Opinion versus Behavior in Statistical Prediction Models

Polls and ElectionsWhile reviewing some early poll data today (it being Election Day 2014) I came across a website that started my mind thinking about the difference between what people say in political polls and marketing surveys versus what they actually do. The site is www.predictit.com.

I Don’t Believe in Gambling

First let’s get this on the table. I don’t believe in gambling and I live in Hawaii, where tight anti-gambling laws would make it difficult for local residents to ever participate. But the theoretical concept behind the PredictIt website is rather intriguing.

Statistical Prediction Models

Statistical Prediction Models, more commonly known as “polls” or “surveys”, are based on mathematical models where you analyze opinions from an identifiable set in order to predict a future outcome. For example, “Will you vote for John Doe on Election Day” can have possible answers of “Yes”, “No”, or “Undecided”. The set is registered voters in John Doe’s district. Students of statistics become familiar with standard deviations and coefficient of variations and they know that as you ask more and more people in the set (registered voters in John Doe’s district), the predictable qualities of the percentages of answers received (like 45% say yes, 25% say no and 30% say undecided) become more accurate when compared against the actual outcome of the event.

Think of it this way. If you ask only a few people in John Doe’s district, your probability of your answers matching the actual outcome is pretty small. But if you asked everyone in his district, and then they did what they said they would do, your results would match the actual outcome exactly. The trick to statistics is finding the right sample size where statically the responses would accurately predict the actual outcome.

Opinion versus Behavior

What drives pollsters and marketing executives crazy is when polls and surveys that have correct sample sizes turn out to be wrong. Often when this happens it is not because the statisticians got the sample size wrong. Rather it’s that the opinion of the person being asked didn’t match actual behavior. People, it turns out, are quite human. It isn’t all that uncommon to respond to questions such as “Would you buy XYZ product at XYZ price?” and then when XYZ product comes on the market at XYZ price that same person does not buy it. Opinion has a nasty habit of not matching behavior, which is why pollsters sometimes look very stupid on election days.

Behavior Statistical Models

It would therefore make sense, at least theoretically, that if you could take a sample of your set’s behavior, instead of your set’s opinion, that your sample would have a much better success rate of predicted outcomes matching actual outcomes. The problem is you can’t measure behavior on something that does not yet exist, (i.e. a product, an election). Until they actually do it, it is only opinion, which may or may not match ultimate behavior.

This is where PredictIt comes in with an interesting theory. Rather than asking questions of opinion, PredictIt asks people to participate, with their own money at risk, in the polling or survey process, by having them actually bet on the outcome rather than opining to the outcome. The idea is that by having participants behave (put their money up) against the outcome, you are moving what would normally be a study of opinions into a study of behavior, which, at least theoretically, would have higher levels of successful predictions of actual outcomes.

Watch the Outcomes Differently This Year

So, as you are watching the actual election returns come in tonight and you see “upsets” where polling data didn’t match actual results, think about statistics, opinion and behavior analysis. It’s More Than Just Numbers!

Real Time Bidding – The New School

How “Old School” is your “Latest and Greatest” Marketing?

Real Time Bidding - Your Ad Here

Let’s assume a common scenario. You’ve read about Search Engine Optimization. You’ve attended some online seminars about keyword searches. You have a Google AdWords account and you’re buying keyword search terms on a Pay-Per-Click Basis. You are aggressively monitoring your Analytics and your Click Through Rates. You feel good about yourself because you believe you are on the leading edge of the marketing frontier, right? Wrong!

The “Current” “Old School”

SEO, AdWords, PPC, and all their cousins, all focus solely on the prospective customer who is actually taking some kind of action to find you. They (your prospective customer) are typing keywords into a search engine and as a result they are hopefully being directed to your website through your SEO, ADWords, PPC and related work.

But you have to ask yourself, “What about all those who would be interested in my product if only they knew it existed?”

Boldly Entering the New Marketing Frontier

If you or your marketing/public relations agency are not currently putting your Real Time Bidding (“RTB”) plan into action, your “current old school ways” will leave you in the dust.

What is Real Time Bidding?

What, you ask, is Real-Time Bidding? Real-time Bidding (RTB), also called Programmatic Buying and Selling, is the process of selling and buying website display advertising one ad impression at a time.


Let’s explain this with an example. Assume you own a website and you want to make some additional money. To do this, you can rent out a spot on your website, much like a landowner adjacent to a freeway does for a billboard. In our example let’s assume you lease your space to a company such as The Trade Desk (simply because they are one of the best).

Now, let’s assume someone is visiting your website for whatever reason. The Trade Desk looks at this someone’s information as your website is loading on your computer and sends a bid request out to potential advertisers with as much information as is available.

Real Time Bidding - How Real Time Bidding WorksThe bid request may include something like, “We have a 48 year old male from San Diego, California, who recently visited conservation/recycling websites, the Smithsonian website, a car manufacturer website, and who recently bought Bruno Mars concert tickets. Who is interested in that demographic and how much will you pay?”

Now, on the other side, three companies have informed The Trade Desk that their target market demographic is 45 to 55 year old males living in San Diego who care about the environment, history and cars, and are Bruno Mars fans. The company with the highest bid wins and its advertisement gets placed on your website.

The amazing thing about this process is how fast and how often it takes place. The entire series of electronic communications takes place in 300 to 500 milliseconds, causing no visible delay to the person visiting your website.

How is this “New School”?

Notice the difference. SEO, AdWords and PPC programs only put your advertisement in front of people who are actively searching for you, which is likely only a small portion of your potential sales demographic. Alternatively, Real Time Bidding will put your message in front of those who are not actively looking for you but are in your target customer profile. In other words, Real Time Bidding puts you in front of your full target demographic. This has the potential of significantly increasing your total sales since you are reaching more complete demographic sectors. With Real Time Bidding, your advertisement is placed in front of potential customers who identify themselves through their normal, daily routines or habits as being in your target demographic.


Don’t get me wrong. I’m not saying that you should curtail any of your SEO, AdWords or PPC programs. In truth, you should continue to hone those activities and improve them, while assessing your results. However, if you are not advancing into the future of Real Time Bidding, you are going to be leaving a significant portion of your total potential target demographic untouched and “ain’t nobody got time for that!”