13.01.2023 | Nikolay Valiotti
SnowFlake: The Best Data Warehousing and Prescriptive Analytics Solution
With 99% of blue-chip companies like Bloomberg or Phizer investing in Big Data and AI heavily despite all the crises, based on NewVantage Partners’ report, it’s no wonder that today’s business landscape is lapped in data. Many SMBs have jumped on the bandwagon, too, making a rush for data more engaging. However, the above survey reveals that even among the mainstream businesses, less than 40% have succeeded in managing their existing data as an asset.
But data must be handled as a valuable business asset and can be transformed into tangible outcomes, not to mention operational and other improvements, with proper data monetization. Let’s look into the data monetization concept and discuss how to monetize data differently.
Like any monetization, this concept stems from the possibility of turning something non-monetary, such as your business data, into new revenue streams or at least other measurable benefits. These perks may vary from reduced costs and improved productivity to a larger market share or increased market value.
For example, Verizon, the largest wireless carrier in the US, managed to reduce support calls by 43% and cut down tech dispatches by 62%, thus lowering operational costs while enhancing customer experience. To achieve these impressive results, they collected offline and online data sets through various channels and used them to derive actionable insights, which were then shared across executives and customer-facing teams to implement effective informed decisions.
In turn, Tableau, another US-based company, this time specializing in data visualization and business intelligence, provided Verizon with tools helping to digest the big data and convert it into actions. However, Tableau uses opportunities to collect data to generate its own analytics, further adding to the company’s offerings: advisory services or instructor-led classes.
These examples show that data collected by a company can be shared among internal and external stakeholders, leading us to two major ways of data monetization.
What Is Indirect Data Monetization?
As the name suggests, internal data monetization covers all scenarios where a company avails of its own data, although without getting revenue straight away, which is why this approach is also called indirect. This is the main reason behind the data collection efforts of every company — to find room for improvement in business operations and make the best possible decisions rather than using the figures just to create beautiful charts and infographics. While things like risk mitigation, employee productivity improvement, or better customer experience may not result in immediate profits, they eventually lead to cost reduction or gain in sales (and sometimes even both), boosting the company’s performance metrics.
What Is Direct Data Monetization?
Contrary to internal data monetization, the direct method implies data sharing aimed at profit-making but geared toward third parties. Here, a company shares collected data or valuable information sourced with external stakeholders to receive revenue or alternative business benefits. Direct data monetization also comes with a range of opportunities, starting from information bartering, where companies swap customer data to grow their bases of potential clients, and ending with selling data to interested businesses on a subscription basis.
Mixed Approach to Data Monetization
Although the two data monetization types require somewhat different analytics tools and skills, a company can enjoy the best of both worlds with a proper business strategy. We have already described how Verizon leverages data and analytics to optimize internal operations and improve customer service. Still, the telecommunications giant doesn’t stop here and expands its data monetization capability through B2B services. It incorporates aggregated and anonymized data into cutting-edge solutions for businesses, such as Verizon Connect fleet tracking, and creates additional revenue streams using the direct method.
As data monetization possibilities are so diverse, let’s slice and dice each type separately to understand better what benefits you can reap from data collection and how different data monetization strategies can be implemented.
What Data Needs to Monetize?
As previously stated, a company can monetize data by making it available to customers or partners. But that’s where you stumble across the first important question — are you going to provide data in the raw form, or clean and process it in other ways to ensure data quality, or take it a step further and shape it into insights?
For example, an e-commerce platform that collects customer purchase data can sell a list of every purchase made on the platform without even structuring it, or it can dig into the data silos to come up with ready-for-use insights on buying preferences, which will be of greater value to the company’s partners and other businesses. Obviously, adding your expertise to the pack is a good move. Still, it will require investing more time in research and analysis along with onboarding advanced analytics tools for data processing and visualization.
Whichever way you choose, here is a choice of data monetization ideas to get the ball rolling:
All in all, you are free to enrich your company data with usage data, competitive data, and other data types obtained through multiple sources.
How to Use Your Information Assets for Data Monetization?
Depending on your business strategy, the structure of your company, and the data you own, you can profit from sharing the assets in several ways and even combine some of the following methods:
Data as a Service
Let’s go back to the raw data vs. insights problem. In the first case, you will serve as a DaaS provider, selling datasets to data brokers or directly to companies looking to increase the breadth and depth of available data for further modeling and analysis. The Data as a Service model is suitable for partnerships aimed at nourishing joint data assets, such as data sharing between healthcare providers and insurance companies. You will also have a range of data marketplaces that connect data sellers with potential buyers. The datasets can be delivered via API integrations or a downloadable data dump.
Insights as a Service
IaaS, which stands for “Insights as a Service,” is a new kid on the block, but the trend to switch from delivering structured and unstructured data to providing businesses with action plans and guidance derived from this data is gaining momentum. Since many organizations don’t have sufficient resources to sift through all those hefty volumes of data, which leaves a significant share of the assets unused, the demand for novel and actionable insights is only growing. If you manage to present your data in a meaningful way, your customers and third parties, like data brokers, will be happy to get a hold of it.
You can distribute the insights via email, provide them as downloadable PDFs, or offer embedded analytics with the visualizations and reports baked directly into a business application. In the latter case, you will need to manage the data and develop an embedded analytics tool to integrate your analytical capabilities into the app.
What Goals Can Be Achieved?
This data strategy focuses on generating valuable insights from data collected by a company. But before you can decide what data to gather, you need to define your goals since different data sets are suitable for addressing various challenges. Let’s learn what benefits a company can get from internal data analytics:
Surely, these are not all the goals achievable with the right data at your fingertips, but the list gives you a good idea of the competitive advantages your company can arrive at. Any actions triggered by data analytics resulting in an increased revenue stream or reduced costs count toward indirect data monetization.
Data Monetization Tools for Internal Use
The range of solutions used by modern businesses to analyze their data is highly diverse, but the basic data monetization tool most organizations need is a data management system. You can’t jump to getting insights from your datasets without storing, managing, and distributing them properly, the more so that it’s not difficult to find an analytics platform with built-in visualization and other features suitable for your needs. Here are some categories of data management tools you may want to consider:
5 Steps to Get Started with Data Monetization
Although some steps on your path to direct and indirect data monetization will vary depending on the chosen method, there are some best practices applicable to every scenario:
Does Data Monetization Work?
According to the latest research, the data monetization market is expected to grow at a CAGR of almost 20% and exceed $7 billion by 2027 while being estimated at nearly $3 billion in 2022. It’s a good reason to follow in the footsteps of the companies already capitalizing on their data assets.
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