Giridhar Ramachandran

BM Term V Session 18
Recommender Systems – An overview

Imagine you are going to browse through the catalogue of items in

Then potentially there are tens of thousands of items in the catalogue if not many
more

There are two ways you can find what you are looking for

a. Search – if you really know what you are looking for, or

b. Use recommendations

The system recommends to you, certain items based on what it thinks you will be
interested in, based on what it knows about you.

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Moving from scarcity to abundance

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Moving from scarcity to abundance

Not a long while ago,

Shelf space for a limited resource with retailers – and so the retailer could carry
only a certain number of products

Similarly in the case of TV networks, movie theatres, …

But now, the web enables near-zero-cost dissemination of information about

products

Given rise to the long tail phenomenon

Products available on Amazon, Movies available on Netflix..

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Moving from scarcity to abundance

There are so many items in the

long tail that it can be very hard
for someone to look for what
they want.

How do you introduce to the

user items that they may not
find on their own?

Ans – Recommendation Engines

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Recommendation Engines Help with finding

Books, movies, news

People (friend recommendations on FB, LinkedIn, ..)

Into Thin Air made Touching the Void a bestseller!!!

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Types of Recommendations

Editorial and hand curated

‘Staff Picks’
List of favorites

Not user generated

Simple aggregates
Top 10, Most popular, Most downloaded

Not dependent on individual user, but on aggregate activity

Tailored to the Individual user

Amazon, Netflix, …

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Collaborative Filtering

Rejected by a lot of studios

Netflix using data to go

ahead and get the deal
- Users had approved of
the director (the social
network)
- Users liked the series on
BBC
- Users loved Kevin Spacey

They see what you are

watching!!

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The Amazon Example

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The Netflix Example

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Collaborative Filtering Approaches

Slope One

Ordinal Logit

Matrix Factorization

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Slope One method

User Movie 1 Movie 2

1 1 1.5

2 2 ?

? = 2 + (1.5 – 1) = 2.5

f(x) = x + b

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Slope One method

User Movie A Movie B Movie C

Giri 5 3 2
Kalyan 3 4 ?

Alok ? 2 5

Average difference between A & B [ for Giri and Kalyan]

= (2 + (-1))/2 = 0.5

Therefore estimated rating for Alok for Movie A = 2 + 0.5 = 2.5

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Slope One method

User Movie A Movie B Movie C

Giri 5 3 2
Kalyan 3 4 ?

Alok ? 2 5

Difference between A & C [ for Giri]

=3

Therefore estimated rating for Alok for Movie A = 5 + 3 = 8

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Slope One method

User Movie A Movie B Movie C

Giri 5 3 2
Kalyan 3 4 ?

Alok ? 2 5

Combining ratings of B and C and after weighting them

(2 * 2.5 + 1 * 8)/ (2 + 1) = 13/3 = 4.33

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Collaborative Filtering

Improvements in collaborative filtering can be done by using

- Correlation coefficients instead of number of ratings

- Clustering customers to find the best neighbor for slope one prediction
- Ordinal logit for model-based predictions
- Matrix factorization

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Movie database

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Movie database

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Ordinal logit models

Used when data represents a rating scale that satisfies the proportional odds
assumption

Used when distance between levels is not the same or is not known

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Ordinal logit models

From the book “Marketing Analytics” by Rajkumar Venkatesan

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Ordinal logit models

From the book “Marketing Analytics” by Rajkumar Venkatesan

Matrix Factorization
Netflix Universe

Mani

Hardeep

Mayur

Asha
Matrix Factorization

M1 M2 M3 M4 M5

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Matrix Factorization

M1 M2 M3 M4 M5

3 1 1 3 1

1 2 4 1 3

3 1 1 3 1

4 3 5 4 4
Matrix Factorization

M1 M2 M3 M4 M5

3 1 1 3 1

1 2 4 1 3

3 1 1 3

4 3 5 4 4
Matrix Factorization

M1 M2 M3 M4 M5

3 1 1 3 1

1 2 4 1 3

F1 F2 M1 M2 M3 M4 M5

1 0 3 1 1 3 1

0 1 1 2 4 1 3

1 0 3 1 1 3 1

1 1 4 3 5 4 4
Matrix Factorization

M1 M2 M3 M4 M5

1.2 3.1 0.3 2.5 0.2

Gradient Descent

2.4 1.5 4.4 0.4 1.1

Error function
F1 F2 M1 M2 M3 M4 M5

0.2 0.5 1.44 1.37 2.26 0.7 0.59

0.3 0.4 1.32 1.53 1.85 0.91 0.5

0.7 0.8 2.76 3.37 3.73 2.07 1.02

0.4 0.5 1.68 1.99 2.32 1.2 0.63

Association Rule Mining - Market Basket Analysis

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How does MBA work?
Association Rule Mining

Used to identify possible cross-sell opportunities based on patterns seen in the

shopping basket (transaction)

Product bundles are determined based on the strength of the co-occurrence

For a given rule A -> B

Support # A - > B/ Total transactions

Confidence # A->B/#A

Lift Support (A->B)/(Support A X Support B)

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