Data’s ability to transform the ways businesses operate have enjoyed it as valuable currency in the digital age.
Many companies — small and large — have found a lot of success by effectively taking advantage of data to help focus on business operations.
Data by itself can certainly carry a lot of value to different types of organizations. However, the process of turning data into money, or otherwise taking advantage of the actionable insights data can unlock, makes the information much more valuable. This process is known as data monetization.
Why Should Businesses Monetize Their Data?
Companies who use data effectively to learn more about their customers and target products or services stand to gain a significant competitive advantage in the marketplace and save on operational costs, including ineffective marketing spend.
According to Bruce Daley, author of “Where Data Is Wealth: Profiting From Data Storage In A Digital Society: said:
“Where knowledge is power, data is wealth. It’s not intrinsic in the data, it’s what you do with it.”
The lucrative financial prospects and the disruptive nature of data monetization have attracted the attention of many companies. The future for the industry looks to be getting brighter each year. A February 2018 report from Allied Market Research projected the global data monetization market to be worth more than $370 million by 2023, growing at a compound annual growth rate (CAGR) over 35 percent between 2017–2023.
What Are the Different Types of Data Monetization?
Businesses ultimately strive to monetize data to trim operating costs and drive more revenue. Internal data monetization focuses on taking advantage of information to boost company operations and productivity.
For example, music-streaming company, Pandora, collects a variety of user information, including the songs, artists, and genres listening habits. This metadata is funneled into Pandora’s smart machine algorithm, which uses the information to search through music repositories and recommends music that matches the user’s metadata.
Pandora’s analytics helps bring users the type of music they like and helps the company focus operations. This process has brought the company a lot of success and laid the groundwork for their entire business model.
By contrast, external monetization focuses on selling data to outside companies to create new streams of revenue. Companies like Verizon and Telefonica have used and sold data to a variety of B2B clients for projects related to fraud detection and density planning.
The Keys to Effective Data Monetization
Effective data monetization is only possible with a sophisticated BI architecture that extends access to all of a company’s end users. A scalable computing platform combined with a robust set of reporting and analysis capabilities is needed to refine data. Once it’s cleaned, the data can be used for the company’s financial benefit.
Organizations should emphasize the following to ensure successful data monetization:
Clear Vision: Organizations looking to monetize their data should treat the information like a product. This means coming up with a clear plan for the information lifecycle and then putting relevant employees and teams in charge of executing the particular initiative.
Concise Process: The data monetization process should result in information that is clean, consistent, and useful, no matter if a company is looking to learn more about customers or trying to promote a product.
Above all, data monetization is about making data work to a company’s advantage.
A Vision for the Future
Turning data into profit is one of the next big frontiers for the digital age. It’s critical for companies to commit to their data and come up with a clear plan before trying to monetize it.
Creating a competitive advantage through monetization comes through a robust BI architecture that helps facilitate insights into better decisions, new revenue streams, and reduced operating costs.
