Advertising and Predictive Markets

Brandweek ran a story about how agencies and advertisers are using predictive markets (wiki) to forecast campaign effectiveness. To see one such market in action, check out Hollywood Stock Exchange that investors are using to estimate ticket sales (a 2005 IHT article has more).

From the Brandweek piece:

"The mechanisms, called predictive markets, don't always exactly mirror the stock market, but they basically work like this: Employees and consultants bet money on possible outcomes. The outcome that most people bet on is considered the most accurate.

Consensus Point, a Nashville, Tenn., firm that works with Best Buy, General Electric, Nokia and Samsung, has been offering such predictive market software for about 13 years, but company president Dave Perry said there's been a big spike in demand over the past two.

Masterfoods, meanwhile, used a predictive market for a pet food launch last year, said Emile Servan-Schreiber, CEO of NewsFutures, a Baltimore predictive market software firm."
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