Data is letting us get what we want before we even realize we want it. Predictive analytics has been called "the next big thing." It's helping us elect presidents, assess health risks, match buyers with the products they want, detect fraud, and other things. I've written before on how predictive analysis is becoming more important for venture investors in determining how successful a company may be. This is all made possible as faster software and advanced databases bring about recommendations that are more efficient and accurate than ever before.
A 2014 TDWI report lists top five things predictive analytics are used for:
- Identify trends
- Understand customers
- Improve business performance
- Drive strategic decision making
- Predict behavior
Part of that "understanding customers" segment means, in part, accurately anticipating, then generating, the right content. Predictive models help Netflix recommend the right kind of movie titles for you, while ecommerce businesses attract and retain buyers by cross-promoting and maximizing consumption.
Now, companies that use Zendesk can, based on past trends, know how many customer support tickets may be opened in a given month, letting them apply the appropriate resources to make customers happy. This significant impact on consumers is "a true turning point for the database industry," says Adam Wray, CEO and president of Basho, a cloud infrastructure and database company.
Predictive Analytics is used for published content, as well. A 2012 VentureBeat article talked about a possible end to content search as we know it, and a migration to content discovery. "Web history search will help us truly understand a user’s interests, both explicitly declared, and implicitly learned," says Vijay Krishnan, Co-CEO of content discovery platform Flipora. "Discovery will be the natural evolution of web search itself."
The advancement of predictive analytics includes properly using users' social network data to understand their interests and preferences. That could mean no more searching for something you previously found but can’t locate now, or missing out on something that had valuable information you could have used. Entrepreneurs are creating new tools to help businesses as well as regular folks enjoy these types of advanced recommendation and predictive engines.
You may not have known it, but Amazon has actually patented the process of shipping an item to a customer in anticipation that the customer will order that product. They are essentially using big data insights to predict who will order what and when. In the realm of content, the aforementioned Flipora’s Discovery Engine uses predictive analytics and artificial intelligence (AI) to deliver personalized content for users (and in turn help the engine learn even more about their interests).
Investors are flooding into this emerging technology to help drive research and development. The market for predictive data is forecast to grow at a compound annual growth rate of 34 percent from 2012 to 2017 reaching $48 billion, according to Gartner. Flipora just raised $1.5 million in a new round of funding, helping drive its platform and app for iPhones and Android devices. Framed Data raised $2 million last year.
A lot of this has to do with the technology’s ROI. PredictiveAnalyticsToday.comconducted a poll this year to asses the return on investment for predictive analytics implementations. For 55 percent of those surveyed, the return on the money they spent was more than 21 percent. Twenty-five percent of the respondents achieved an ROI between 16 and 20 percent. In fact, 90 percent of surveyed companies with predictive analytics projects enjoyed returns of no lower than 11 percent of the money they spent.
Numbers like that are making "the next big thing" perhaps even bigger than we’d anticipated.