Is data monetization a clingy catchword or an emerging megatrend? You haven’t realized, it could be another differentiator in your journey of digital transformation. Data is no longer the standalone oil fuelling the digital economy. We are witnessing the arrival of the data economy that has overwhelmed us with the volume, velocity and variety of data. In Europe alone, the data economy’s impact on GDP is projected to grow from 2.6% to 4.2% by 2025 (Source: European Commission). There are more stats to buttress the data monetization story. IDC estimates that 95% of organizations will digitally consume some form of outside data KPIs by 2023. But gaining access to the right data is fraught with challenges. In a recent study that covered 400+ companies across 34 countries, only 1 in 12 firms is fully monetizing their data.
What is data monetization?
Data monetization is extracting economic value out of data and information. Monetizing data and information assets means trading them for cash or something equally valuable. But data monetization has an expansive definition- it goes beyond selling raw and processed data. Companies with a strong data-driven culture focus on internal data monetization- where they use data to improve business processes, streamline decision-making, cut operational costs, elevate User Experience (UX), generate new revenue streams, and boost employee productivity. Some of the top Fortune 500 organizations such as Amazon, Meta, and Apple are also good data monetization companies. They focus on data-driven business models to develop new products and services and improve the customer experience (CX) while generating additional revenue streams.
Data monetization market size
The global data monetization market is expected to grow from $2.1 billion in 2020 to $15.5 billion in 2030, a CAGR of 22.1%. This will be driven by the increasing magnitude of generated data, awareness of data monetization, and emerging tech opportunities such as Business Intelligence and Analytics (BI&A), cloud computing, blockchain, IoT, social networks and post-Covid-19 pandemic business approaches and strategies. Examples of data monetization include upselling or cross-selling opportunities with targeted marketing, insurance companies charging dynamic premiums by monitoring vehicle drivers’ performance using telematics, or a logistics company using data to streamline the supply chain by analyzing the optimal patterns of distribution.
It’s estimated that 175 zettabytes, or 175 trillion gigabytes, will be generated each year by 2025 – a fivefold increase over 2018 levels (Source: World Economic Forum). One way to harness this data and glean insights from it is through data exchanges – platforms that enable open, efficient, and accountable trading of information. As part of their respective national digitization strategies, India, Colombia, and Japan are investigating and implementing this concept.
Crafting the right data monetization strategy
Building the right data monetization model is no cakewalk. Companies have to get over layers of challenges like limited usage of advanced analytics, onboarding the right talent, compliance with regulatory issues, and reimagining legacy organizational structures. Here are the five ways in which they can get started and map a robust data monetization strategy.
- Drive from the C-Suite: Data monetization has to come from the top. If done right, data analytics can create sizable new revenue streams besides saving costs.
- Analyze existing data and plan for future collection: The first step to monetizing data is assessing its value. An organization needs to audit its data and figure out which data provides value and which data needs extra resources. You can’t monetize data that doesn’t exist. Your key decision-makers need to figure out if any data points aren’t being measured yet, either in your organization or in your industry.
- Choose your audience: Having assessed the value of your data, it’s time to decide who you’re planning to sell it to. You don’t have to target an outside company. You can actually reach critical departments within your own company. By using data, you can learn more about consumer behaviour, for instance.
- Identify your goals: It’s crucial to agree on the overarching goals before you start monetizing your data. Making the distinction between in-house cost reductions and launching a data-as-a-service arm of your business is critical before starting the process. Data monetization strategies require a deep understanding of the different models, their implications, opportunities, and limitations.
- Minding the legal tangles: Data monetization infrastructure owners need to consider legal risks, data protection barriers, competitive barriers, and data availability problems. That means they have to navigate complicated data sovereignty laws that vary from country to country. According to the UN, 137 countries have sovereign laws governing how data should be handled and stored within their borders.
What’s next for data monetization?
In the future, enterprises will leverage data monetization to generate new revenue streams through targeted advertising and data marketplaces. Innovative data products and services could also emerge, enabling companies to foray into untapped markets and move ahead on the curve. Companies can also develop personalized products and services tailored to individual users, taking UX to an unimagined frontier. Any crystal-gazing on data monetization will help you realize that it isn’t only about minting money from data.
