Algorithms are a sequence of logical instructions based on activities that are in an initial state and seek a final result. For example, if you want an amortization table for a loan as a final result, the algorithm will handle all the necessary calculations for this purpose (sequence of logical instructions), receiving some required parameters (initial state) such as the type of table, the loan’s amount and duration. At the end of the process, you will receive the table of amortization according to the regulations defined in the algorithm.
Artificial Intelligence (AI) is a higher grade of programming algorithms. Through algorithmic programming, the systems not only perform a predefined action but obtain knowledge through their execution and learn from the “error” or “experience.” The algorithm itself is able to identify a problem and find the logic to repair it. The logical system doesn’t finish with the error’s execution, it’s able to register all the previous actions, allowing the generation of the desired result from the collection of information itself.
Algorithms are used in digital marketing by companies such as Google and its Google Ads system, a service that programs advertising according to the search patterns of the users who might be interested in a product or service. Another network that has strengthened its algorithms for marketing is Instagram. It is possible to promote a product or service through its platform with a post. The system is able to recognize all those users who follow or have “liked” similar posts and will show the ads in their accounts.
Amazon, a leading company in e-commerce is another use case that we can mention. The operation of its algorithms is focused on obtaining its clients’ information, knowing the purchase needs to then determine consumption patterns, and provide the most relevant product suggestion in the search field of its platform. Likewise, its algorithms are able to change the prices many times in the same day to adjust to its consumers’ demand and purchase behavior.
In companies, the data based on algorithms and Artificial Intelligence can affect many tasks positively, generally these tasks are associated with staff reduction and resources optimization. However, artificial intelligence will renew the business world through the analysis of millions of data in record time, thus preventing possible failures or even improving the services through evolution or innovation. The digital world allows consumers’ opinions to travel constantly to the production center, therefore a robust enough algorithm can provide new ideas and generate improvement opportunities before other decisions can arise.