outdated systems are blocking about 90 percent of the media finance executives we talk to.
Our industry changes a lot faster than legacy tools like Excel can keep up.
The rise of direct-to-consumer platforms has given companies a wealth of real-time data, but many media finance teams don’t have the necessary tools to ingest that information in a timely, cost-effective way. They can’t generate predictive revenue insights or actionable forecasts. Usually, they rely on humans: experts and analysts in high demand, who can’t possibly find and correct every error. As a result, a lot of risks and opportunities are going undetected these days.
Media CFOs are starting to consider where modern automation and artificial intelligence tools can play a role in revenue forecasting. There’s a lot it can do, so figuring out where to invest can be daunting.
If your finance team is wondering where AI can add the most value, it’s worthwhile to consider the following questions.
- Is my current forecasting model valid? If you’re not confident in your projections, AI forecasting tools can test and improve accuracy.
- How is my revenue tracking against forecast? AI can expose current and potential gaps – what would a 5% distributor rate drop mean? – and the reasons behind them.
- Is my budget on track with expected revenues? Capital allocation is currently a focal point; use AI to forecast and plan for potential changes to your cash flow.
- Are my revenue objectives achievable? AI and machine learning algorithms eliminate bias and correctly weight variables for more realistic projections.
- What are we missing? Anomalies, risks, and opportunities are hidden under layers of data. AI is the best way to see into the unknown unknowns.
In our current environment, AI software for media and entertainment companies offers a greater level of certainty – and provides the greatest chance for sustained growth.