Data is a company’s most valuable asset, but only few are maximizing its economic benefit. What’s worthwhile is that by investing in your data, you as a data owner can effectively earn revenues through Data Monetization.
So if you are leaving an economic opportunity on the table, you could miss out on the outcomes it could otherwise bring. Hence you need to know why data monetization is the need of the hour!
Before that, let’s pinpoint what data does for a company, what does monetizing mean and how data can be monetized.
Every company operating today is a data-driven company. They have an access to a bunch of data on their supply chains, operations, strategic partners, customers, and competitors.
Most companies monetize only one out of ten monetizing data. Consequently, they leave behind the profits they could otherwise earn.
And if you haven’t transformed your operations with data already, get started with monetizing your data first.
What is data monetization?
Data is intrinsically valuable, but comprehension derived from data enriches that value. This further segments customers, predict demand and churn, optimize prices and manage cost.
Further data can command higher margins when sold externally. So, what does monetize mean? In general ‘to monetize’ means to convert into or express in the form of currency.
Data monetization pertains to the act of generating economic benefits from available data sources. Less commonly, it may also refer to the act of monetizing data services.
After understanding the data monetization meaning, the next significant step is ‘how to monetize data’.
How to monetize your data?
There are two basic ways to monetize data.
It occurs both internally and externally.
Internal data monetisation focuses on leveraging data to improve a data owner’s operations, efficiency, productivity. It enables ongoing communication with customers or his users.
External data monetization involves making the data available to brands and agencies. It helps in the creation of new revenue streams and leveraging businesses.
Below is an illustration explaining the steps to monetize data in the simplest fashion.
A powerful data strategy sees data as an expanding asset living and growing within a living enterprise. So, data is not as a stagnant asset that depreciates in value.
Essentially, it is about boosting competitiveness and making more money. Additionally, effective data monetization is as much about strategy as it is about execution. And it is as much about where to go as it is about where to start.
1. Data Monetization creates opportunities in the market.
More and more businesses are identifying the value of the data they are collecting. Data Monetization creates opportunities for organizations.
With adequate data volume it leverages the untapped and tapped information to develop new revenue sources.
2. Data Monetization increases the value of data.
Not all data is valuable in its raw form. It typically requires harmonization with other sources to yield useful insights. So, most companies that enter the data monetization business identify partners who can enhance internal data.
Talking about Google and Facebook, they don’t analyze a profile based on a single click. Rather they culminate all the activities associated with a user, thus deriving the interests, income level, buying preferences and so on.
3. Data Monetization helps in sizing of the market.
It is essential to understand the set of potential customers (both internal and external), and also how they might benefit from a company’s data.
This involves leveraging data from one business unit for use by another part of the company to optimize a broader system.
Also it helps an external client with the ability to make better decisions by tapping into data-based solutions packaged by the company.
4. Monetized data maximizes the value potential
The answer to ‘How much is the data worth of a company?’ depends on factors such as market demand, data’s shelf life, competition, and how potential customers use the data.
So, companies need to identify insights from the data available from competitors to attain maximum value potential.
5. Data Monetization creates competitive advantage
Companies such as Amazon, Netflix and Disney monetize data internally by gaining a close understanding of their customers.
They consider things like demographics, preferences, purchase behaviours etc. to offer highly personalized products and services.
Likewise they delight customers at every touchpoint and in this way create a competitive advantage.
6. Data Monetization strategy increases productivity
Under Cost reduction, data owners can use data to increase productivity or reduce consumption and waste.
With Revenue growth, they can use data to improve sales performance or minimize customer attrition.
Owners of data understand their target customers and create meaningful segments slicing their data according to their target audience’s needs.
7. Monetization of data increases revenue generation through segmentation.
Segmentation of data could be based on Gender, Demography, Prospects, Industry, and so on.
By segmenting the customer database into related target groups, the data owners are on their way to make the most out of data.
For revenue generation, data owners identify and segment the users into classifications.
These classifications allow them to deliver highly targeted and personalized messaging, thus creating a better user experience for everyone.
8. Data marketplace is the basis of Data Monetization.
Data Marketplace is a specific place created to buy and sell data. Some common types of data traded in the data marketplace relate to consumer’s demography and personal profile or a mix of both.
Selling data in a particular format helps to make the data relevant, customized and more usable to the buyer.
A data market defines a standard data model and interfaces for buyers and sellers to exchange data.
The data owners can set their prices instead of having a central authority pricing data and consumers can choose from who they wish to buy data.
Consequently, this creates better value, and it is likely to increase demand. Increased demand provides better possible revenue for data owners ensuring effective Data Monetisation.
9. Monetizing data is the top business strategy
Data monetization takes place in the background of the app and site, so it creates an uninterrupted mechanism. Monetized data has one of the highest CPMs in the industry.
By tapping data monetization, data owners can focus on their work while earning money with their app or site.
For acquiring more, they should go beyond standard strategies of app monetization. Hence, data monetization and mobile data monetization are the non-obvious way to monetize mobile apps and sites.
Data monetization strategy is now a proven sustainable revenue-driver for both Android and iOS apps in 2018. This is expected to anchor more like a mobile data monetization trend in 2019.
To sum up, Data Monetization is an unmissable emerging trend.
Monetizing data helps in earning revenue over and over again.
Data Marketplace segments audiences and provides the right set of customers for the right kind of data.
It solves data pricing riddle by taking a free-market approach.
It helps in stopping revenue leaks, inferring customer satisfaction, detecting fraud and piracy, minimizing churn and increasing ROI.
Data monetization can be of considerable significance to the data owners in finding great opportunities.
It helps them to generate economic value from their target audiences, leading to a win-win situation in this so-called Informative Era.
Let me know how you benefit from it. Comment below!