A Twitter Market Sizing

I wrote about my hypothetical Twitter customer segmentation recently, and I thought I’d follow up with a rough stab at a market sizing for Twitter advertising.  The exercise is helpful one for thinking about Twitter’s business model and potential revenue, even if some of the numbers are placeholders. Continue reading A Twitter Market Sizing

Another Market Sizing Trick - Employees

Apologies if you’re getting sick of seeing another post on market sizing, but I promise this one will be the last for a while.  The devil really is in the details when coming up with a convincing market size estimate, so I wanted to share one more technique that can help you deal with scarce data.  It’s estimating company revenue based on employee numbers, which are often easier to find or approximate than actual revenue. Continue reading Another Market Sizing Trick – Employees

A Full Market Sizing Example

While I’ve written a good deal about market sizing, I thought an actual example might be helpful.  So let’s see if we can figure out the market size for board games.  It’s a small enough market that public data probably isn’t overwhelmingly available, and there are some interesting considerations in terms of customer and product segments.

First, let’s clearly define the market.  We’ll include traditional games like chess and checkers, mainstream games (e.g., Monopoly), and specialty games.  Role-playing games will be excluded.  Traditional playing cards will also be excluded, as will newer card games like Magic.  To start with, we’ll look at the US in depth.  An international estimate will be harder since it would be difficult to gauge cultural attitudes towards board games and pricing differences. Continue reading A Full Market Sizing Example

Information Sources for Market Sizing

I described some general approaches to market sizing in a previous post, but one of the biggest challenges is not necessarily the overall process, but rather finding the right data.  This is true whether you’re doing top-down or bottom-up market sizing.  There are a number of valuable data sources out there, but for most US-centric market size analyses, the US Census is the best place to start.  They have a wealth of data both on US businesses and on population statistics.  The Bureau of Labor Statistics is also a great complement with its detailed information on consumer expenditures and time usage patterns. Continue reading Information Sources for Market Sizing

The Secrets of Market Sizing

Market sizing is a staple of consulting engagements, strategy development, investor pitches, and case interviews (e.g., classics like “how big is the market for golf balls in Japan?”).  Oddly enough, there’s very little publicly-available information on how to go about it.  Maybe that’s how consultants maintain demand for their services, or maybe it’s because no one wants you to know how shaky even the most frequently cited market size estimates can be.

Like forecasts, market size estimates should most often be considered directional (consulting speak for “in the right ballpark”).  You should also keep this point in mind when consuming market size information – the market size numbers you read in the news or market research reports are probably only accurate within 10-20% in many cases.  One of the best ways to ensure that you get at least a sensible result is to triangulate between different approaches: top-down and bottom-up estimates. Continue reading The Secrets of Market Sizing