Rocket fuel for advertising – the future is Artificial Intellgence

wargames - AI in action and a little less powerfu than Rocket Fuel
wargames – AI in action and a little less powerfu than Rocket Fuel

Advertising was never a very exact science, we all knew that 50% of our spend was wasted (but famously didn’t know which 50%), but that’s all changed now and changed forever.

I was lucky enough to be in a presentation from Lucy Arkwright of Rocket Fuel, who’s strapline is a rather cool ‘Artificial intelligence. Real results’. I haven’t seen a more amazing presentation in some time.

In short, what Rocket Fuel do is use single pixels on page to track a users real traffic. Then, using Artificial Intelligence (ie learned behaviour) they build up a picture of your real internet usage and shopping habits. It’s far more than just clicking likes, it’s about behaviours and real moves to action. So, less of what you say you’ll do and all about what you actually do.

As an example, with a traditional ad for a dishwasher, the agency buyer would just buy space in a magazine and hope enough people looking to buy their dishwasher wandered past and happened to want one at that point in time.

This was largely replaced by behavioural retargeting of ads (those ones that follow you around on the internet) which repeatedly show you dishwasher ads if you have ever clicked through to a site selling dishwashers or large kitchen appliances.

What the Rocket fuel system does is understand your specific behaviour. It begins to learn what brands you are most likely to buy and when you are really in the market to buy them. It knows to stop serving you ads when you have seen it more than a given number of times (your personal preferred number and not the rest of the worlds) and then stop serving you ads if you have actually bought a dishwasher from anywhere online. It’s like the Perfect Market, but all the sellers now have all the information. It’s a perfect, perfect market.

The AI bit is the really clever technology. This learned behaviour is done through a billion decisions per second that the system makes about how you like to think, shop and browse online. And this doesn’t just change the game a bit, it changes it completely.

I’ll leave you with a stat to prove the point.

The average click through rate (CTR) on a conventional online display ad is 0.03%, so all in all, pretty wasteful. and clicks aren’t anywhere near as good as actual conversions.

In one of the Rocket fuel examples, they showed that 40 percent of purchases of new BMWs in North America in the second quarter of 2012 were influenced by Rocket Fuel advertisements.

None of us had actually noticed that it wasn’t 50% of our ad spend being wasted, it was 99.97% being wasted. And it’s now with this system it’s back to being closer to 50% again.

When this technology rolls down to smaller users, it will change the way advertising is bought and sold completely. And forever.

Wow, just wow.

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What Chance do Comet and any other electrical retailer have?

What chance Comet and any other underfunded high street retailer?
What chance Comet and any other underfunded high street retailer?

Sadly, on November 2nd Comet slipped into administration. It was probably inevitable, even though it was only purchased by private equity firm OpCapita last year for £2. I guess they overpaid for the 236 stores.

Maybe i’m an idealist, but I do think these stores have a place in the market and this is where I see it.

1. They are brand showrooms. They price match any price anywhere on the Internet. It means they will lose out on some margin on sales to those who are price sensitive, but reward the ones who make all the effort to search for the best online price (like I do). There is no substitute for seeing the product and pressing the buttons and you just can’t get this from a photo online.

2. They then charge for delivery or installation as no Internet retailers seem to offer this.

So, is this possible?

Amazon seem to be able to match any online price pretty closely and whilst they don’t have 236 stores, they still have lots of warehouse space and staff. My suspicion is that the rent and rates on the stores are simply too high to make these spaces pay. I hope Comet survive. Not because I am a fan per-se, but because I believe in choice. I don’t want to just buy from Amazon and John Lewis, but I do want to be rewarded with a better price for my research and for making the effort to drive out to see them in their store.

PS

I just went down to Comet in Nottingham Castle Marina. The only sign of any change at all is an A4 sheet in the window. It isn’t a bad looking store really and the staff I spoke to were all friendly and helpful. The staff have said that anything can be sold at face value only, no gift cards and no discounts. It did look a little like it had been robbed as there were lots of gaps in the stock (particularly in the upstairs bit!). Expect a fire sale soon.

PPS

Interestingly, when they bought the cahain, they said they would focus on low prices http://www.opcapita.com/news/OpCapita-puts-focus-on-value-at-Comet What i’m suggesting is just that.

Solar panels installed for £500 – rent your roof

Solar panels on a domestic roof - hardly gorgeous are they?
Solar panels on a domestic roof - hardly gorgeous are they?

I have just been leafletted with a flyer promising the installation of 25m2 of solar panels on my roof for £500 against a normal price of £14,149.

It sounds to good to be true. Because I think it actually is.

With this deal, you don’t benefit from the feed in tariffs that could be as high as £1,100 per year, but you do get some amount of free electricity. The installers claim this will be about £175 per year – so a payback on your investment in under three years and then lower electricity bills for the next 22 after that.

You actually rent your roof out to the investor who takes all of the tariff and lets you keep the free electricity as your contribution.

Maybe it’s win, win and maybe I’m being cynical, but the Daily Mail ran an article last year about them being installed free. The £500 is obviously to pay commission to the ‘Surveyors‘ (or door to door sales people as they are really).

Anyone got any experience of this?

The other big concern is what happens at the end of the life of the solar panels?

Are they really that green? can something that has taken that much energy to manufacture and distribute ever be really green?. This little article says not, but maybe they can be in the future. Maybe our green superhero Simon Spuddey Dare can shed some light?

Thanks to Integr8x for the image

Quango redundancies – A kick start to the economy?

quango_staff_strike_for_fair_pay
Quango staff strike for fair pay (off)

This is not meant as any form of political comment, just an observation. I don’t believe any of the parties would have acted any differently, all would have made savage cuts to the government run/funded quango staffing levels.

There are a huge number of people who were given notice soon after the election. Their quango was closing or they were just put on notice to reduce headcounts. An awful lot of them have reached the end of their consultation period and will be out of work by the end of February.

This is NOT the case with most everyday public sector employees and and I have been told in no uncertain circumstances by a friend that most local government employees will only receive the standard 1.5 weeks per year if they are over 40, but with a max of £380 per week,

The quango redundancies do create a few interesting economic scenarios.

1. Some of them will be getting thumping big pay off’s

Government Quango redundancy doesn’t seem to work quite the same as private sector or local government sector. Over here, if we are between 21 and 40 years old, we get a week per year served. Some may choose to enhance it a little. At 40+ years old, this is ramped up to 1.5 weeks per year. Ten years gets you 10 weeks pay. 22 years, may get you 30 weeks. This may be subject to that limit of £380 per week, so hardly get rich quick stuff.

In the Quangos, the person I know will get a cumulative redundancy allowance. So for ten years service they get 1+2+3+4+5+6+7+8+9+10 = 58 weeks. Wow! The first £30k is tax free too. This will be a big outgoing for the public purse in one single month.

I’d love to know how many people get this deal and how many get the normal one like the rest of us.

2. The respend may be the kick the economy needs to get it going

With that much money swilling about in the economy, a huge amount will be respent.

Mortgages will be paid off, freeing bank cash to lend again – maybe to first time buyers?

Building work will be done, helping boost the skilled trades economy

Lots of cars, and gadgets will be bought – most of which is exported cash, but at least a boost for UK retailers after a dodgy Christmas.

3. Tough to cope with

The biggest concern has to be that many of these services that are being removed will just be subcontracted to the private sector and some of the people made redundant taken on to do the actual work. Audit work is likely to be taken over by the accountancy firms and I can’t believe they will be able to deliver the same level of independent scrutiny for less money. Can they be truly independent if they are in danger of losing their contract renewal?

Thanks to elhamalawy for the cool image