Monday, August 1st, 2011...10:37 pm
The cool kids in the digital world have been pumped by the innovations in social media and mobile apps over the last few years. There’s a big wide web full of friends, followers, circles, deals, apps, likes and +1’s. Us social media gurus in the know are often quick to preach to the digitally unenlightened on how platforms like Twitter, Facebook and Android are changing the goddamn world.
I’ve been moping around the digital block for a quick minute. Hopefully that gives me a bit of context and insight into what’s the next big thing. Actually, it’s being calculated as we speak. That’s because it’s Data.
I know. I know. The meaningfulness of data falls somewhere between a mid-afternoon snoozer and the name of the little Asian kid in The Goonies. Leave it to the 1999 Great Neck North math team co-captain to proselytize the power of numbers. For most, data is something for the database marketing guy to crunch, research nerd to dive into or Mathematics professor to compute.
But here are two of the experiences that smacked me upside the head and made it apparent that data is the future.
In March, I attended the MIT Sloan Sports and Analytics Conference in Boston. I met lots of really smart people using data in professional sports to influence strategy, scouting and coaching. All these nerds are convinced they are way more right than the norm and the results are starting to show. Moneyball, by Michael Lewis (and soon to be a major motion picture), brought this concept to the sports fan and that sports analytic has now permeated throughout pro sports. The NBA Champion Dallas Mavericks are big believers in data mining and statistical analysis and give their own “stat geek”, Roland Beech, a seat on the bench. Most NBA teams now have their own analytics departments. It will be more impactful than when sports teams first started to watch game tape.
I recently had the good fortune of attending Darren Herman’s Silicon Alley Invitational tournament. The high-caliber group of advertising executives is focusing on how to solve advertising. The consensus of some very brilliant people all seem to focus on how to utilize data to create more effective and efficient marketing campaigns. This is generally referred to as Ad Tech and the smart money believes it is the future of advertising. Its not a far stretch that an objective and sophisticated model can outperform a 24 year old media buyers who may be influenced by factors other than campaign performance. The advertising industry shouldn’t be dominated by “sales”, it should be dominated by results. There’s a reason why Google controls 40% of the total digital marketing pie.
There are venture capital firms that focus on “big data”. There are hedge funds that only make trades based on data. I’m not exactly sure how flash trading works but I’d bet on it beating out the slick rick at the brokerage. There are now computers that can beat grand masters at chess and quirky dudes at Jeopardy.
Data is becoming the superstar.
It’s easier than ever before to collect, organize and process data. Technology is creating new input devices and therefore new data. At Sportsvite we like to share the idea that soon every little leaguer will have their stats computed from their first t-ball game and know their career batting average at any point in their life. At the same time, technology is also allowing for more powerful computation of extremely large and complete data sets. Technology makes data more manageable and useful. Because of digital their is more data waste but it now can also be recycled into the fuel.
Don’t just think of data in terms of numbers. It’s information. Twitter is an amazingly complex and unstructured data stream. Think about the secrets that lie within that aggregate stream if analyzed and computed properly. Here is one take on what it all means from a data guru. You have the inner monologue of the world!
Data is about to totally upheave entire industries. Humans created most business processes, market places, strategies and marketing metrics and principles. Over generations those original processes have evolved incrementally. But data has no regard for feelings, upheaval, paths or “politics”. It is brutally honest.
Let’s go back to sports for a simple example (one that is covered in Moneyball). Since the game was invented, Baseball used the Batting Average statistic as a measure of a player’s offensive ability. Talent was valued, acquired and compensated based on this data point. In the last decade, a bunch of smart people crunched some numbers and realized that On-base percentage was a much more accurate statistical measure of offensive productivity. All professional talent evaluators in baseball will now use OBA as a more accurate measurement. They’ll readily admit that for over 100 years baseball was wrong in valuing batting average as an important statistic yet the concept was hardly ever challenged until now. I wonder what else baseball has got wrong over the years? Maybe there is a better way to position players on the field. A manager would never have the audacity to reinvent positions but a computer model would!
Sports are just an example. Try to extrapolate how data can transform health care, government, urban policy, Wall Street, education, etc. One idea that excites me is how every body function will be measured, calculated and analyzed at all times. Some little chip will be implanted in your wrist and it will be equivalent to being hooked up at all times to every machine in the Lenox Hill emergency room.
But data has some issues it needs to sort out. It has really bad marketing.
For the most part, the evil and inferior humans are afraid of data and try their best to oppress the numbers. Data is a byproduct that goes by the wayside far too often. Executives will talk about strategy, relationships, their “gut” and every other which way to describe their own importance in their business. Data also often gets manipulated to reinforce a bias rather than drive the decision. As someone who likes and trusts numbers I still find myself dumbing down my data. I’ll find and use stats that “sound good” to back up my argument. I’ll reject most business stats (that I don’t compute myself) because I’m weary of their accuracy or how they’ve been manipulated.
Data can only be tamed by the right people. It’s not you or me. It’s the engineers who study and work with large, structured and unstructured data sets. It’s the Navi warrior who can tame that weird flying dragon that the Navi flies around on.
Also, how much better does data have to be than the status quo for people to take notice? In many industries, both the buyer and seller have incentive to keep on doing it the same way. Only if data forces their hand, by being so much better than the status quo, does it eventually pick up. Again, Google is the great example. Their products (mostly all automated with a fluent marketplace) owns 40% of the digital advertising market. They benefit (better and more trackable ROI) is just too good to ignore.
As the cool kids recognize the power of data they will begin to use it in new ways. I also think data will become friendly so anyone can analyze it without getting bogged down in numbers. Cool things are about to happen. Start giving numbers the respect they deserve!