Monetising data is a goal for many organisations – whether they realise it or not. Depending on the definition used, monetising data could literally mean converting data into cash, or more broadly it means generating a profit (or other benefits) through data use.
Using data effectively can create enormous value in your organisation. Many of the world’s largest companies (Google, Amazon and Facebook for example) are well-known data users. But you don’t have to be a tech giant to monetise your data. You just have to clearly align your data use with your business strategy.
This step is important because there are so many different ways to use data. Data can be used as legal tender, or to generate a profit (in the case of Google, selling it via improved targeting). Plus, data can be sold directly for money by organisations such as the British Retail Consortium that provides data to retailers.
By aligning your data strategy with your business strategy, you ensure that any projects you implement will have a direct impact on your company’s goals and bottom-line. There’s little point in using data to optimise your marketing effectiveness when your organisation is totally focussed on new product development.
Say “monetisation” in the boardroom and you’re likely to get a number of different definitions. It’s important for all your peers to be on the same page when it comes to monetising data and putting it on your balance sheet. Common misconceptions about monetisation include:
- Monetisation isn’t just about selling data.
- It doesn’t always involve a monetary exchange.
- Your data isn’t always involved – other organisations’ data might be involved too.
- The data doesn’t have to be in a raw form.
- Other organisations won’t want your data.
- That you can only market your data to suppliers or partners.
Facebook offers a good example of a company that has pivoted from being a social network to selling services based on data. It holds a lot of data on its users, but it doesn’t sell it in a raw format. Instead, it sells advertising (with targeting options informed through data) to a broad range of customers. Facebook is now one of the most popular marketing channels with 93% of marketers stating that they regularly use Facebook Advertising.
Credit reference agency Experian offers a range of different data propositions to its customers. For example, it offers consumer insight data to organisations through its Business Services (along with identity, fraud and credit risk).
How to monetise your data
Now that you understand that monetisation takes many different forms, the next logical question would be how you can uncover data value in your own organisation. There are several methods for this:
- Keeping and attracting customers: notably through improved marketing and sales effectiveness, and better customer service
- Developing more products and services: as shown through Experian and its expanded services based on the data it holds. Data can also inform new product development
- Gaining a competitive edge: data can improve your targeting and bottom-line, as well as provide insight into competitors’ performance
- Decreasing ongoing maintenance costs: for example, through remotely monitoring warehouse/factory equipment and predicting breakdowns
- Entering new market areas: data can reduce the risk of this by predicting how well your organisation will perform in new markets
- Exchanging data for a better deal (or goods and services): usually with partners or suppliers
- Predicting risk and uncovering fraud: often seen in financial services – all banks now use data to predict risk or uncover fraudulent transactions
- Improving business relationships: with partners, suppliers and potential clients
- Aiding citizen wellness: as illustrated by many smart city initiatives
Valuing data loss
Of course, where there’s profit, there’s potential loss. Because of the value of data, it inherently comes with a risk of attack. Data is a valuable asset for many organisations. Don’t underestimate the potential losses from a data breach. The value that you obtain from your data needs to cover any potential losses you might incur. It is a high-value asset and should be secured appropriately. Especially is the data itself is particularly sensitive (like biomedical information).
Multiple approaches for your data
Whatever your approach, whether you directly exchange data for money or if you monetise it in a broader sense, you need to link its value back to your business goals. Your organisation won’t benefit from data value that is misaligned to its strategy. It is also vital to understand the risks associated with using data. It is worth a lot, not just to your business but to outsiders as well. So secure it effectively.
The opportunities for monetising data in your organisation are vast. You don’t have to be a tech company or in information management to monetise data. It could be as simple as having an Excel spreadsheet and acting on the insights. But the key is to start. You won’t deliver value without starting your data journey first.
(Jason Foster – Founder & CEO)