Netflix and Learn: Demystifying Recommender Systems

Have you ever wondered how Amazon knows to show you ads for a new type of electronic you’ve been considering, or how Netflix recommends shows that totally fit your mood? Find out more about the science behind these recommendations.

Seemingly customized recommendations are everywhere these days—Netflix is making suggestions of what to watch next, Amazon recommends products, LinkedIn highlights potential contacts, Pandora delivers you music you will probably enjoy. While sometimes these recommendations can seem off-base, in general, they are fairly accurate at reflecting our interests and sometimes present a welcome surprise. What is the science behind these recommendations? Companies are using a state-of-the-art data science technique, Recommender Systems, to leverage large datasets to efficiently guide the customer experience.

While there are many variations on a recommender system, on a general level they work by using existing information about behavior to predict preferences of the clients or end users. One approach, referred to as “Content-Based Filtering” identifies characteristics of the end product that the customer engaged with and identifies similar products. For example, if you recently purchased warm winter boots, the shopping site may recommend a similar winter item such as wool socks. Under the hood, each item in inventory is characterized by text description, a series of features, or other such descriptors. Then, one (or multiple) algorithms can be used to identify which items are most similar. Then, when the customer purchases an item, the site can recommend products that are most similar. However, it can be problematic to recommend something too similar. If I just bought a pair of winter boots, I likely don’t need another pair.

RELATED: Getting Value from IOT Data

Recommending similar items based on item characteristics can be useful in some circumstances. However, by just identifying similar items, one is missing out on a voluminous and rich data source—human behavior. A technique called “Collaborative Filtering” uses information about what items people like or interact with to predict what any given person may prefer. As a very simplified example, Person A bought winter boots, and cold medicine. Person B bought winter boots, cold medicine, and diapers. Based on patterns in behavior from Person A and B, when Person C adds winter boots to their cart, the site may suggest “people who bought winter boots also bought cold medicine.”

One way collaborative filtering is done using explicit ratings, like movie ratings (such as 4-stars). A popular algorithm takes all the ratings across all customers to make a big table, or matrix. Then, the algorithm uses matrix factorization as a mathematical way to represent information about the users and items.

These representations can then be used to compute theoretical ratings for items that an individual may not have seen before. In the end, this manifests as “People who purchased winter boots also purchased cold medicine.” This approach differs from the previous one in that the recommended item is not suggested because it is necessarily similar at all to the original item, but rather patterns of human behavior suggest commonality.

However, many of us don’t bother rating movies or products, yet still receive solid recommendations. Explicit ratings are great, but rare. Therefore, it is also possible to use the Collaborative Filtering technique using what is called “implicit ratings.” This term refers to the idea that you can infer what a person thinks about a product based on their behavior—did they click on it and spend time on the product site, did they buy it, did they only watch the first three minutes or did they binge the first three seasons.

Mathematically transforming information about how a person interacts with a product can serve as a stand-in for ratings, although with some assumptions baked in—such as that they bought it, therefore they liked it. Or they watched three seasons, not just fell asleep with auto play on. While these assumptions may not always be accurate, with the large volumes of data common in streaming media or e-commerce, clear trends still emerge.

RELATED: Read more articles featuring Pandata.

While recommender systems can be very powerful, they are not without potential pitfalls. A big risk is that by using like to recommend like, suggestions fall into a silo. At best, this causes recommendations to be boring. At worst, recommendations can reflect social bias or discrimination present in the underlying dataset. Siloing can be due to limitations in content based filtering or due to the predictability and stereotypy of human behavior.

People who watch one horror movie probably watch multiple horror movies. Pretty soon, the algorithms are only recommending horror movies. Human bias can also be reflected. For example, if you are using a recommender system to suggest college classes, a recommender system without additional modification may recommend engineering classes to male students and early childhood education classes to female students—based on gender biased enrollment patterns. That said, there are statistical and mathematical steps one can take to avoid pigeonholing. A truly effective recommender system involves a component to identify and address bias and siloing.

Next time you are wondering how Amazon knows what shoes you like, or Netflix plans the perfect Friday evening, you have a recommender system to thank. If there is an AI concept that you would like to see explained, contact hello@pandata.co.

Hannah Arnson is a Data Scientist at Pandata. LLC, a Cleveland-based data science consulting firm.

Share
  • Email
  • Next up: Did You Know that You Can Choose Who Provides Your Electricity?
  • More in Operations
  • Did You Know that You Can Choose Who Provides Your Electricity?

    Looking for the short and sweet version? Listen to our radio ad featured on WTAM-AM. There are over 100 Retail Energy Providers (REPs) certified by the Public Utilities Commission of Ohio, and each provides customers with different benefits. Whether you stay with the utility or go with a third-party supplier, your service and bill format will remain the same. The difference is in the rate you will pay, as competition between REPs can result in lower-priced offers and additional benefits for customers.

    Looking for the short and sweet version? Listen to our radio ad featured on WTAM-AM.

    Did you know that you can choose who provides your electricity?

    There are over 100 Retail Energy Providers (REPs) certified by the Public Utilities Commission of Ohio, and each provides customers with different benefits. Whether you stay with the utility or go with a third-party supplier, your service and bill format will remain the same. The difference is in the rate you will pay, as competition between REPs can result in lower-priced offers and additional benefits for customers.

    Having options is a good thing, but COSE understands that finding the right electricity provider for you can be stressful. Fortunately, we’re here to help with the COSE Energy Choice Program. Our consulting partner, OnDemand Energy, has conducted the research and interviews needed to select a smart, reputable choice for your home’s utility services.

    Now, after much consideration, we are pleased to continue to recommend residential services with Public Power LLC  to COSE members.

    A few benefits that you will enjoy with Public Power:

    - The peace of mind that comes with a fixed rate.

    - Easy, quick sign-up with no interruption in service.

    - Monthly Usage Reports.

    - Renewal Incentives, including Energy Savings Kits!

    Our team is available to answer any questions about the COSE Energy Choice Program, rates, benefits and more. Please feel free to contact us at 216-592-2205 or energy@cose.org.

    To ensure you receive COSE’s exclusive rate, please visit https://www.ppandu.com/cose.

    Share
  • Email
  • Next up: Do You Know How to Access All the Savings Under the New Federal Tax Law?
  • More in Operations
  • Do You Know How to Access All the Savings Under the New Federal Tax Law?

    Read on below for savings available to businesses under the new federal tax law that you might not have known about.

    You know that working with the GCP Energy Team to complete an assessment of your facility—can help you uncover savings of up to 20%. And you know that energy efficiency is an economic engine, supporting 2.2 million jobs nationwide in manufacturing, construction and other fields, most of which cannot be outsourced overseas.

    BUT. Did you know there’s another reason why being more energy friendly should be a high priority for you and your business this year? I’ll give you a hint. It has to do with something that’s probably been on your mind given this time of year. Give up? It’s taxes. Specifically, it’s new tax savings (Code Section 179) for building owners under the recently passed federal Tax Cuts and Jobs Act of 2017. Retroactive to Oct. 2, 2017, the Tax Act now allows for immediate expensing of certain building components and systems involved in an energy project, namely the replacement of HVAC, roof, fire suppression or security systems valued at up to $1 million.

    Prior to the new Tax Act, Section 179 expensing was not available for HVAC, roofs, fire suppression, and other structural building components.  Building owners should consult with their tax advisor if also purchasing new  machinery, vehicles, equipment, etc. The tax deduction annual cap is $1 million. The deduction is reduced dollar-for-dollar if total expenditures for all qualifying improvements and new personal property exceed $2.5 million in a tax year.

    Below is a table showing what the tax savings and after-tax cost of a $50,000 HVAC replacement project would be in 2018 under the Tax Cuts and Jobs Act of 2017 is when compared to the prior year (before the new tax law.)

    2017

    2018

    HVAC replacement

    $50,000

    $50,000

    First-year write off

    -

    $50,000

    Bonus depreciation

    -

    -

    Normal year 1 depreciation

    $641

    -

    Total year 1 deduction

    $641

    $50,000

    Cash(Tax) savings

    $250

    $14,500

    After tax cost

    $49,750

    $35,500

    As you can see, the difference between the two years is striking. This table also shows how a project that you might have initially believed was cost-prohibitive is well within your reach. Even better, in addition to the tax-related savings, such a project could reduce your building’s energy usage by 20% to 30%. That, of course, brings along its own savings in the way of lower energy bills.

    I know it sounds like a lot of moving parts here, but it’s quite simple: If you’re willing to take steps to make your building more energy efficient, there are savings waiting for you. It’s that easy.

    To make things even easier, the GCP Energy Team is more than happy to walk you through all the steps you need to take to ensure you’re saving as much money as possible. You can email the Team at energy@gcpartnership.com or contact us by phone at 216-592-2205.

    Share
  • Email
  • Next up: DocuSign Email Scam: How to Identify it and Protect Your Business
  • More in Operations
  • DocuSign Email Scam: How to Identify it and Protect Your Business

    The DocuSign email scam is causing a lot of problems out there for businesses. Here's how to identify it and take steps to safeguard your business.

    As a small business owner, it is crucial that you stay on top of all scams that could potentially target your business. While we are focusing on many of these types of specific scams in a series from the Federal Trade Commission, we wanted to draw your attention today to a phishing email scam that is on the rise.

    With this particular scam, hackers are posing as someone you know. You receive an email from a trusted source when in fact, the email is coming from the hacker. You will be asked to verify documents via email and from there the scammers capture your email address and email password to hack into your account.

    How does this scam play out?

    The following five steps outline the usual progression a hacker will most likely follow in regard to this type of scam:

    Step No. 1: You and/or members of your organization receive an email from a trusted source—someone who you have previously done business with or have corresponded with. The email states you have received documents that need to be signed or reviewed or something similar. The subject line of the body or the email will reference Docu Sign or some other document storage application.

    Step No. 2: You are asked to click on a link in order to sign in, open and view the documents.

    Step No. 3: The link opens another page and you are asked to sign in with your Microsoft account information or your email address and password.

    Step No. 4: If you click on the link and sign in, your email address and password are immediately sent to the hacker.

    Step No. 5: Once they have your email address and password, they will be able to log into your email account or spoof your email and send/receive email as if they were you. Recipients will see the incoming email coming from your address. Or, the hacker can set up your email account in their local Outlook program on their computer and send/receive email as if they were you.

    It is not unusual for the hacker to do nothing for several days. They will log in and out of your email account just to see if you have changed your password. After several days, when they see they still have access to your account, they will begin sending malicious emails to individuals in your contact list.

    We have also seen an incident where the hacker logged into a user’s account and configured email Rules on the Exchange server that diverted incoming email.

    What to do if you are targeted?

    If you receive one of these DocuSign emails or a similar type of email request, call the sender and make sure the email was actually sent by the person. If not, delete the email. DO NOT CLICK ON THE LINK OR SUPPLY YOUR EMAIL ADDRESS OR PASSWORD. If you have a situation where someone clicked through and signed in, you should change your email passwords right away.

    How can you protect your company from this type of scam?

    • Communicate with your staff on a regular basis of the potential threats out there and the steps to take against them. Make sure everyone in your company is well-versed on what to look out for when it comes to email scams. Anytime you hear of a particular scam, send an immediate notification out to everyone on your staff and any outsiders who also use your network. Security issues should not be tacked with a one-and-done approach; there should be a constant drip of information.
    • Advise all employees to verify a suspicious and unexpected email by calling the actual sender.

    Steve Giordano is president of TeamLogic IT. Learn more about the company by clicking here.


    Share
  • Email
  • Next up: Don't Get Locked into the Wrong Contract
  • More in Operations
  • Don't Get Locked into the Wrong Contract

    Perhaps, like many of our members, you are confused by the numerous postcards and calls you are receiving about your energy rates, and not sure which provider to choose? We hear your frustration and hope to simplify it for you.

    As you receive postcards in the mail, or a suspicious call, or even someone who stops by your office with an appointment, please call us to clarify and confirm before agreeing to a rate/plan with another supplier or broker that may not be ideal. We strongly urge you not to auto renew without the COSE Energy team first reviewing all offers to ensure you are renewing and/or enrolling in the COSE program.

    We have been notified by many of our members that they are turning away solicitors at their door or on the phone claiming they can lower their rate. Beware.

    We are always closely monitoring the state of affairs with our energy consulting partner, OnDemand Energy, to ensure rate stability and a broad array of energy choices for our members.  One call handles both natural gas and electric, for your office, residence and employees.  

    If you have an immediate question or concern regarding your natural gas or electric contract, please contact our partners at OnDemand Energy at (855) 267-3688.

    We look forward to providing you more options than anywhere else and providing a no-cost consultative review of your bills.  For general questions, please feel free to reach Nicole Stika, our Vice President, Energy Services (216) 592-2338. 

    Share
  • Email
  • Next up: Don't Leave Money on the Table
  • More in Operations
  • Don't Leave Money on the Table

    End of year estimations for budgets is upon us – that hurried time of the year where books close and you may be left grumbling. So, how do you make sure you don’t miss out and leave money on the table?

    End of year estimations for budgets is upon us – that hurried time of the year where books close and you may be left grumbling. So, how do you make sure you don’t miss out and leave money on the table? 

    The reality is that most energy efficiency projects aren’t budgeted. Why?  Maybe the project was more opportunistic than planned (who budgets to replace lights that aren’t broken?). Or, maybe the equipment that you thought could make it through summer with maintenance Band-Aids and Duct Tape now needs to be replaced. And you definitely don’t want to get into the frost bite of winter and be left without adequate heating.  Financing lets you do the project without a pre-determined budget.

    Financing isn’t new. It’s an everyday occurrence.  From buying a new vehicle to purchasing office equipment, we all have experience with it. The irony is while over 80% of CFOs and finance guru’s use financing to purchase capital equipment, very few think to use financing for building equipment, like lights, chillers, controls, and boilers. May not be as appealing, but they are necessary to properly run your business.  

    Until recently, financing for this equipment was difficult to secure. Now, it’s simple. No longer do you as the building owner and/or tenant have to hope money falls from the sky and pads your non-existent energy budget. You can now take advantage of attractive financing solutions, even when you don’t have the budget.  

    It just makes sense to shift dollars in your bottom line from energy savings to other areas of your business. Now, in partnership with our friends at KeyBank, we will structure a plan that illustrates positive cash flow to your business. Don’t let the cost of waiting (or not knowing what to do, and when) get in your way; it is never too early to map out your energy savings strategy.

    So as the year starts to come to an end, it’s time to make your cash flow more positively to end the year strong. Let us show you how!

    Contact us today at 216-592-2205 or email us at energy@cose.org

    Share
  • Email
  • More in Operations