Date:
American Public Media, Marketplace, July 26, 2010
Every time you swipe one a rewards card at a store, that data goes somewhere to get analyzed. Marketplace's Stacey Vanek-Smith takes a look at the multi-billion dollar data mining industry -- how it has evolved and where it will go.
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Those smart coupons are just the tip of the $100 billion data mining industry. Every time you search for something online, swipe your credit card or pull up directions on your cell phone, that action creates a little module of data about you. Data compilers collect that information and sell it -- usually millions of records at a time to marketers who use it to target consumers.
Robert Grossman heads the National Center for Data Mining.
ROBERT GROSSMAN: This allows better targeting with less effort that can be more widely used by more companies and hopefully increase their margins.
Collecting data is just the beginning, then someone needs to make sense of it. Someone like data analyst Peter Harvey, CEO of Intellidyn. A travel company, which was looking to sell high-end vacation packages to Asia, recently came to Harvey with data on millions of potential customers.
Peter Harvey: We pass 5,000 data elements across them and figure out which of them are most likely to travel.
The attributes of the Asian traveler?
Sound Montage: Wedding march, farmers, soldiers shouting, man singing "when I'm 64"
Turns out, if you're married, a farmer, ex-military and over 65, you want to go to Asia! Harvey says data mining can double or triple the response to an ad. And companies will be able to hone in on potential customers even more precisely as data gets more individualized. Sites like Google, Facebook and Foursquare track what you're buying, what you're looking to buy and where you are.
Andreas Weigend teaches data mining at Stanford.
Andreas Weigend: Traditionally, companies knew transaction data. They knew how many latte macchiatos were sold at this location. They didn't really know who they were sold to.
And now?
Weigend: The company could very well know who the person is based, for instance on his mobile phone's ID, and could have the coffee ready before the customer even orders it.
Virtually every large companies mines its data -- it's how Amazon and Netflix come up with those recommendations that entice you to buy another book, another movie. It's how iTunes knows that if you like this song...
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