Marketing Analytics

Introductory Chapter

What is AI?
Artificial intelligence (AI) is the ability of a computer program or a machine to learn, think and decide
like a human being.
How are businesses using artificial intelligence?
Artificial intelligence (AI) is steadily passing into everyday business use. From workflow management to
trend predictions, AI has many different uses in business. It also provides new business opportunities.
Application of artificial intelligence in business:
1. Improve customer services - e.g. use virtual assistant programs to provide real-time support to
users (for example, with billing and other tasks).
2. Automate workloads - e.g. collect and analyze data from smart sensors, or use machine learning
(ML) algorithms to categorize work, automatically route service requests, etc.
3. Optimize logistics - e.g. use AI-powered image recognition tools to monitor and optimize your
infrastructure, plan transport routes, etc.
4. Increase manufacturing output and efficiency - e.g. automate production line by integrating
industrial robots into your workflow and teaching them to perform labor-intensive or mundane
tasks.
5. Prevent outages - e.g. use anomaly detection techniques to identify patterns that are likely to
disrupt your business, such as an IT outage. Specific AI software may also help you to detect and
deter security intrusions.
6. Predict performance - e.g. use AI applications to determine when you might reach performance
goals, such as response time to help desk calls.
7. Predict behavior - e.g. use ML algorithms to analyze patterns of online behavior to, for example,
serve tailored product offers, detect credit card fraud or target appropriate adverts.
8. Manage and analyze your data - e.g. AI can help you interpret and mine your data more
efficiently than ever before and provide meaningful insight into your assets, your brand, staff or
customers.
9. Improve your marketing and advertising - for example, effectively track user behavior and
automate many routine marketing tasks.

1
Examples of artificial intelligence use in business
Artificial intelligence (AI) is all around us. You have likely used it on your daily commute, searching the
web or checking your latest social media feed.
Whether you're aware of it or not, AI has a massive effect on your life, as well as your business. Here are
some examples of AI that you may already be using daily.
Artificial intelligence in business management
Applications of AI in business management include:

• spam filters
• smart email categorization
• voice to text features
• smart personal assistants, such as Siri, Cortana and Google Now
• automated responders and online customer support
• process automation
• sales and business forecasting
• security surveillance
• smart devices that adjust according to behavior
• automated insights, especially for data-driven industries (e.g. financial services or e-commerce)
Artificial intelligence in e-commerce
AI in e-commerce can be evident in:

• smart searches and relevance features

• personalization as a service
• product recommendations and purchase predictions
• fraud detection and prevention for online transactions
• dynamic price optimization
Artificial intelligence in marketing
Examples of AI in marketing include:

• recommendations and content curation

• personalization of news feeds
• pattern and image recognition
• language recognition - to digest unstructured data from customers and sales prospects
• ad targeting and optimized, real-time bidding
• customer segmentation
• social semantics and sentiment analysis
• automated web design
• predictive customer service

2
Big data
Big data is a term that describes the large volume of data – both structured and unstructured – that
inundates a business on a day-to-day basis. But it’s not the amount of data that’s important. It’s what
organizations do with the data that matters. Big data can be analyzed for insights that lead to better
decisions and strategic business moves. Big data is larger, more complex data sets, especially from new
data sources. These data sets are so voluminous that traditional data processing software just can’t
manage them. But these massive volumes of data can be used to address business problems you wouldn’t
have been able to tackle before.
3 Vs of big data
The term “big data” refers to data that is so large, fast or complex that it’s difficult or impossible to
process using traditional methods. The act of accessing and storing large amounts of information for
analytics has been around a long time. But the concept of big data gained momentum in the early 2000s
when industry analyst Doug Laney articulated the now-mainstream definition of big data as the three V’s:
Volume: Organizations collect data from a variety of sources, including business transactions, smart
(IoT) devices, industrial equipment, videos, social media and more. In the past, storing it would have been
a problem – but cheaper storage on platforms like data lakes and Hadoop have eased the burden.
Velocity: With the growth in the Internet of Things, data streams in to businesses at an unprecedented
speed and must be handled in a timely manner. RFID tags, sensors and smart meters are driving the need
to deal with these torrents of data in near-real time.
Variety: Data comes in all types of formats – from structured, numeric data in traditional databases to
unstructured text documents, emails, videos, audios, stock ticker data and financial transactions.

Volume The amount of data matters. With big data, you’ll have to process high
volumes of low-density, unstructured data. This can be data of unknown
value, such as Twitter data feeds, clickstreams on a webpage or a mobile
app, or sensor-enabled equipment. For some organizations, this might be
tens of terabytes of data. For others, it may be hundreds of petabytes.

Velocity Velocity is the fast rate at which data is received and (perhaps) acted on.
Normally, the highest velocity of data streams directly into memory
versus being written to disk. Some internet-enabled smart products
operate in real time or near real time and will require real-time
evaluation and action.

Variety Variety refers to the many types of data that are available. Traditional
data types were structured and fit neatly in a relational database. With
the rise of big data, data comes in new unstructured data types.
Unstructured and semi-structured data types, such as text, audio, and

3
 video, require additional preprocessing to derive meaning and support
metadata.

How Big Data Works?

Big data gives you new insights that open up new opportunities and business models. Getting started
involves three key actions:
1. Integrate
Big data brings together data from many disparate sources and applications. Traditional data integration
mechanisms, such as ETL (extract, transform, and load) generally aren’t up to the task. It requires new
strategies and technologies to analyze big data sets at terabyte, or even petabyte, scale.
During integration, you need to bring in the data, process it, and make sure it’s formatted and available in
a form that your business analysts can get started with.
2. Manage
Big data requires storage. Your storage solution can be in the cloud, on premises, or both. You can store
your data in any form you want and bring your desired processing requirements and necessary process
engines to those data sets on an on-demand basis. Many people choose their storage solution according to
where their data is currently residing. The cloud is gradually gaining popularity because it supports your
current compute requirements and enables you to spin up resources as needed.
3. Analyze
Your investment in big data pays off when you analyze and act on your data. Get new clarity with a visual
analysis of your varied data sets. Explore the data further to make new discoveries. Share your findings
with others. Build data models with machine learning and artificial intelligence. Put your data to work.

4
What is Marketing Analytics?
A practice of measuring, analyzing and managing marketing performance to maximize its effectiveness
and optimize the return on investment. It transforms data into insight for making better business
decisions. It enables us to make data-driven decisions rather than decisions that are intuitive or based on
observation alone.

Types of data analytics:

There are 4 different types of analytics. Here, we start with the simplest one and go further to the more
sophisticated types. As it happens, the more complex an analysis is, the more value it brings.

Descriptive analytics
Descriptive analytics answers the question of what happened. Let us bring an example from ScienceSoft’s
practice: having analyzed monthly revenue and income per product group, and the total quantity of metal
parts produced per month, a manufacturer was able to answer a series of ‘what happened’ questions
and decide on focus product categories.
Descriptive analytics juggles raw data from multiple data sources to give valuable insights into the past.
However, these findings simply signal that something is wrong or right, without explaining why. For this
reason, our data consultants don’t recommend highly data-driven companies to settle for descriptive
analytics only, they’d rather combine it with other types of data analytics.
Diagnostic analytics
At this stage, historical data can be measured against other data to answer the question of why something
happened. For example, you can check ScienceSoft’s BI demo to see how a retailer can drill the sales and

5
gross profit down to categories to find out why they missed their net profit target. Another flashback to
our data analytics projects: in the healthcare industry, customer segmentation coupled with several filters
applied (like diagnoses and prescribed medications) allowed identifying the influence of medications.
Diagnostic analytics gives in-depth insights into a particular problem. At the same time, a company
should have detailed information at their disposal, otherwise, data collection may turn out to be individual
for every issue and time-consuming.
Predictive analytics
Predictive analytics tells what is likely to happen. It uses the findings of descriptive and diagnostic
analytics to detect clusters and exceptions, and to predict future trends, which makes it a valuable tool for
forecasting. Check ScienceSoft’s case study to get details on how advanced data analytics allowed a
leading FMCG company to predict what they could expect after changing brand positioning.
Predictive analytics belongs to advanced analytics types and brings many advantages like sophisticated
analysis based on machine or deep learning and proactive approach that predictions enable. However, our
data consultants state it clearly: forecasting is just an estimate, the accuracy of which highly depends on
data quality and stability of the situation, so it requires careful treatment and continuous optimization.
Prescriptive analytics
The purpose of prescriptive analytics is to literally prescribe what action to take to eliminate a future
problem or take full advantage of a promising trend. An example of prescriptive analytics from our
project portfolio: a multinational company was able to identify opportunities for repeat purchases based
on customer analytics and sales history.
Prescriptive analytics uses advanced tools and technologies, like machine learning, business rules and
algorithms, which makes it sophisticated to implement and manage. Besides, this state-of-the-art type of
data analytics requires not only historical internal data but also external information due to the nature of
algorithms it’s based on. That is why, before deciding to adopt prescriptive analytics, ScienceSoft
strongly recommends weighing the required efforts against an expected added value.