Recommendation Engines Rev Up

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Recommendation Engines Rev Up

The ultimate in mass customization would be to have a different store for each customer. And that’s exactly what Jeff Bezos, CEO of Amazon, recently told Business 2.01 he wanted: 66 million unique stores to cater to his 66 million customers.

How can he accomplish that? By customized recommendations. If you go online and buy Moby Dick from Amazon, the site will also try to sell you The Scarlet Letter, The Great Gatsby, Crime and Punishment, The Grapes of Wrath, and Treasure Island. Not interested? Well, someone is. Of the $220 billion spent online last year, between 10 and 30 percent resulted from “strategic suggestions” made by recommendation engines.

Not surprisingly, companies are now popping up that do nothing but design recommendation engines for others to use. They call this “discovery marketing,” the trick of selling people things they didn’t realized they wanted. Among these new businesses are ChoiceStream and CleverSet.

CleverSet, which is being used by Drugstore.com and WineEnthusiast.com, sorts and analyzes what customers buy across numerous metrics and then feeds that information into a relational database to come up with new suggestions.

According to Advertising Age,2 one of the hottest of these new companies is Aggregate Knowledge. Business Wire recently reported that the famous venture capital firm Kleiner Perkins has put $20 million into the start-up.3

The core concept at Aggregate Knowledge is that what you do on the Internet — where you go and what you read or watch — tells much more about you than what you type into a search box or even what you say about yourself. And that information will help determine what you buy as well.

The company has been compiling enormous amounts of information about customers and their buying and browsing behavior into its software system, which will then be used to allow companies to automatically recommend products to people reading news stories. It will also be able to recommend other content for them to read, such as other news stories.

This is just another step toward making the Internet more navigable by sorting through vast amounts of unorganized data. Other companies doing similar work are Digg, Reddit, and StumbledUpon.

According to the Hollywood Reporter,4 ChoiceStream has a database that collates the choices of some 30 million people who have watched and rated movies. Movielink, for example, which rents digital movies, is going to use ChoiceStream to make Amazon-like recommendations to its customers...

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