In our previous article (Data Driven Business Models), we discussed exploring new business models driven by data, the article provided some insights into what a business model driven by data could look like. We did not however discuss how the industry is already monetizing data. Our focus in this article is to look across industries and verticals to see how various organizations are monetizing the huge volumes of data generated.
According to Forrester, if the average fortune 1000 company would increase accessibility to data they generate and own, it would result in more than $65 billion in additional net income. That’s an extremely large figure for just increasing access to data. Large organizations across various industries generate petabytes of structured and unstructured data and manage to convert some of that data into useful business models. The approach to monetizing that data, taken by many organizations usually follows a few key focus areas namely, selling Insights/Analytics and selling access to raw/processed data.
Business Approaches and Models
We mentioned above the three focus areas of many organizations when it comes to monetization strategies, we will dig a bit more into how they work.
1- Selling Insights/Analytics
These business models are usually a key for market research companies focused on retail corporates. The idea behind this business model is for a market research company to take product data from a specific retailer and social media or market data gathered by the company and help position brands to strengthen market share, understand buying power or understand sentiment about a new product launch. It is quite a powerful approach to know that social media and the market gathered over time can guide a large retail organization’s strategy. The business model here would normally be a consultation model and licensing of a specific database.
Business Model 1: Selling consultation services around curation and development of insights
Business Model 2: License database to the customer
A second approach to this is if your organization captures structured data about products or services that are not your core business. You could consider selling that data back to various suppliers, providing more granular insights than they could capture. In our previous article, we mentioned how a Health and Wellness national franchise (Data Driven Business Models) can sell product data to their suppliers. Since the health and wellness business has a national footprint they are able to provide more insight where the supplier doesn’t currently have reach.
Another twist on the approach above is to sell access to leads generated by a company through various campaigns, competitions, or data collection means. An example would be an innovative marketing company that can build digital campaigns via social media platforms offering a simple and easy way for companies to immigrate. This data collected can be sold to visa brokers or immigration specialists.
Business Model 3: Selling access to product insights via a single point of reference. This can be transactional base or subscription-based. The difference is, that the client either pays per request on the data or the client pays a fixed monthly fee.
This approach however relies on a customer sharing part of the data set with you regarding the product information, there are numerous pain points with this approach like data governance, security and regulation. The rise of privacy concerns from the EU and US will mean companies need to pay special attention to how they capture and manage the data.
2- Selling access to raw/processed data
Many companies today have made a living by aggregating raw data sources into a single large dataset. The biggest example is Google.com, they have managed to build a multi-billion dollar business around aggregating websites. Google’s approach however is not a direct sale of raw data, instead, they use it to attract users that are looking to find something within the data and then sell access to their attention to companies looking to advertise.
Business model 4: Provide free access to data for one side of the market and then charge a premium price for the other side of the market to get their attention.
To gain access to government tenders we used to rely on newspapers and bulletin boards to notify us of any upcoming work. Today companies have teams aggregating tender information from newspapers, websites, and bulletin boards into a single access point and charging for access to that information. They usually add some value-added functions to make the experience better like reminders for when a tender closes. This is all added to strengthen the core proposition which is access to the data in the first place.
Business model 5: Selling access to raw/processed data via various reference points like an API or Database. This is a growing business model that many organizations are considering when it comes to monetizing data.
Conclusion
Above we demonstrated 5 business models with two specific business approaches, in summary, they were;
Selling Insights/Analytics
Business Model 1: Selling consultation services around curation and development of insights
Business Model 2: License database to the customer
Business Model 3: Selling access to product insights via a single point of reference.
Selling access to raw/processed data
Business model 4: Provide free access to data for one side of the market and then charge a premium price for the other side of the market to get their attention.
Business model 5: Selling access to raw/processed data via various reference points like an API or Database.
The future of technology is becoming heavily reliant on data, companies like Uber, Airbnb, and Google are using data to push new frontiers when looking at business in the future. Building a business driven by data is an exciting journey but not a simple process that just happens overnight. It requires a deep understanding of regulation, area of operations, talent/skills supply, and strong governance practices. As we have seen in recent news many businesses are thriving off the approach, but however, have not paid enough attention to the concerns of the public and it nearly cost them their business.
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