Mining for Gold

SOUTH AFRICA — Hailed by many as the key to inflating e-profit
margins, data mining is regarded by many analysts as one the
emerging technologies that will change the face of e-business.

Data-mining (sometimes known as content management) — the use
of statistical analysis to uncover hidden patterns in otherwise
random information – is an art that many e-tailers have yet to
perfect.
While delivering personalised web-content is central to content
management, its a convoluted craft that leads to many wacky
assumptions.

“A lot of people think I’m just going to put this in the hands of the
marketer and we’ll get the secret sauce,” said Bob Moran, a
managing vice president at the Boston-based Aberdeen Group.
Nonetheless, the art of data-mining is taken by many to be just the
secret sauce that will spruce up an other-wise dull e-business
offering and tempt customers into coming back for more.

Whilst mountains of recorded data on consumer behaviour are piling
up, dozens of small data-mining companies are competing with the
likes of Oracle and IBM to present the next and best data-mining
solution.
All these competitors are betting on the fact that theres bound to
be a useful structure in all the heaps of consumer-behaviour data
that e-tailers and their ilk are avidly collecting.

Once subjected to real-time analysis a pattern for creating higher
margins and inflating revenue is sure to emerge alongside a marketing
slant that’s bound to strike gold.
Armed with the right data-mining application marketers can target
customers with personalized stock quotes, news updates, special
promotions and other information they are most likely to use,
dramatically reducing advertising budgets and boosting revenue.

The biggest challenge for the emerging science of data mining,
however, remains that ever-elusive quirk of human nature – finding
out what people really want.

At present data-mining concerns itself with the past-behaviour of
customers (i.e. what people are likely to purchase based on previous
transactions, demographic information and other data points). The
real key to treasury, however, lies in figuring out what people would
rather purchase, as opposed to what they merely settle for.

“You can figure out the behaviour of performance metrics, but what
you’re missing -the biggest piece of the puzzle – is what it is that
people really want,” states Kyle Johnstone, director of business
intelligence for Emerald Solutions.

That, he muses, may be a mathematical impossibility.