Contact Us

Data labeling vs. data annotation: everything you need to know

Data labeling and data annotation might sound similar, but they play different roles in making smart computer programs.

In this easy guide, we’ll explore what each term means, how they differ, and why they’re important for creating AI. Get ready to understand all about these key steps thoroughly.

Alexey Kornilov Avatar

Basics of data handling in AI

Handling datasets in AI is the process of preparing, cleaning, and structuring large amounts of raw data for later use. Structuring it (labeling and annotation) helps AI learn from it and make intelligent decisions.

This thorough approach to management is crucial for developing accurate and reliable AI systems across various applications, from predictive analytics and natural language processing to computer vision and beyond.

Here we have listed definitions, techniques, and challenges to help understand the differences between types of handling to help you easily navigate the choice of labeling vs annotation.


What is data labeling?

Data labeling is categorizing raw data and adding descriptive labels to them to help AI analyze it more effectively. Labels should be meaningful and provide relevant context for the machine learning model.

This process is paramount in supervised learning as it is when the algorithm learns to predict outputs from the input data. 

Techniques and methods

There are two basic techniques for realizing the process: 

  • Manual labeling: requires human reviewers to label the data as per the defined categories and guidelines. This method is useful with ambiguous and context-dependant categories where labels require human judgment. 
  • Automated labeling: requires trained algorithms and pre-labeled data to accelerate the process. Automation is relevant for text categorization, image segmentation and such cases where the label is obvious and non-subjective. 

Limitations and challenges

Although an effective and crucial process in handling data, adding labels brings about several challenges and limitations to machine learning practices. 

For manual labeling
  • Human error: With manual adding labels, the human error factor can lead to inaccuracies. 
  • Inconsistency: Creating a unified approach across all practices can be a challenge when dealing with larger task volumes. 
  • Scalability issues: The dataset growth requires more effort and cost especially with large-scale AI applications. 
  • The need for expertise: In certain data types in medical and legal contexts, you will need domain experts to ensure accuracy. 
  • Sensitive data: Dealing with private and sensitive information poses security concerns, especially under regulations like GDPR.
For automated labeling 
  • Accuracy: Despite being faster and less resource-intensive might produce less accurate labels leading to poor model performance.
  • Evolving categories: Categories change over time and require adjustments in the pre-defined labels for automation algorithms.
  • Ethical concerns: The risk of unethical use of biased models, especially in sensitive areas like facial recognition or predictive policing, is a significant concern.

What is data annotation?

Data annotation is adding extra information to data, making it understandable for machines. Similar to putting labels, this step assists in better processing by AI. Annotating is like adding sticky notes to your data, pointing out exactly what’s what.

In addition to teaching computers to recognize images, understand texts, or listen and interpret speech, annotating the information helps the computer to learn and make sense of it.

Annotators might mark where an object is in a picture, label the sentiment of a sentence, or pinpoint the start and stop of a spoken word in an audio clip. This detailed work lays the groundwork for AI to learn from examples.


Techniques and tools

Here are the basic techniques used for data annotation. 

  • Bounding boxes: This is used for object detection tasks and the process is like drawing a rectangle around an object in an image to mark its location. Bounding boxes are useful in recognizing simple object locations of images, however, it doesn’t capture the exact object shape. 
  • Polygon segmentation: This technique is used for more precise object outlining. Each corner point of a polygon is marked, and the lines connecting these points define the object’s boundary. Most commonly, polygon segmentation is used for satellite image interpretation or medical imaging.
  • Keypoint annotations: Annotating keypoints involve identifying specific points of interest on an object within an image. For example, when working with images of people, key points might be placed on the elbows, knees, tips of the ears, and eyes to map the posture and movements of the human body. 

Limitations and complexities

Alongside its benefits, data annotation poses some limitations in machine learning. In the list below we have described the common limitations and complexities you should consider:

  • Quality assurance: Consistency and quality across annotations particularly with a large team of annotators is a challenge to handle carefully.
  • Time and budget consumption: Annotating requires a significant amount of human labor therefore it makes the process quite costly.
  • Subjectivity: Some tasks are subjective, leading to variability in the labels which can affect model training.
  • Data privacy: As in labeling, this one also poses security limitations when handling personal details and privacy regulations. 
  • Expertise:  Some level of technical expertise is often required to annotate accurately, especially for more complex tasks like semantic segmentation.

Data labeling vs. data annotation: key differences 

While both data labeling and data annotation play crucial roles in preparing datasets for machine learning models, understanding their key differences, particularly in goals and applications, is essential for using them effectively.


Labeling has the goal of assigning an identifier to a dataset, essentially providing a high-level classification. This helps guide machine learning models in autonomously recognizing and categorizing data.  

e.g. tagging an entire image as “cat” or a text document as “email”.  

Labeling helps in tasks like differentiating between different objects or themes within datasets by attaching one or more labels that best describe the overall content or nature of the data.

On the contrary, the goal of annotation involves adding additional information and context to the data, which might include marking up specific elements within the data.

e.g. drawing bounding boxes around objects, segmenting regions, or marking key points in images.

The annotating process often supports more detailed and nuanced understanding and analysis by delineating boundaries, identifying key points, or providing detailed classifications within data segments.

This detailed guidance allows models to not only recognize what is present but also understand the location, dimensions, and other specifics that are critical for more complex interpretations and decisions.

Understanding the distinctions and applications of labeling and annotation can significantly impact the effectiveness of your machine-learning models. Let’s see the cases and situations where either labels or annotations can be a preferred choice.

Data annotation vs data labeling: use cases
Use data labeling for:

Broad categorizationSimpler models with less granularityEarly stages of model training
Use data annotation for:

Detailed analysis and decision-makingNatural Language Processing (NLP)Advanced computer vision projects

When to use labeling 

Picking the right data handling approach depends on the project’s goals, the complexity of the task, and the level of detail required in the analysis. Here are the cases, when you better use labeling over annotation. 

  • Broad categorization: Where the key requirement is to distinguish data at a fundamental level — for example, identifying whether an image has a cat or a dog.
  • Simpler models with less granularity: In scenarios where the model does not need to understand the intricate details within the data to make accurate predictions.
  • Early stages of model training: When introducing the basic concepts to a model before it advances to analyze more detailed and nuanced information.

When to use annotation 

  • Detailed analysis and decision-making: Annotation is vital for tasks requiring an understanding of intricate details, such as facial recognition or autonomous vehicle navigation, where exact positioning, dimensions, and identities of multiple objects are crucial.
  • Natural Language Processing (NLP): Applications like sentiment analysis or entity recognition in texts, where specific parts of the data need to be identified and understood in context.
  • Advanced computer vision projects: Including object detection, segmentation, and tracking in images or videos, where the precise locations, shapes, and interaction of elements are essential for the model’s performance.

Both processes are integral to the development of sophisticated, reliable AI models, each serving its unique purpose in the broader context of machine learning and AI development.


Both data labeling and data annotation are integral to the development and enhancement of machine learning  and artificial intelligence models, but they find their specific applications in different contexts:

Labeling applications

  1. Image classification:  Assigning a single label to an entire image, such as “dog” or “cat”. This application is widespread in sorting visual content for e-commerce or social media platforms.
  1. Email filtering: Labeling emails as “spam” or “not spam” helps email services automatically filter out unwanted messages, improving user experience.
  2. Sentiment analysis: In natural language processing (NLP), texts (reviews, comments, etc.) are labeled based on their sentiment (positive, negative, neutral) to estimate public opinion or customer satisfaction.
  3. Voice command recognition: Labeling audio data to train virtual assistants and voice-controlled devices to understand and respond to spoken commands accurately.

Annotation applications 

  1. Object detection and segmentation: Annotating images with bounding boxes around specific objects (detection) or outlining the exact shape of objects (segmentation). Used in autonomous vehicle technology for identifying obstacles, in medical imaging for tumor detection, or agricultural drones identifying crop health.
  2. Facial recognition: Annotating facial features using keypoint or landmarks for applications in security (e.g., surveillance cameras) or technology (unlocking smartphones).
  3. Pose estimation: Annotating human figures with key points to understand body posture and movement. Applications include sports analytics for improving athletes’ performances, physical therapy and enhancing interactive gaming experiences.
  4. NLP for advanced contextual understanding: Deep linguistic annotation in texts for tasks like machine translation, where context, syntax and semantic roles need to be understood precisely. This is critical in developing AI that can understand and generate human-like responses or translations.
Data labeling vs data annotation: practical applications
Use data labeling in

Image classificationEmail filteringSentiment analysisVoice command recognition
Use data annotation in:

Object detection and segmentation (automotive, healthcare, and agriculture) Facial recognition (security and high tech)Pose estimation (games, sports, healthcare)NLP for advanced contextual understanding


Labeling finds its application across various sectors like:

  • retail, where it helps in product categorization
  • healthcare for identifying types of diseases based on symptoms
  • autonomous vehicles for recognizing traffic signals.

Annotating, on the other hand, is significant in industries requiring precision and detail; for example,

  • healthcare for annotating medical images (like MRIs for tumor detection)
  • automotive for developing advanced driver-assistance systems (ADAS)
  • technology for enhancing AI-driven applications like virtual assistants.


A variety of tools exist to streamline these processes, each offering unique features tailored to specific types of data-handling tasks. Here’s a roundup of popular tools for both data labeling and data annotation: 

Tools for labeling

  1. LabelBox: A universal platform that supports labeling for various data types including images, videos, and text. It offers a collaborative interface, making it easier for teams to work together efficiently.
  1. Amazon SageMaker ground truth: Part of the AWS ecosystem, this service helps build highly accurate training datasets for machine learning quickly. It offers both automated and manual labeling features, along with built-in workflows for common tasks.
  1. DataTurks: A platform that provides labeling tools for images, text, and tabular data. It’s known for its simplicity and effectiveness in handling classification and entity extraction tasks.
  1. Figure Eight (now Appen): Offering both software and access to a crowd of workers, it’s ideal for tasks that require human judgment across data types such as text, image, audio, and video.

Tools for annotation

  1. VGG Image Annotator (VIA): A simple and standalone annotation software for image, audio, and video. VIA is highly customizable and works in a browser without the need for server-side processing or storage.
  1. Prodigy: A scriptable annotation tool that supports active learning, allowing users to train a statistical model in the loop. It’s particularly effective for text data, offering rapid capabilities for a variety of NLP tasks.
  1. LabelMe: A web-based tool for image annotation that allows researchers to label images with polygons and store them in XML format. It’s widely used in computer vision research.
  1. A free, easy-to-use online tool for annotating images that don’t require any setup or installation. Supports various types including bounding boxes, polygons, and keypoints.
  1. CVAT (Computer Vision Annotation Tool):  An open-source tool designed for annotating digital images and videos for computer vision algorithms. It supports several methods, including object detection, image segmentation, and classification.

Human input in labeling and annotation

Human input crucial role in the development of machine learning models by labeling and annotating data, tasks that require precision, understanding, and often, domain-specific knowledge. Human contributions ensure the high quality of data that AI systems rely on to learn and make accurate predictions. Humans can assist machine learning in the following activities: 

  • Understanding complex contexts

The human ability to identify nuances, cultural specifications, and other contextual features allows them to label and annotate data with a level of understanding that is currently beyond AI capabilities.

  • Making judgments on ambiguous data

In ambiguous situations, human annotators use their judgment to categorize or annotate it appropriately. This is particularly important in subjective areas like sentiment analysis or when dealing with complex, domain-specific content.

  • Ensuring quality and consistency 

Humans are responsible for maintaining the quality and consistency of labeled and annotated data. They review the work for errors or inconsistencies and validate the accuracy of annotations, ensuring that the final dataset is reliable for training machine learning models.

  • Providing detailed annotations

Annotating often requires detailed work, such as drawing precise boundaries around objects in an image or marking specific features within a dataset.

  • Implementing domain-specific knowledge

Humans with expertise in specific fields, like medicine, law, or biology, provide invaluable insights that greatly enhance the quality and relevance of the labeled and annotated data.

Required human skills and expertise

  • Attention to detail: Precision is key in labeling and annotating data.
  • Analytical skills: Understanding the context and making informed judgments on how to label or annotate complex datasets requires strong analytical skills, particularly when dealing with ambiguous or subjective information.
  • Domain-specific knowledge: Experts bring depth to the data that general annotators cannot, ensuring that annotations are both accurate and meaningful.
  • Patience and diligence: Maintaining high levels of concentration over long periods is essential for producing quality work.
  • Familiarity with annotation tools: Proficiency with the tools and software used for labeling and annotation ranges from basic to advanced, depending on the complexity of the task. 

Core differences in human skill requirements 

Data labeling and data annotation are both essential tasks in machine learning models, but they require different skill sets and expertise from human annotators. 

Data labeling is assigning labels or tags to data points, such as categorizing images or texts. It requires attention to detail, accuracy, and familiarity with specific labeling guidelines. Annotators need to be precise and consistent in their labeling to ensure the quality of the final dataset. 

On the other hand, data annotation entails adding additional information or context to the data, such as highlighting key features or marking relationships between data points. Annotation requires a deeper understanding of the data and often involves more complex analytical skills. Annotators must be able to interpret the data and make informed judgments to provide meaningful annotations. 

Although both data labeling and data annotation require attention to detail and analytical skills, data labeling focuses on categorizing and organizing data, while data annotation involves adding context and meaning to the data. Annotators working on these tasks may need different levels of domain-specific knowledge and expertise to perform their roles effectively.

Automation prospects

The automation of labeling and annotation stands at the forefront of transforming how data is prepared for artificial intelligence (AI) and machine learning (ML) development. 

Leveraging advancements in automation will help enhance efficiency and accuracy, and reduce the manual labor traditionally associated with labeling large datasets.

Key prospects include:

  1. Semi-automated tools, blend human insight with machine learning algorithms to refine and accelerate the process. 
  2. Active learning techniques prioritize instances that would most benefit from human annotation, optimizing the allocation of human resources.
  3. The adoption of pre-trained models offers another avenue for automation. These models, already trained on extensive datasets, can perform initial annotations with minimal human intervention. 
  4. Synthetic data generation as a novel approach to creating automatically annotated data, tailor-made for specific AI applications.

However, these automation prospects are not without challenges. Ensuring the quality of automatically generated labels and annotations, addressing domain-specific nuances that require expert knowledge, managing ethical concerns and biases in training data, and maintaining adaptability to new requirements are crucial considerations.

As the sector progresses, the synergy between automated systems and human oversight will be greatly valued. Balancing the scalability and speed of automation with the nuanced understanding and judgment of humans will be key to utilizing the full potential of data labeling and annotation for AI’s future.