Data monetization is a hot topic these days. Executives at both startups and large companies are being asked to capitalize on the value of their data assets and drive bottom line results. According to McKinsey, in their paper “Fueling growth through Data Monetization”, companies that invest in data monetization are outperformers in their category — which is not surprising, given that application of data is highly indicative of a forward-thinking firm that leverages technology, data science, and cloud services to drive value for their business stakeholders. Tens of billions of dollars will be spent on data and related services over the coming years.
What is Data Monetization?
Data can be monetized internally — sharing data across organizational silos for better insight and machine learning use cases. An example is a company in the logistics and shipping business — simply digitizing their assets through IoT sensors allows them to get a real-time view of shipping performance — and using machine learning, can re-route carriers based on traffic and other conditions to drive faster shipping speeds and reduce costs. For a business that processes hundreds of millions of dollars of products, a single digit percentage point increase in their system performance can lead to meaningful increase in margins with little added cost — all powered by data. Data can also be monetized externally — sharing data with customers and partners to improve the value chain and even drive new revenue streams. The same shipping company can integrate third-party weather data, traffic data, and eCommerce sales data to continually optimize the routing of their shipments with precise accuracy as to real-time product need and supply chain bottlenecks, or can sell their shipping data out to third-parties and generate new revenue in return.
Data Marketplaces are growing in popularity
A trend in recent years is the rise of the data marketplace. Third-party platforms allow for the buying, selling, and exchange of data assets that are packaged up by data owners. Amazon Web Services recently launched its data exchange, featuring over 1,000 data products that can be used for machine learning and artificial intelligence. AWS has over 1,000,000 businesses on their platform — and all these data products are going to be steadily rolled out for consumption by these business users to solve a variety of needs, such as enhanced operations or business analytics.. The Snowflake Data Exchange allows companies to create data hubs on their computing platform, integrating a range of third-party data assets with first-party data for insights and intelligence. Snowflake has over 3,500 customers, all very sophisticated users of cloud computing. And the list of marketplaces continues to grow, with companies like Datavant and HealthVerity in the healthcare industry, Narrative.io and LiveRamp in the marketing services industry, EagleAlpha and Bloomberg in financial services, and more.
It’s becoming easier to realize the value of your data
Data marketplaces are a needle-mover in the field of data monetization. They are creating tangible paths for realizing the value of data through external data monetization — meaning companies can actually earn real revenue in return for sharing of their data assets. This revenue rolls right onto the bottom line, as it’s extremely high margin and doesn’t require any new assets. Additionally, the marketplace enables streamlined consumption of data products for the end user — taking a lot of the one-off integration and billing work out of the hands of the data seller. Use cases include sharing transaction data with financial institutions who can make smarter, real-time investing decisions. Or enabling safe sharing of customer marketing data with partners, creating better customer experiences and more relevant campaigns for advertisers. Consumer behavior data, such as social determinants of health, are shared with healthcare firms to improve pharmaceutical research and healthcare outcomes. All of these use cases are enabled via data marketplaces, which allow data assets to gain liquidity and exposure among a wide variety of data buyers.
It is a safe bet that the demand for data will continue to grow, and that data marketplaces will thrive across all industries due to their ease of use for both buyers and sellers, and their ability to generate liquid value for data. As an executive, now is the time to start actualizing the vision of data monetization within your organization, and start to create real value from your data assets by integrating with these data marketplace channels and gaining exposure to new partners and revenue opportunities.
Dan Scudder is CEO of Highland Math, a data monetization platform that powers internal and external data monetization strategies. Previously, Dan Scudder was co-founder and GM of Data at LiveRamp.