It’s a great time to be in data.
Blame the increasingly connected nature of our lives. Depending on our age, we spend upwards of five hours a day on our phones, constantly moving between Wi-Fi connections and beacons that track our location. We share personal information across social media platforms and apps -- everything from our birthday to our favorite Starbucks drink.
A recent Forbes article reports that analysis of this data will grow into a $203 billion industry by 2020. By 2025, users across the world will create over 180 trillion gigabytes of data, and companies are scrambling to get a piece of the pie. Who can blame them? Data isn’t just big anymore: it’s massive.
For companies and developers who find themselves flush with this suddenly valuable resource, “data monetization” sounds like a pretty good deal. It’s a chance to set up an entirely new revenue stream, based on data that they may not even be using. But how does it work, exactly? Who is buying data, why do they want it, and how do you go about selling it to them?
There are a lot of different uses that companies could have for user data, but monetization essentially comes in two forms: indirect and direct.
With indirect data monetization, you are doing the work to make the most money out of your own data. Maybe you analyze your customer’s mobile habits in order to create more targeted ads. Perhaps you realize that your product does better with certain demographics, and refocus your marketing accordingly. With a little bit of work, raw user data can be a crucial part of increasing profitability and building a more connected business.
There’s only so much you can do with your own customer data, though. Much of the information you collect may not even be relevant to your bottom line. That’s where direct data monetization comes in: that is, selling your data to third party companies that need it.
There are a number of different industries that would love to get their hands on your data.
Advertising agencies can use it to improve the targeting and effectiveness of campaigns. Corporations can use it to gain a better understanding of how consumers interact with their brand. Knowledge is power, and in the data market, you are holding all the cards.
Beyond these basic categories, there is still more flexibility for how data monetization can work best for you. Data can be sold for a profit, or traded in exchange for a service offered by the buyer. It can be sold as raw data, or you can break it down into analytics and sell it for a higher price. The best part about direct monetization is that it is an opportunity to create a new, self-sustaining revenue stream that requires minimal work on your part.
As data grows even larger in the next several years, more and more companies will jump aboard the monetization train. It’s important to remember, however, that participating in this data “revolution” is a responsibility as well as an opportunity. Will your company lead the charge, finding innovative ways to maximize the value of your data, while also maintaining user security? Data is here to stay: It is up to you to decide where you fit into it.