Companies are realizing that their data as an asset has intrinsic value. With that realization often comes the desire to create a data monetization business to turn that valuable asset into revenue.
On paper, selling data is easy. Collect the data, sell the data, and then transfer the data. In reality, selling data is much more complicated than that.
There are six important things to do and consider before you decide to build out a data business:
“Data is the new oil” is an overused but apt phrase. What data is not is a “free lunch.” Launching a data monetization effort is going to require an investment of time and resources to be successful.
Building a data business typically requires input from senior management, sales, product management, legal, engineering, analytics, and finance. Each of these teams need ongoing involvement to create a sustainable business.
It’s important to be realistic: You aren’t going to create a multi-million dollar business overnight. The first year of doing data monetization typically results in a lot of learnings and a few deals. Year one can be the catalyst, however, for building long term revenue, but you won’t get there overnight.
Data is a nebulous term. It’s often used as shorthand to talk about a specific type of data. Before kicking off a data monetization strategy, you need to understand what types of data you have. From there you have to determine which of those data sets you’re willing to sell.
Here are some sample questions you should ask when taking inventory of your data:
Here’s a checklist to help you take inventory of your data and evaluate building your data monetization business.
You understand your data better than anyone else. When creating a data monetization strategy you should have a point of view about why your data is valuable to other organizations.
Spend time looking at how you use your data internally and try to envision if those same techniques would apply to other companies. Estimate how much your data is worth to you and evaluate if that data valuation would apply externally. Ask yourself how many companies fit the profile of finding your data a valuable resource.
The easiest monetization opportunities will be the ones that are the most familiar to you. Leveraging those use cases will give you an estimate of the opportunity size of a data business.
There will likely be opportunities to sell your data for use cases you can’t contemplate. Starting with a POV and with familiar scenarios will make the early days of selling data more productive.
The data broker industry was born to make it easier for companies to sell their data. To fulfill that promise they removed the nuance from the data sellers. That nuance is what allows companies to build long-term sustainable businesses.
Data brokers introduce three challenges to creating a scalable data monetization business:
In the short run, data brokers can seemingly make your life easier. In the long run, however, they add undue risk and put a cap on the potential for your data business.
If you are unsure whether the company you are dealing with is a data broker, ask them if they themselves buy data. If a company doesn’t have their own data, yet they are an active participant in the market they are serving, they are a data broker.
When it comes to selling data, a number of different channels exist. We’ve already discussed data brokerages and some of the challenges they present. Beyond the pure broker model you might also consider working with a data marketplace or by selling your data directly.
Data marketplaces look like an eBay for data. These marketplaces can be great places to start your data monetization journey, as they offer easy and instant access to a large number of buyers. Examples include the AWS Data Exchange, the Snowflake Data Exchange, and the Narrative Data Marketplace.
You should consider the following questions when working with a data marketplace:
If the answers to these questions align to how you want to sell data, you should work with the marketplace. If you have to make uncomfortable tradeoffs it might be worth looking for another marketplace to work.
There have been a number of data regulations passed recently. The regulations have been enacted by the European Union (GDPR), California (CCPA), and others. These regulations add on to laws that have been around for years like HIPAA.
These rules have been put in place to make sure that citizens have protections when companies are collecting information about them.
These regulations don’t prevent you from creating data monetization businesses, rather they force companies to be more diligent when it comes to their data collection practices. Ultimately, they are designed to create a healthier more sustainable ecosystem while protecting the rights of consumers.
Selling data can be a meaningful revenue stream for many companies. Like any other part of your business, data monetization requires a thoughtful approach. The companies that are the most successful at selling their data are the ones that start the process armed with information and ready to work.
Narrative Distribute helps companies tackle the complexities of data monetization. Data sellers can use Narrative Distribute as their data monetization platform of record. If you are looking to move ahead with your data selling strategy, Narrative Distribute can help you implement it and turn your strategy into reality.