1) The document discusses the limitations of using big data and predictive analytics to model human consumer behavior, giving examples where improvements have been small even with large datasets and prizes. 2) Specifically it examines the areas of film ratings predictions by Netflix, customer attrition predictions, and web advertising click-through rate predictions. 3) The key point is that while marginal gains can be made, major breakthroughs are unlikely because human behavior remains inconsistent, impulsive, and dynamic.

1. {
Big Data Hype
(and Reality)

2. ‘The randomness inherent in
human behavior is the limiting
factor to consumer modeling
success.’

3. Three areas where better
prediction of consumer
behavior would clearly be
valuable are:

4. 1)Film ratings

5. {
Netflix Competition

6. the error of Netflix’s own algorithm was about
0.95-meaning that its predictions tended to be off
by almost a full “star.”
After a 3 year gap and million dollar prize, the
average prediction of how a viewer would rate a
film improved by less than 0.1 star.

7.  When an activity is driven by
consumers’ whims, no amount of
ingenuity can produce the ability to
know what will happen.
2)Customer attrition

8. Analysts measure how accurate
the list of potential churners is
by using a measure called “lift.”

9.  challenge of predicting the
click-thru rate (CTR%) of an
online ad — clearly a
valuable thing to get right.
We should exclude search
advertising, where the ad is
always related to user intent,
and focus on the rates for
display ads.
3)Web advertising response

10. meaning that
today’s best
targeted
advertising is
ignored 98.6% of
the time.
 average CTR% for display ads has been reported as
low as 0.1-0.2%. that a seven-fold improvement from
0.2% amounts to 1.4%

11. Big data will see its biggest and
most important application in the
realm of artificial intelligence.
We NEED TO FOCUS
ON:

12. Predictive
analytics can
figure out how to
land on Mars, but
not who will buy a
Mars bar.

13. {
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.
Fun Fact!

14. {
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.

15. THANK YOU