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Black Swan analyzes social media to predict which products will be successful – londonbusinessblog.com

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Consumer packaged goods companies – think PepsiCo or Nabisco – are facing major challenges from the rising cost of living and distribution. As inflation continues unabated, consumers’ disposable incomes are not going as far as they used to, while products are becoming more expensive to ship. The pressure is therefore on companies to bet on the right innovations. That’s true in less chaotic times, but the stakes are higher right now.

Although founded long before the pandemic, Steve King says that: Black Swan Data, the data science and technology company he helped launch in 2011, fits in well with today’s environment. Black Swan uses data from social media conversations and analyzes the data to map “growth opportunities” for businesses, in an effort to identify trend signals more accurately than traditional approaches to market research.

Before co-founding Black Swan, King was a technical director at creative agency Digital Jigsaw. The other Black Swan co-founder, Hugo Amos, was a digital marketing strategy manager at PepsiCo.

“One night at a bar in Toronto, Amos and I had our ‘eureka’ moment connecting seemingly disparate data sets to predict consumer behavior,” King told londonbusinessblog.com in an email interview. “After scribbling the idea on the back of a beer mat (now hanging in the reception area of ​​the London headquarters), Hugo and I returned to the UK to start Black Swan. We felt there had to be a better way for companies and brands to tap into the mass of data they have; data is largely irrelevant unless you can harness its power effectively.”

Black Swan claims to use published research from Stanford, University College London, Meta and others to try to predict social trends and sales data months into the future. To conduct market research, the platform looks at billions of tweets, posts, discussion forum threads, reviews, and blog posts over a two-year period and then filters out about 400,000 different concepts (e.g., “Themes,” “Ingredients,” “Brands,” ” “Product types”, “Benefits and needs”) in the data, for example when people discuss foods that are healthy for children to eat after school. From this, Black Swan finds the relationships between concepts to gain insights that – hopefully – aid in a company’s product development.

“By embracing AI, users can glimpse the future — using predictive algorithms to skate to where the puck is going rather than where it is now,” King said. “Black Swan is akin to the largest focus group in the world. It continuously analyzes this data to map growth opportunities and identify emerging trend signals earlier and more accurately than traditional approaches to market research. This capability allows for a more scientific and comprehensive approach to the new product innovation process, enabling brands to take risks when making decisions in uncertain times when consumer behavior is changing rapidly.”

It is true that product development is risky. according to an source, 95% of the more than 30,000 new products introduced each year fail. The failure The number of new products in the supermarket alone is estimated at 70% to 80%.

But can AI predict success? The answer is not clear. Black Swan claims it does, as do startups like the eponymous Black Crow AI, which sells a service that projects what products e-commerce customers will buy, and Turing Labs, which uses AI to formulate CPG products for mass-market appeal. However, the fact that an algorithm is accurate today does not guarantee that it will be accurate tomorrow. As the data shifts, the predictions shift of course, at worst give a false sense of security.

That may be why King notes that Black Swan does not replace human judgment. Rather, it aims to help companies see product categories through a consumer’s eyes, he said, while taking individual tastes and preferences into account.

Regardless, Black Swan has been doing pretty well for itself lately, expanding its customer base to 50 companies, including PepsiCo, J&J, Kraft Heinz, SC Johnson, and P&G. (PepsiCo has been) Open on the partnership, crediting the Black Swan platform with its new line of Propel sports drinks infused with immunity ingredients.) Annual recurring sales are at $10 million, and Black Swan — which announced today it has raised $17 million — plans to expand its 170-person workforce to over 200 by the end of the year. One of the other short-term focus areas is increasing the startup’s market share in the US and supporting product development, King said.

Oxx led Black Swan’s latest funding round, with the participation of AlbionVC. It brings the total amount raised from the company to $18.5 million.

“Black Swan was founded on the belief that brands can make better use of what people are talking about online to understand their behaviour, anticipate moments and shape them to their advantage,” King said. “The adoption of technology-driven market research solutions, and in particular AI-driven observational research and predictive analytics, has accelerated tremendously, and this is reflected in Black Swan’s growth… The benefit of this whole paradigm shift is that Black Swan sees the market from a consumer perspective and finds new and emerging trends sooner – enabling users to be more customer-centric and stay ahead of their innovation strategies.”

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