Algorithms Are Just Another Buzzword We Haven’t Worked Out How To Use

In this post, Strohfeldt Consulting founder and creative director, Robert Strohfeldt, argues that the modern day ‘algorithm’ is nothing more than a fancy buzzword in the industry – and a painful one at that.

Doing some research for an online guitar tuition course, I came across: “After playing guitar for over 12 years, we tried the most popular lessons online, rated each with a custom algorithm and then wrote reviews to help other guitarists choose.”

It reminded me of the numerous times I see a similar use of “algorithm”. A business who monitors and does analyses of social media by: “Aggregating all of a company’s social media posts and using an algorithm to determine which are the most relevant.”

And a recent article detailed a business started by a dual rugby league/union international which uses “an algorithm” to identify power players with the most potential to change consumer behaviour. (Links brands to sports stars’ social media followers).

There is also the hot topic of programmatic media buying: “An algorithm is used to select and buy the most cost effective schedule from available online media inventory.”

It seems that once an “algorithm” is brought into play, then the result it spits out is automatically deemed to be correct. The calculation is beyond reproach.

What happened to the old saying about “Garbage in, garbage out.”? Should there be a rigorous examination of the said algorithm, rather than blind acceptance of the outcome?

Take the question of programmatic buying. With so much online media inventory, old style calculations would take an eternity. Computers literally calculate at the speed of light; therefore, it is obvious that the numbers are crunched by computer. There are too many combinations and permutations for an individual with a calculator to attempt.

So the question is not “is programmatic buying” a feasible solution, rather how good is the program (or algorithm) being used? What calculations and assumptions were made and what is the accuracy or validity of each?

The same applies to the social media and sport stars’ algorithms. For the social media algorithm, someone must first make assumptions on which words or phrases are deemed relevant. If any of these assumptions are incorrect, then the resulting algorithm is going to be incorrect.

Identifying sports’ stars with the ability to change human behaviour would logically extend to any celebrity or high profile individual. How the hell does one determine if a person can change human behaviour? Changing human behaviour is far more complex than asking the question ‘If (sport star a) recommended this product, how likely would you be to buy it?”

Having a magic algorithm sounds so far more in tune with the digital age. A victory for marketing fashion over function (again). A basic fact often forgotten, or not understood – that a person does the thinking, a computer simply does as it is told.

Quite often the individual writing the code or algorithm knows very little about the topic for which the algorithm is being developed.

A good example is Airbnb. A huge success that has taken the world by storm. We use it for a property on the Gold Coast. There is no doubting it has increased the occupancy of the property. In comparison a real estate, who has been in the holiday rental business on the Gold Coast for nearly 40 years and is one of the biggest and best known, also takes bookings. Yet 75 per cent of the business comes from Airbnb and 25 per cent from the agent.

So I want to clearly establish, I am a big fan of Airbnb, BUT, they introduced a new algorithm, called “Smart Pricing”. The price of accommodation varies – school holidays, Christmas, New Year, low season. Instead of manually going through every day in each month of the calendar and entering a price, “Smart Pricing” uses an algorithm to calculate the pricing for you automatically, depending upon vacancy. All you do is set a minimum and maximum price for it to work from. (Like all other algorithms, it is a pretty broad definition).

Great idea in principal, save a heap of time. It wasn’t long before we received a request for two nights in October – the price the algorithm quoted wasn’t even sufficient to cover costs for cleaning. It was less than one quarter of the minimum price that was set.

The person writing the code did not know how to do the maths to work out a price variance equation based on demand and occupancy. Because the mistake was so obvious, it was easily picked up. But what if the calculation is for say, programmatic media planning?

Writing code and communications are two vastly different disciplines. In today’s digital economy, both need to work together. I have yet to meet the person who can do both to a level of excellence. Though many make this claim. Don’t get me started on “digital marketers”.

A good analogy is when desktop publishing first became available to just about anyone with a computer. Prior to this, designers and art directors had to actually be able to draw and be visually creative. Now anyone who could operate a computer and basic design programme was a “designer.”

We are still a long way from artificial intelligence. (Singularity, when artificial intelligence overtakes human intelligence.) All algorithms are an analysis of a problem, using a pre-determined formula and assumptions developed by a person. Yes, some are incredibly complex and developed from “machine learning”, but the “learning” is programmed. Deduction is not imagination.

An algorithm cannot turn lead into gold any more than it is an infallible, “magic” solution to a problem or calculation to which the path to the answer is not already known.

So rather than merely accept a conclusion is correct because an algorithm was used, the question should be “can we see the formula and assumptions used to develop the algorithm”?

You don’t have to be a code writer or mathematician to do this. Understanding of and experience in your area of practice will tell an individual if the assumptions made are correct.

The basics really don’t change. And when it comes to algorithms, programmes or whatever term is deemed the most fashionable, the absolute fundamental has been around since the first computer was invented: Rubbish In = Rubbish Out.