Data monetization refers to the process of identifying and using data to generate revenue.
Article by Mário Mineiro
When it comes to extracting the value of data, it’s a no-brainer that it comes along with better decision-making and undiscovered opportunities, but how about data monetization?
Data monetization refers to the process of identifying and using data to generate revenue. It increases the value of data, increases overall productivity, improves customer experience and customer loyalty. Nowadays, data is a more valuable commodity than any other tangible product.
Looking into the BI Survey, 17% of companies have an established data monetization initiative, 12% of companies are currently building prototypes, and an additional 10% are developing a concept.
Data monetization is becoming a must and a lot of companies according to the BI Survey are moving into it. After all, it creates opportunities and competitive advantages in the market.
Companies are starting to understand their data better and start using that knowledge to improve their processes and their products, to create new products and new services, to reduce costs and to increase the quality of products and services. The best way to start and to accomplish the business goals is by defining the KPIs, defining the target, generating insights and acting. Then it is necessary to repeat and improve the process.
There are two main ways to monetize data: direct or indirect (can also be called external and internal).
Direct Data Monetization:
The world is now in a data-driven mindset and evolving fast to an insight-driven one. Direct data monetization is providing access to business data to third parties for a fee, normally in raw form or aggregated or anonymized.
Consumer data is one of the most valuable data and everyone wants it, but some caution is needed to ensure policy and privacy in this field.
Indirect Data Monetization:
This is where embedded analytics comes into play. By embedding a robust BI tool in your application or software, you pass along the value of data analysis to your customers.
Customers can analyze their data from your application in conjunction with their other data sources to make their business more data-driven.
At the same time, you can monetize the embedded analytics by offering it as a value add-on or additional tier of service. This method of data monetization allows you to increase the appeal of your application by providing more value to your customers while also creating an additional revenue stream.
You’ll also get a competitive advantage as you enhance the customer experience for your clients.
For the data monetization process to work better, it is important to think of data-as-a-product and evolve into data-as-a-service, so that all customers of this data (both internal and external) can take in real-time the maximum benefit from them.
When a company gets all teams, whether product or service, to work on data, when these teams dominate the segmentation of their customers, customer profiles and what they are looking for, then they can offer these groups exactly what they need.
But if you're trying to implement a data monetization initiative in your company, here's what you should know.
Five key lessons that you should keep in mind:
1. Gain top management’s support
Importantly, the external monetization strategy must reflect the corporate strategy, for example, compliance with privacy policies should be reflected in corporate policy. Top management should be setting or at least supporting these policies. In addition, it must approve the business case, allocate appropriate resources, ensure cross-functional coordination and sometimes remove the key obstacles that inevitably pop up during implementation.
2. Understand customers’ needs
To develop a valid business case, service providers must understand the needs of their advertising partners, and seek to provide rich and relevant data (compliant with applicable regulatory regimes).
Service providers can leverage partners to better understand market requirements as well.
3. Think big, start small
Service providers do not necessarily need a perfect data solution to be effective in the market.
By understanding the market, service providers can start by supplying a relatively small, but meaningful, stream of data and expand the depth and breadth over time.
Partners with deep market understanding can help service providers to prioritize data sets.
4. Privacy is crucial
Implementing a robust set of privacy measures is critical to the success of any data management effort and is not limited to the avoidance of regulatory penalties.
Privacy is a fundamental component of customer trust, and without trust, it is nearly impossible to engender loyalty.
Compliance with privacy regulation may be viewed as complex, cumbersome and expensive, but it is a necessity regardless of your monetization strategy.
5. Manage customers’ data as a corporate asset
Because that’s what it is! A strong data management program is important for myriad reasons, not just for monetization and to comply with privacy regulation:
- Being able to provide rich, relevant, accurate data in a highly scalable fashion can lead to a substantial competitive advantage and increased revenue.
- Data monetization might not be the prime driver of data management efforts, but it should justify such programs and their priorities for improvements.
Data monetization is an important initiative that’ll help you grow and develop your company even further so, if you want to learn more about how you can implement these strategies in your business, get in touch with us and see it take off!