Easy Money? Considerations for Building Out Your Data Monetization Practice
Three years ago, The Economist had concluded that oil was no longer the world’s most-valuable resource years ago, data was. In today’s data economy, FAANG stocks — Facebook, Amazon, Apple, Netflix, and Google (okay, Alphabet) are among the world’s most valuable firms.
Consider also that all told, the average American’s data is worth an estimated $240 a year. Why is FAANG so valuable? In a large part because of all the data they have procured from their millions of users.
According to Forrester Analytics’ Global Business Technographics, as demand for data and insights grows, the opportunity for companies to take data to market, in some form or another, grows with it. And it’s already happening: 47% of companies report commercializing their data (i.e., selling or sharing their data for revenue).
While selling data might sound like it’s easy – collect the data, sell the data, and then transfer the data – in reality, it’s much more complicated than that. Before you rush in to take advantage of this resource, you should consider the following steps. Doing so will give you a more realistic view of how you can extract value from your data.
Take Inventory of Your Data
Before kicking off a data monetization strategy you need to understand what types of data you have and who would want it.
When taking inventory of your data, you should also ask which systems those datasets live in, how easy it is to get the data out of your existing systems and then determine how much the data you’re looking to monetize is worth to you.
Finally, you should look at how your customers will use the data and whether it will be used for marketing purposes.
Make sure you take a long-term view when you inventory your data. Data used to be something harvested by the IT department. To get the attention of senior management, sales, product management, legal, engineering, analytics and finance, and finance, it had to be translated to each.
That’s still largely the case, but IT isn’t always the best at communicating the potential benefits of what it has found. Nor does IT always have the foresight to look out years ahead to see a multi-billion-dollar business. In reality, the first year of monetization usually nets a lot of learnings but few deals.
To really get value out of your data, you need to involve people from all parts of your organization and imagine possible profits even decades out.
To discern the true value of your data, just imagine someone broke into your system. Kaspersky estimates that the average cost of an enterprise data breach was $1.41 million in 2019.
Decide Which Channels to Use
When it comes to selling data, a number of different channels exist. One is data brokerages. Another choice is a data marketplace.
Data marketplaces look like an eBay for data. Examples include the AWS Data Exchange and the Snowflake Data Exchange. Marketplaces can be great places to start your data monetization journey. They offer easy access to a number of buyers.
But such access comes with a few caveats. To protect yourself and your data, ask your data marketplace some questions. Like if they have pricing controls. Ask if they can manage which companies they’re willing to sell to, what percentage of the transaction do they get and what kind of rights to your data they get.
Be Mindful About Data Regulations
There have been several recent data regulations that anyone contemplating this space should be aware of. For instance, the European Union has enacted GDPR, California has passed CCPA, and there are all sorts of other new-ish data regulations plus old ones like HIPAA.
These rules have been put in place to make sure that citizens have protections when companies are collecting information about them.
These regulations don’t prevent you from creating data monetization businesses. Instead, they force companies to be more diligent when it comes to their data collection practices. Ultimately, they are designed to create a healthier more sustainable ecosystem while protecting the rights of consumers.
In the end, if you take the time to avoid the potential pitfalls, you will be able to realize a highly valuable asset.
About the author: Nick Jordan is the Founder and CEO of Narrative. He founded Narrative in March of 2016 to help organizations more efficiently acquire and monetize raw data sets. Previously, he served as a senior vice president of global strategy of Tapad, which was acquired by Telenor in early 2016. Prior to Tapad, Nick served as director of product management at Adobe, overseeing Adobe’s data management platform AudienceManager (formerly, Demdex). He served as vice president of partner solutions at Demdex, Inc. since September 2010. Prior to Demdex, he served as a senior director at Yahoo!, where he ran the non-guaranteed marketplace team of the North America Yahoo! Display Ad Network.