Predicting the future

CHICAGO - Quietly working in the background, today's computers can spot insurance fraud, thwart shoplifters and lure racing fans to spend more at the track.

With uncanny accuracy, computers predict behavior by sifting through mountains of data about customers collected by businesses. Called predictive analytics, this automated crystal-ball gazing has become a $2.3 billion industry in the United States and is on track to reach $3 billion by 2008.

"It's gotten so important because the stakes have risen," said Robert Blumstein, an analyst with IDC, a marketing intelligence firm that predicted the growth.

"When nobody did it, it didn't matter much," he said, adding that there are hundreds of firms - large and small - marketing software to track customer patterns. "But if your competitors use this to fight for customers and you don't, you'll be at a real disadvantage."

The software can be downright spooky, as when it singles out a group of customers likely to crave a new product they have not even heard of.

"When these consumers receive a targeted marketing offer, it leads to the eerie feeling of marketers 'knowing what I want' or 'making me buy something,'" said Amar Cheema, assistant marketing professor at Washington University in St. Louis.

The technology's power was demonstrated recently at Arlington Park racetrack where marketers targeted specific segments of their clientele, offering bonuses crafted to appeal to each customer's preferences.

•	Your PC is also playing FBI role! India Times, Monday, Aug. 22, 2005 Byline: Jon Van of the Chicago Tribune

•	Predicting the future Portsmouth Herald News (NH), Friday, Aug. 19, 2005 Byline: Jon Van of the Chicago Tribune

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