Making money from rain or drought. The Weather Company Experience

In the past few months, one of the main topics of discussion in the European part of Russia was the weather. It was too ambiguous and unexpected this spring. Hurricanes were devastating, the elimination of consequences is expressed in hundreds of millions of rubles, there were often tragic outcomes - couldn’t it all be avoided, or at least to reduce the effect? Perhaps few thought about how much the weather affects our lifestyle.

Do we not change our plans for the weekend, if it rains, or, on the contrary, we aspire to parks, if the weather is fine? Do weather and weather conditions not affect what we eat, what clothes we wear, what and where we buy? The experience of The Weather Company shows that accurate weather forecast not only affects various industries in the world, but can also be commercially successful.

Our habits depend on the weather.
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A number of the largest retail companies in the world are already using knowledge about the weather and are building their marketing campaigns depending on it. For example, Walmart has been displaying products on the site for several years depending on weather conditions: if it rains, then umbrellas will be offered to customers first of all, if cooling is expected, then at the top of the list there will be warm clothes. But, we have to admit, these are rather simple correlations. If we carry out the analysis further, we can find some very interesting dependencies, which, at first glance, are not obvious. For example, the experience of Walmart showed that the wind can influence the purchase of berries: people buy more when there is a little wind outside and the temperature is no more than 26 degrees Celsius.

The company began to actively advertise products in those regions where such weather conditions are common, and as a result was able to increase sales by 3 times. An addiction was also found that people buy minced meat when it is warm enough outside, light wind and sunny. Salads are sold better when there is a light wind outside and the temperature is no more than 25 C. The company began offering burgers in places that meet these conditions and was able to increase sales by 18%. Moreover, in addition to targeted offers to customers, this knowledge helps to more accurately distribute marketing campaigns to partner networks: in which stores to allow advertising of one or another partner.

The source of weather data for Walmart is the result of a partnership with The Weather Company. According to an analysis done by ForecastWatch , The Weather Company’s forecasts are the most accurate.



Is it so easy to give an accurate forecast? Statistics The Weather Company.

Probably, most readers will agree that weather services do not always accurately predict the temperature even a day in advance, but for an accurate marketing campaign, we can talk about forecasting the amount of precipitation in a certain small region. How to make it possible?

To give the most accurate forecast, it is not enough to receive data only from specialized weather stations. In addition, The Weather Company uses information from more than 800 different types of data sources, including 40 million mobile devices where the application is installed, and not just a weather widget (there are much more), 200,000 personal weather stations located around the world. , and even readings from 50,000 flights per day. The result is more than 100 TB of data received daily. All this together allows us to update the forecast every 15 minutes and provide it with an accuracy of 500 square meters in some regions of the world.

The Weather Company - IBM Business

Many mobile phone users do not even realize that IBM provides them with a weather forecast. How does this happen? For example, on Apple devices (both on phones and tablets), the weather widget takes information from The Weather Company (TWC). Moreover, recently the service from TWC will be a native or pre-installed weather service on all Samsung S8 or S8 + devices. It would seem, how are The Weather Company and IBM related? Just over a year ago, IBM closed the acquisition of this company, which also includes the weather.com website and the Weather Underground service.



Scenarios for using The Weather Company services by industry

Retail

In a recent study, Business Insider conducted an analysis of the capabilities of the largest US retail companies to deliver products by drones. It’s no secret that Amazon sees a big impact on the future development of e-commerce precisely in delivery using drones and is actively developing this direction. A study based on data from The Weather Company found that the current capabilities of Walmart and Target make them more prepared for the introduction of the delivery technology by drones. The fact is that the delivery distance of the drone is small (up to 6 miles), and 49% of The Weather Company users live within this distance from Walmart stores. For the Target network, the share of such buyers is 47%. In the case of Amazon, 44% of customers live within 20 miles, which is currently too much distance for the delivery of products by drones. Therefore, companies will have to incur additional expenses for the construction of special centers and warehouses in order to shorten the distances, and Walmart and Target can use their stores as platforms for launching drones.

This example well demonstrates that it is possible to commercialize not only weather prediction, but also a service that provides location information from a mobile phone application.

Power industry

In addition to influencing the daily routine of people, the weather makes adjustments to the work of entire industries, be it insurance, logistics, or energy. For example, the special services of The Weather Company help in 72 hours to predict in advance possible accidents or equipment failures at the enterprise due to severe weather. They are based on the created models and algorithms of machine learning based on both current and historical data. By combining all this information, the service helps to determine in which area and for which part of the infrastructure the threat is maximum and helps to assess the risks. A separate solution is to alert workers, for example, in the area of ​​electrical networks, of an imminent threat to ensure their safety.

Insurance

A similar scenario is possible for the insurance market: insurance companies can integrate bad weather services into their applications, making them more valuable to the customer. And this is just one of the directions. In general, all scenarios for insurance can be divided into 3 groups: customer involvement, risk management and reduction of insurance claims.

For the third group of scenarios, it is worth noting that for an insurance company, the most profitable insurance case is the one that did not occur. Therefore, a number of companies make a mailing to their customers based on data from The Weather Company with recommendations and actions to avoid problems due to the weather, for example, move the car to a closed place for motorists or remove water from pipes due to a cold snap for homeowners. A study by the IBM Institute of Business Value showed that, of all the people who submitted claims for reimbursement for an insured event after bad weather, only 3% were notified in advance. Understanding possible risks also helps insurance companies prepare the compensation process in advance, which directly affects customer satisfaction. The same study provides statistics that the level of loyalty and satisfaction with the company's actions increased by 18% for those who received compensation within one week after the insured event.

Trading

Weather conditions also have a strong impact on trading and trading. Statistics for 2012 shows that the total financial losses in the production of grain due to drought amounted to $ 25 billion, and the amount of insurance damage reached $ 12 billion. As a result, world prices jumped to a record level since 2008. One of the services of The Weather Company due to the seasonal prediction of climate change helps to assess risks and reduce the amount of both losses for traders and payments due to the damage caused to insurance companies.

Logistics

According to a US Department of Transportation study , the cost of delays in the delivery of goods due to weather conditions is estimated at $ 8.7 billion annually. To reduce these costs, The Weather Company provides a service panel for managing ground transportation. The panel includes information about weather conditions, road conditions and traffic. The service also helps to lay the best routes and notify drivers of changes in weather conditions.

Marketing

And, of course, the area actively using weather data is marketing. In the beginning, an example was given of Walmart,

The Weather Company - Digital Company

Obviously, The Weather Company is not just a meteorological service, which gives the current state on the street or a weather forecast for several days, but also a vivid example of a real digital business model. What does it mean? All services that TWC provides are provided digitally through the open API mechanism. Currently, the company has 9 groups of such services. In essence, this is the business model that many of the existing organizations aspire to.

The only thing that remains in a non-digitized form in the case of The Weather Company is data sources or sensors: for example, a weather station. Also, the company employs more than 100 data scientists - specialists in work with data. The list of their tasks is the compilation of behavioral models and the dependence of people's lifestyle on the weather. Thanks to their work, The Weather Company provides a ready-made service through the API for predicting, for example, the conditions of playing golf, running and skiing. Also, third-party companies have the opportunity to buy raw data, then to analyze them yourself.



Platform and technology

And at the end a little more about technology. Obviously, the platform on which The Weather Company is based must be able to process a huge amount of data in near real-time mode. All this is possible through the use of a variety of technologies: from relational databases to in-memory calculations and graph-oriented databases. This example well demonstrates the idea that it is impossible to create a large platform for storing and processing data on any one technology.

Also, one of the main principles of building a platform is modularity - The Weather Company platform can operate in several cloud data centers. In many ways, the uniqueness of the created platform, in addition to a promising business, was one of the main reasons for acquiring the company by IBM. Currently, IBM is actively integrating The Weather Company platform into its current systems and solutions, using its accumulated experience in working with data and obtaining information from various sources.