Trusted Consumer Intelligence
Executive Business Plan
The future of personalization
Concept
Personalization is an undelivered
promise from the internet revolution.
Responding to this need, Innovai is creating the first trusted consumer
intelligence service. This service is a trusted 3rd party available
to all marketing channels for truly one-to-one interactions with the
consumer. It uses proprietary
statistical and artificial intelligence based datamining solutions to derive
information from consumer purchasing histories across distributed sources,
filtering and focusing all marketing interactions. This cutting-edge
technology enables improved recommendation capabilities to proprietary merchant
channels as well as bulls-eye targeting through existing marketing providers.
With better technology and more data about the consumer, our trusted consumer
intelligence service will dramatically improve marketing across all channels,
changing it to become a continuous and intelligent conversation with each
individual consumer.
To have a sustainable competitive advantage and execute
through the initial hurdles, it is crucial to create the latest proprietary
recommendation and predictive technologies, build the platform to market this
capability, and continue to commit resources to improve and innovate these
assets for next generation technology.
Innovai is creating this improved proprietary data mining technology,
helping businesses search through their existing consumer purchase data for
recommendations of future purchases.
Current players operating in the personalization market have been slow
to move to new forms of delivery of their technologies, and alter their present
business model. However, as previously
noted, there is a growing demand for businesses of all types and sizes to have
access to the latest state-of-the art personalization capabilities as a
service, allowing merchants to continuously improve their relationship with the
consumer. Fulfilling this need is the
first step in Innovai’s plan.
However, Innovai has a
greater vision for the future. Its
emerging technology capability targets access to a large number of independent
merchant repositories. With the
consumers' permission, purchase information across merchants are combined
together, enabling a unified prediction capability that benefits both the
consumer and participating businesses. In turn, Innovai is creating the first
personalized “google” of marketing. Its
proprietary technology, SmartPredict,
focuses on this vision through features that automatically help it learn and
improve its predictive functions as more data becomes available. Combining SmartPredict with datawarehousing
infrastructure our “trusted consumer
intelligence” is provided to parties owning the advertising distribution
channels such as internet service providers, cellular providers, and direct
marketing players. The consumer
indirectly benefits from this service because he/she receives more accurate
recommendations on proprietary merchant channels and more relevant offers
across existing marketing channels.
Opportunity
Opportunity
Although both pure Internet and traditional retail
companies have embraced the web and soon the wireless web as a sales channel,
personalization technologies are not being used at the same level of
sophistication as they can be created.
Among the reasons for this discrepancy is that much of the technology is
overpriced and its integration cost expensive.
Further, personalization as it applies to advertising, specifically for
one-to-one marketing is an undelivered capability. However, many technologies have now converged
to create a window of opportunity to deliver these features together in a
seamless manner through a new type of service.
Both the personalization
and advertising markets are set to grow dramatically. According to Datamonitor, the global
personalization market will grow from the present $500m to $2.1 billion by
2006. Datamonitor emphasizes that
personalization technologies dramatically enhance the understanding a business
has of its customers while improving their experience online. These
capabilities will become an increasingly crucial competitive differentiator
across all channels of communication and distribution with the customer. Additionally, Jupiter Media Metrix predicts
that although online ad spending in the United States will increase only 5
percent this year, it will rebound and grow at a compound rate of 22 percent
over the next five years—reaching a total of more than $15 billion by
2006. At the same time, Jupiter also
forecasts, that spending on digital marketing initiatives such as coupons,
promotions, and e-mail will surpass spending on advertising, reaching more than
$19 billions during the same time period.
Through sustained
pursuit, merchant adoption, and commitment to engineering unique enabling
technology, Innovai will seize the opportunity from both these markets to
create the first trusted consumer intelligence service.
Technology
Technology
Innovai's proprietary SmartPredict Technology
powers this vision with cutting-edge predictive capabilities. Combining statistical and artificial
intelligence based approaches, the technology is on the path of creating a
trusted consumer intelligence for intelligent marketing. Our proprietary technology will work together
with our own datawarehousing capabilities to deliver on the long-term
proposition.
Our SmartPredict Technology allows predictions of
consumer response to any type of marketing offer. Its features include
making recommendations on items that a given consumer is likely purchase and
predicting which consumers would most likely be interested in a product,
service, or marketing offer.
SmartPredict can mine distributed merchants' consumer databases to
discover the latest product and consumer correlations. Through it a merchant gains the ability to
engage a consumer in a more personal manner during the sales and marketing
process, offering and highlighting products which this particular individual is
most likely to purchase. As our technology makes use of all available data, it
continually adapts, improves, and becomes increasingly accurate as more data is
available. Both the features of
recommending products for a consumer and the targeting of a product to the most
likely consumers are part our current SmartPredict version.
Currently being developed, is the ability to
effectively combine and normalize data from multiple sources to power
inter-merchant data mining. This will result in better predictive
capability through both the increased volume and variety of data. In
order to accurately process data from these different sources, an Advanced
Classification System (ACS) is being developed.
In addition, with the ability to combine and normalize data from
multiple sources using ACS, SmartPredict
will enable inter-business datamining to produce more accurate results.
This will result in even greater predictive capability through both the
increased volume and variety of data. The goal of ACS is to enable the
automatic categorization and association of products based upon their
descriptions, attributes, availability, and consumer appeal. Prediction of
market demand for unreleased products, as well the accurate targeting of newly
released products is then enabled.
Combining it with it identity mechanisms working with marketing
channels, SmartPredict enables a one-to-one targeting service to reach
consumers individually with the advertising that they will be most interested
in. Patents are pending on methods and components
encompassing our technologies.
Strategy
Strategy
Innovai has a clear strategy to execute on the vision and
take advantage of our technology assets.
After raising our first round of funding, optimally of $3 million, we
plan to hire the required personnel and buy the necessary hardware and software
infrastructure to maintain our own datawarehouse. With these resources we plan to productize
our current SmartPredict technology and create the delivery platform to sell
our current predictive capabilities as a service. We will give our product away at first to
attract an initial customer base, and then charge additional clients in the
future to use our data mining services.
Providing our advanced personalization technology to merchants as a
service at a discount to the current competition enables us to quickly gain
merchant customers that have not adopted this type of technology because of its
cost. Within a year we plan achieve our
first goal which is to secure an initial number of merchants using our
personalization technology and having varying types of consumer product
purchase histories.
Plans for the next phase
are focused more in our goal to become a trusted consumer intelligence
provider. With an additional round of
funding we plan to ramp up our technology capability to productize the next
generation of SmartPredict. There would
be a new focus, of gaining access to a large consumer base through existing marketing
channels and emerging digital “passport” capabilities. This would enable us to discover trusted
targeting information about the consumer based upon the information we derived
from their purchasing information across merchants. This consumer intelligence would enable
one-to-one targeting for both marketing campaigns across current communication
channels as well as product and service recommendations through proprietary
merchant channels. With a critical
consumer base, and growing access to merchant purchasing information, Innovai’s
trusted consumer intelligence service would be so effective that a second wave
of merchants, advertising channels, and consumers would seek our one-to-one
targeting intelligence for marketing. Our roadmap for execution is a clear path
to market domination.
Return on Investment
Return on Investment
The return from investing on Innovai is immense, as defined
by the large market for personalization technologies in addition to long-term
vision to improve marketing targeting.
Competitors in the personalization market currently provide overpriced
capabilities. Embracing the web services
adoption, Innovai positions itself to quickly provide leading edge analytic and
datamining capabilities to merchants. The
risk of this proposition is justified given the lucrative profit generating
opportunities from charging both merchants for improved personalization
technology and marketing providers for one-to-one consumer targeting through a
single delivery infrastructure.
The benefits of having personalization technology for merchants, such as retailers has already been studied. According to a survey of 25 top online merchants by Jupiter Communications, Jupiter found that customization at 24 consumer e-commerce sites boosted new customers by 47% in the first year while revenues rose 52%. Some of the documented benefits gained from two past business cases are:
· BMG - BMG Music Service's site transaction volume increased tenfold after introducing a personalization service based ATG's Profile Station software.
· N2K - Sell-through jumped at least fivefold during an early test at N2K's Music Boulevard, zooming from 2-4% to 10-30%. N2K uses a collaborative filtering system supplied by NetPerceptions.
The enabling personalization software cost in these cases varied greatly. BMG's site development fees rose from $200,000 to $2 million (PC Week). In contrast, artuframe.com, which uses a NetPerceptions system, reports spending only $100,000. Amazon.com is another well-known company that owns and uses personalization and recommendation capabilities. By providing such capabilities as a service, merchants are assured that they will always be up to date with the latest personalization solutions, while minimizing the infrastructure and maintenance costs. Combining the revenue generated from integration work derived from strategic partnerships currently being pursued with implementation partner, this is by itself is a great business.
The greatest opportunity is from the trusted consumer intelligence aspect of the proposition. Table 1 (below) summarizes our financial projections based on this capability. In the first year, the service generates little revenue since we provide our personalization technology (SmartPredict) to merchants at a significant discount. Slowly as we begin charging for this feature, we make more revenue from merchant service fees, ranging from 100k to $1 mill per customer. As our technology evolves it is applied for consumer targeting based upon inter-business datamining, and a more lucrative business emerges from additional revenue generated from fees charged to marketing channel customers such as internet service providers and direct marketing companies to use our service to enable one-to-one marketing. Finally at the end of the 5th year, as we have more merchant customers and have better consumer targeting/intelligence capabilities, we gain momentum attracting a larger array of marketing channels paying us a premium to provide intelligent one-to-one marketing to all of their customers. Our costs are controlled, since much of the infrastructure is reused, but the added value is in the form of software enabling the intelligence. In a short period of time, Innovai delivers on the vision of a “trusted consumer intelligence” provider, creating a very lucrative business, and capturing all the monetary rewards derived from enabling one-to-one marketing.
Trusted Consumer Intelligence Metrics
|
2002
|
2003
|
2004
|
2005
|
2006
|
Total
Merchant Customers
|
2
|
8
|
20
|
40
|
60
|
Marketing Channel Customers
|
0
|
2
|
5
|
8
|
10
|
Total Participating
Consumers (thousands)
|
0
|
2000
|
10,000
|
50,000
|
80,000
|
Expenses
(millions)
|
3
|
20
|
30
|
35
|
50
|
Revenue
(millions)
|
0
|
2
|
10
|
81
|
203
|
Profit
(millions)
|
(3)
|
(18)
|
(20)
|
46
|
153
|
Table 1: Innovai Financial Projections
Future
The future is
bright and full of opportunities for Innovai, as the leading trusted consumer
intelligence provider, personalizing the interaction with the consumer across
mass-marketing channels and enabling improved recommendation services across
proprietary merchant channels. Developing state of the art technology
that will find strategic marketing correlations, we plan to help science better
guide the creative aspects of advertising.
Additionally, our technology will mine varying types of data to discover
information providing insight into the effectiveness, depth, and efficiency of
any marketing campaign—potentially right down to an individual
advertisement. With the growth and
success of Innovai, personalization will no longer be accessible to a select
few, and will make the visions of one-to-one marketing reality.
The TeamThe Innovai team is an energetic group of individuals planning to change the way marketing is done.
The TeamThe Innovai team is an energetic group of individuals planning to change the way marketing is done.