BIG D A TA H Y P E

(AND R E A L I TY )
Y P IA TE TSK Y-SHAPIRO
L YSIS OF ARTIC L E BY GRE GOR
ANA
 WHAT IS BIG DATA?

BIG DATA OFFERS

UNPRECEDENTED AWARENESS OF
PHENOMENA — PARTICULARLY OF
CONSUMERS’ ACTIONS AND
ATTITUDES
KEY INSIGHTS
DECISION-MAKERS WANT TO UNDERSTAND
THE PATTERNS IN THE PAST AND THE
PRESENT IN ORDER TO ANTICIPATE WHAT
IS MOST LIKELY TO HAPPEN IN THE FUTURE.
LET US LOOK AT SOME CASE
STUDIES:
#1. FILM RATINGS
•NETFLIX ROUTINELY SERVES UP PERSONALIZED
RECOMMENDATIONS TO CUSTOMERS BASED ON THEIR
FEEDBACK ON FILMS THEY’VE ALREADY VIEWED. THIS IS A
PREDICTION CHALLENGE.

• THE ERROR OF NETFLIX’S ALGORITHM WAS ABOUT 0.95 (USING A

ROOT-MEAN-SQUARE ERROR, OR RMSE, MEASURE), MEANING
THAT ITS PREDICTIONS TENDED TO BE OFF BY ALMOST A FULL
“STAR.”

• WITH THREE YEARS OF EFFORT BY SOME OF THE WORLD’S BEST

DATA MINING SCIENTISTS, THE AVERAGE PREDICTION OF HOW A
VIEWER WOULD RATE A FILM IMPROVED BY LESS THAN 0.1 STAR.
#2. CUSTOMER ATTRITION
• IF PREDICTIVE ANALYTICS DRAWING ON BIG DATA
COULD ACCURATELY POINT TO WHO IN PARTICULAR
WAS ABOUT TO JUMP SHIP, DIRECT MARKETING
DOLLARS COULD BE EFFICIENTLY DEPLOYED TO
INTERVENE, PERHAPS BY OFFERING THOSE WAVERING
CUSTOMERS NEW BENEFITS OR DISCOUNTS.
• THERE IS A LIMITING FACTOR TO PREDICTION
ACCURACY FOR CONSUMER BEHAVIOR SUCH AS
CHURN.
#3. WEB ADVERTISING
• THE AVERAGE CTR% FOR DISPLAY ADS HAS BEEN
REPORTED AS LOW AS 0.1-0.2%.
• BEHAVIOURAL AND TARGETED ADVERTISING HAVE
BEEN ABLE TO IMPROVE ON THAT SIGNIFICANTLY,
WITH RESEARCHERS REPORTING UP TO SEVEN-FOLD
IMPROVEMENTS.
• BUT STILL, SEVEN-FOLD IMPROVEMENT FROM 0.2%
AMOUNTS TO 1.4% — MEANING THAT TODAY’S BEST
TARGETED ADVERTISING IS IGNORED 98.6% OF THE
TIME.
RELEVANCE TO MANAGERS IN INDIA
 The randomness inherent in human behavior is the
limiting factor to consumer modelling success.

 Marginal gains can perhaps be made thanks to big data,

but breakthroughs will be elusive as long as human
behavior remains inconsistent, impulsive, dynamic, and
subtle.

 But when an activity is driven by consumers’ whims, no

amount of ingenuity can produce the ability to know
what will happen.
 Big data analytics can improve predictions, but the
biggest effects of big data will be in creating wholly new
areas.

 The success of facebook, twitter, and linkedin social

networks depends on their scale, and big data tools and
analytics will be required for them to keep growing.

 Big data will see its biggest and most important

application in the realm of artificial intelligence.
 So you should expect big
data to have big impact. And
you can bet that it will help
machines interact more
usefully with our
unstructured, changing, and
sometimes downright
confused human ways. But if
you’re counting on it to make
people much more
predictable, you’re expecting
too much.
THA NK Y OU !!
BY: TARANG JAIN