Data monetization means converting available company data, including those generated as a by-product of business transactions, into products and services with measurable monetary value or economic benefits. Large tech companies such as Google and Facebook monetize their users’ data by selling products and services derived from converted data sources as advertising revenue. If you are considering data monetization as an additional income stream for your company or business, study these key elements of the value chain of data monetization.
DATA SOURCE
The main ingredient in any successful data monetization is the data source. The data must be relevant for purpose, meaning information and conclusion that may be inferred from analyzing and converting said data are proven to be valuable in addressing customer challenges and problems. For example, a Philippine fintech company, Finscore, has successfully harnessed mobile SIM card usage metadata into consumer credit scores that indicate a potential borrower’s credit worthiness. Finscore’s data source is accessible only through secure application programming interfaces that are vetted and approved by mobile operators and has been proven to be relevant to lenders for credit scoring through continuous testing and use.
CONVERSION PROCESS
Once data has been proven to be reliable and relevant the next part of the data monetization value chain is to convert the data into salable products and services. Such conversion process, often referred to as productizing, requires careful analysis and testing of data, with the objective of extracting value from the resulting analysis. Google, for example, analyzes user search data to identify patterns and discernible consumer behaviors which then improves their advertisement targeting services, thereby increasing revenue. Skills relevant in the data conversion process include strong knowledge of statistics, data science, features engineering, and psychology, among others.
MARKETING AND SALES
The last, but most important, part of data monetization is the marketing, selling, and receiving payments for the products and services developed from converting relevant data. Much like traditional goods and services, data products must address a target market’s needs, and that said market is willing to pay for them. Advertisers, including small and medium-sized businesses, pay Facebook for the latter’s services in order to reach a hyper specific demographic of its audience effectively and cost-efficiently based on defined user profiles built off of social media usage data.
Monetizing data involves ensuring data sources are relevant, reliable, and secure, implementing robust data conversion methods into products and services, and successfully selling them to the target markets and clients. Study these value chain elements carefully before embarking on data monetization as a strategy for your business or company.
*** Reach out via email at [email protected].