Data Monetization is the process of generating revenue from a company’s data, either by using it internally or by selling it externally. Find out everything you need to know about data monetization.
Today, almost every company in business has access to a large amount of data about their supply chains, operations, strategic partners, customers, and competitors. However, according to a study conducted by A.T. analysts. Kearney analysts, only 1 in 12 companies monetize their data.
Data Monetization: what is it?
Data Monetization” or monetization of data consists in use company data to generate profit. This may involve selling the data directly for money, or relying on the data to create value indirectly.
According to Barbara H. Wixom, a researcher at MIT, there are three main ways to monetize data. The first method is simply to sell the data directlyThis can be done independently or by using a data broker as an intermediary.
The the second method is that of information exchange.. It is possible to exchange data for other data, but also for goods or services. Data can also be used to negotiate arrangements with partners.
The final way to monetize data is to to improve company performance or to create new products based on the data. Indeed, data analysis can help identify the weak points of a company to find solutions to problems that prevent it from achieving its objectives.
Likewise, data-driven companies can rely on data to better understand customer demand and needss. It is then possible to create new products and services to respond appropriately.
How can you monetize your company’s data?
As soon as you invest in your data management infrastructure, you can consider that you are already monetising your data. Indeed, by duplicating, standardising, linking, transforming, moving and securing your data using software tools, you enable your company to gain in productivity and save precious time.
A Data Management platform also ensures the integrity of transactions concerning the management of orders and services or invoicing. For good reason, these tools make it possible to minimize missing, incorrect or conflicting data. By extension, by eliminating errors and the traditional systems that are responsible for them, the company is able to reduce its costs.
This is a way to monetize your data internally. The second way is to Monetize your data externallyby opening access to this data to your customers and partners to generate new sources of revenue.
Your customers and your partners will be able to use your data for the purposes of automation, extending the logistics base, distribution, adding digital functionality to existing products, customization, or creating digital platforms.
However, many companies Monetize their data both internally and externally.. This is for example the case of telecommunications companies such as Verizon, Deutsche Telekom or Telefonica. These companies monetize their data internally by using it to optimize their activities and customer services, but also externally by using this anonymized and aggregated data to offer new services to their B2B customers.
Among the proposed offersExamples include geotargeting and geofencting for retailers or the tourism sector. Similarly, advertising agencies, public transport companies, health sector organisations or government agencies can also benefit from traffic data.
For financial companies, the data can be used to detect fraud. Brands and digital advertisers can use the data for advertising targeting.
Data Monetization in the Age of Big Data
With the rise of technologies such as Big Data and the Internet of Things, the concept of Data Monetization has gained popularity.. Data is becoming more and more abundant, thanks to sensors and other web applications, but also more and more coveted as analytical systems provide valuable insights.
That’s why many companies are looking to monetize their data. For web giants like Google and FacebookData Monetization has even become a core business due to its unrivalled profitability.
What are the challenges related to Data Monetization?
Data Monetization has many benefits for the business, but can also bring its own set of challenges. First of all, the sale and exchange of data is subject to strict regulations that the organization will have to comply with. This is the case, for example, of the DPMR in the European Union.
Moreover, by deciding to sell its customers’ data, a company may raise concerns about confidentiality. We can cite the example of Facebook, which has grown rich but has alienated many users by exchanging user data with dozens of partners.
Another challenge of Data Monetization is related to the democratization of data. Most companies are now able to monetize their data. It is therefore need to be competitive against your competitors, for example by diversifying your data sources.
Before you start, ask yourself several questions about your company’s position in his industry. It is preferable that your company is among the leaders in the industry (at least 20% market share), and that you are among the first to monetize your data. Also make sure you have the right to legally reuse your customers’ data and that you have the necessary infrastructure in place.
In conclusion, there are many advantages to monetizing data, but it is a cautious approach is essential. Try to seize the best opportunities to achieve your company’s goals.