What Businesses Should Do With Artificial Intelligence

Artificial intelligence (AI) improves prediction. AI is computer software that learns, finding complex patterns in massive amounts of data. Improving predictions is obviously very useful for most businesses, with a wide range of applications. For example, AI is helping industries from manufacturing to air travel predict when key equipment or airplane parts will fail, reducing downtime. A servicer of printers and copiers can determine when they will run out of toner, based on how many and what types of print jobs are done. The machines will automatically order more just-in-time toner, preventing waste from replacing toner cartridges too early. Google Translator AI “predicts” (recognizes) equivalent speech in different languages. In all of these examples, the AI gets better as it takes in more data, or “learns.”

But businesses can throw a lot of money at AI simply because it’s the “in” thing. So, owners must improve the odds of success.

First, figure out what problem you want AI to solve. What mission critical information are you dying to know? The problem may not require a solution as complex as AI. Basic snags could simply require statistical analysis, such as linear regression. Another key question to ask yourself: Has AI ever been used before for that application? If not, then being the first may be a tad costly. Run small experiments to determine usefulness before committing to a massive project.

Second, do you have good data to work with? Remember the GIGO principle: If the data are old, unstructured or disjointed, then you’re not going to get good results, period. And you need a lot of data—AI is only useful when it has much to work with because its whole purpose is identifying complex patterns in large data sets. Thousands of data points are a minimum, and millions are best. Also, your data needs to be labelled so a machine can understand what it is. Provide the context that is creating the data from the start so that the AI doesn’t make a boneheaded mistake, such as treating Christmas-time sales as the normal monthly level.

Third, AI learns or evolves with experience in real world operations. It will be wrong at first. So, does the application allow room for growth, or is it so important that it has to be right the first time? AI cannot be perfected solely based on in-house training data.

Fourth, AI requires development—there is no AI “plug and play.” It is unlikely that a company has the expertise to do this in-house. So, finding the right contractor that has the specific knowledge for a particular problem is important. Trusting the contractor is key: AI programs are not very good at explaining how they got their results, so you’ll have to take the contractor’s word for it. Have your experts examine vendors’ results and evaluate both their accuracy and usefulness. Today’s main AI platforms are IBM’s Watson, Amazon Machine Learning (part of Amazon Web Services), Microsoft’s Cortana Intelligence Suite, and Google Cloud Platform. (A website listing a plethora of specialized AI vendors follows below.)

Finally, don’t relegate AI to the IT department. AI will boost worker productivity, but it can also shed light on what lines of business strategy to choose, so CEOs should be fully informed.

Some AI vendors worth a look:

https://appliedai.com/vendors/1

Applications:

Health care: https://www.techemergence.com/machine-learning-healthcare-applications/

Finance: https://www.techemergence.com/machine-learning-in-finance/

Advertising and marketing: https://www.techemergence.com/artificial-intelligence-in-marketing-and-advertising-5-examples-of-real-traction/

What Car Shoppers Need To Know This Year

If you’re in the market for a new ride or might be later in 2018: You’ll find better deals on popular SUVs and crossovers…new or used…if you wait a bit. Manufacturers continue to ramp up SUV and crossover production, so that supply of these popular vehicles may soon outstrip demand. Also, while vehicle sales are off to a good start so far this year, they’re likely to slow later, forcing automakers to rely more on discounting and other buyer incentives. These should approach $5,000 per vehicle, on average.

Given the popularity of SUVs and crossovers, manufacturers are offering more models than ever before, including luxury models. Car-based crossover SUVs are especially prized for their blend of size and practicality. Plus they’re relatively fuel-efficient, so the return of $3 gas won’t ding their popularity. As a result, manufacturers are cutting back on their car models. The Chevy Impala is likely to be cut, and Ford has already announced that it will abandon most of its car models in the next few years to focus on SUV/crossover/pickup truck production. (The Ford F-150 pickup truck is the best-selling model of any vehicle.) Even sedan perennial best sellers Toyota Camry, Honda Accord and Nissan Altima have required incentives to bolster demand. This means that there are likely to be some good deals on car models as the shift occurs, especially full-size and mid-size sedans. Demand for compact cars has ticked up recently as the cost-conscious buyer segment finds fewer low-cost options. Continue reading “What Car Shoppers Need To Know This Year”

Will You Have to Pay Sales Taxes on Your Online Purchases?

A pending case before the Supreme Court has many consumers wondering: Am I going to start paying more in taxes to shop online? But you already do, to a certain extent. Amazon, Walmart, Target, Costco, Sears and others have already agreed to collect state sales taxes on online orders. After fighting tax collection efforts for years, Amazon is bowing to the necessity of having a physical presence in every state in the form of distribution centers if it wants to honor its delivery guarantees. That in turn means complying with each state’s sales tax laws.

However, Amazon only collects taxes on its third-party sellers for two states, Washington and Pennsylvania. And many other sellers that do not have a physical distribution network, such as Overstock.com, do not collect either. Such e-commerce businesses have not been required to collect sales taxes since the 1992 Supreme Court case, Quill v. North Dakota, which held that only those businesses with a physical operation in a state had to collect sales taxes from customers in that state. This issue is being revisited in the current Supreme Court case, South Dakota v. Wayfair, which the Court will decide sometime this summer. Continue reading “Will You Have to Pay Sales Taxes on Your Online Purchases?”

Can Online Shoppers Ever Get Both Personalization and Privacy?

“Anonymous personalization,” or the ability to offer online shoppers personalized promotions while letting them remain anonymous to the seller, is the Holy Grail of online retailers, according to Paula Rosenblum, Managing Partner of RSR Research. Retailers like personalization because it can win new customers and make their marketing more cost-effective. Plus many shoppers do not like having to go to multiple locations and would welcome having items of interest to them all in one place online. Apparel shoppers, especially, want to see in one place ensembles that reflect their preferences, size and style. Retailers would love to provide all this, if customers would be willing to share their personal information.

Some customers are willing to share their data: The online clothier Stitch Fix has two million clients who have taken a 15-minute personal profile survey. Other online apparel sellers following the same model are Wantable and Indochino. Continue reading “Can Online Shoppers Ever Get Both Personalization and Privacy?”

Higher Shipping Rates Will Have Staying Power

Shippers will pay more to trucking companies for a while. A “perfect storm” of surging demand, a driver shortage, cold weather, and tighter safety regulations boosted rates in January by as much as 40% from a year ago. Although the extremely cold weather requiring temperature-controlled trucks has eased, the other factors are still pressuring shipping costs. Spot rates will keep rising, though at a slower pace, until mid-year, but contract rates will rise until mid-2019, according to Avery Vise, vice president for trucking research at FtrIntel.com.

The driver shortage is worsening, when the country is already down approximately 50,000 drivers, as estimated by the American Trucking Association. New safety regulations requiring electronic logging devices (ELDs) on trucks that record actual driver hours, which make it easier to enforce hour limits, are one factor. Larger trucking companies have already adopted these, but many independent truckers will delay until enforcement starts in April. This additional squeeze on driver availability is the reason the shortage may get worse before it gets better. Continue reading “Higher Shipping Rates Will Have Staying Power”

Looking For Interest In Smaller Places

Interest rates on certificates of deposit at small banks, internet banks and credit unions are now a full 1 to 1.5 percentage points higher than at big banks. While all financial institutions have raised the lending rates they charge their borrowers in response to Federal Reserve rate hikes, only the smalls have been raising deposit rates.

Previously, most financial institutions were reluctant to raise deposit rates because their profit margins had been so squeezed by the ultralow rates that prevailed before the Fed finally started hiking at the end of 2016. But now, competitive pressures to attract deposits are forcing small banks, internet banks and credit unions to raise their full range of CD deposit rates in line with the increase in Treasury bill rates (though offerings on lowly savings accounts are still paltry). Continue reading “Looking For Interest In Smaller Places”

Career Training Takes An Old Turn

Apprenticing, the way Ben Franklin and Paul Revere learned their trades, is making a comeback in the U.S. after many decades of being confined mostly to union halls in the construction trades. Interest in a more structured way to prepare young people for a career is growing, as 6 million unfilled jobs illustrate the gap between required job skills and educational preparation for those jobs.

College is not “one-size, fits all,” if it ever was. Only 23% who enter a two-year college program graduate, and only 60% of those entering a four-year school graduate within six years. While there are many good technical education programs at community colleges and private training schools, there has been a need for more structure and stronger employer involvement. Continue reading “Career Training Takes An Old Turn”

Advertising in the Digital World

Advertising on the internet is now bigger than on TV and is growing fast. Many businesses are jumping on the internet and social media bandwagon to hawk their wares, or just to build brand awareness. Some advice for businesses:

Stick your toe in the water by building brand awareness on social media.  Advertising on Facebook is cheaper than on Google, and is best for expanding your business’s online visibility. Ads appear in Facebook’s news feed and can be targeted by location, language, age, gender, workplace, college, interests, relationship status, education level, college major or your own email lists. Eighty percent of the time, Facebook is viewed on smartphones, where simple branding-type ads work best. However, product-selling ads are also used. Ads that require the customer to input lots of information, such as financial services ads, should be targeted only at desktop computers.

A trial ad campaign can be set up for as little as $1 per day, though $5 to $30 per day is better to gauge effectiveness. If you’re going to go to the trouble of producing decent ads, then you’ll want to give them a good test. Facebook will generate metrics for you, such as number of clicks, likes and shares. The average cost-per-click for Facebook ads is 28 cents in the U.S. Test multiple versions of ads to see which generates the most response. A company like AdEspresso will help you design effective Facebook ads, if you need help.

Google AdWords is a little more expensive, but also gets lots of attention. Ads can be assigned to certain search words, or products can be advertised in Google’s Shopping Ads (Product Listing Ads or PLA). Amazon also has a large reach. Other social media platforms include Instagram, Snapchat, Pinterest and Twitter, but the limitations of each of these needs to be considered.

To save time, consider using an advertising management platform like Hootsuite, Salesforce or Nanigans, which allow you to automate a lot of the ad process. Other companies will help you design ads or both design and manage the entire marketing effort. For larger campaigns, third-party ad management can drive the cost-per-click below 1 cent. The trick is to spend enough on an ad in order to have it appear with reasonable frequency, but not to overspend.

A search engine optimization (SEO) expert can help drive your company up the search rankings in Google, ensuring that users see your website.

Native advertising is growing as a share of ad spend, as opposed to banner ads, which can suffer from “banner blindness.” Native advertising contains content that is related to the same topics as the regular content on a website. It often consists of a product testimonial or description written by the advertiser. The idea is to provide an informational service as well as advertising, which may garner more attention from viewers.

Progressive web apps are gaining ground at the expense of regular apps. It is becoming apparent that, on average, consumers use only seven apps on their mobile phones and ignore the rest. Apps can be a hassle because consumers must download updates and revalidate their accounts. But apps are still valuable because they result in a lot of online orders, if you can get customers to use them. Because of this, Google has developed progressive web apps. These are versionless apps that work just like accessing the web via a browser and never have to be updated. Apple has been reluctant to compromise its revenue selling traditional apps, but is likely to come around, eventually.

Retail outlets and restaurants will especially want to pay attention to their Google Maps listing, which also has star ratings. Currently, these have a small number of reviewers leaving comments, so just a few can have a large effect on the overall rating, for better or for worse.

Use closed captioning on video ads. Many people don’t turn on the sound on their computer and so don’t pay attention to muted videos that play automatically.

In electronic gaming, rewards advertising is rapidly gaining ground. This is advertising that promises an in-game reward, such as game “money,” abilities or lives in return for a willingness to view the ad first: A good way to get the attention of an increasingly video game-addled population.

 

The Economic Toll of Hurricane Harvey

Hurricane Harvey will ding third quarter GDP but boost the fourth quarter. Much of the Texas coast, including Houston — the nation’s fifth-largest metro area — was shut down for over a week because of the storm. As business resumes after Labor Day, it will be operating at about 80% of normal staffing levels for a while. That is likely to knock 0.3 percentage points off of U.S. GDP growth in the third quarter, resulting in a pace of about 2.5%. However, as more folks return to work, the economy will likely see a boost to GDP in the fourth quarter. Likewise, the national employment report for September is likely to come in weak, with a gain of fewer than 100,000 jobs, but the following months will show larger than average gains. Continue reading “The Economic Toll of Hurricane Harvey”

How Will Political Gridlock Affect the Economy?

Consumer and business confidence soared after the presidential election because of the belief that President Trump’s policies on spending, tax cuts, health care and regulatory reform would give the economy a boost. So, what will be the impact on the economy if political gridlock prevents or delays Trump from delivering what he promised?

For starters, let’s assume a government shutdown is avoided. Congress will need to pass a bill known as a continuing resolution by April 28 in order to keep federal agencies funded and operating. If they fail, the reduction in federal spending would ding second-quarter growth and inhibit the economy’s ability to recover from a weak first quarter. Continue reading “How Will Political Gridlock Affect the Economy?”