Data monetization is a topic we cover often here on the APEX of Innovation. This includes how companies are using data to uncover business value, fueling new growth with data-driven products, and leveraging the simple rules for effective data monetization. For companies that get it right, data monetization can deliver tangible business benefits, such as opening doors to new markets, generating new revenue streams by selling data or creating new products, and enabling better partner collaboration and results through data sharing.
Below we unpack a recent Forbes article that takes a fresh look at data monetization and the “new value streams” that innovative companies are tapping into for increased economic impact. According to the article, “Data has economic properties that enable it to be leveraged in ways other assets cannot.” For example, unlike physical assets such as oil, data can be monetized in multiple ways—at the same time. Or to put it another way, data exists as a “regenerative asset,” according to the article. This quality alone enables virtually any company to look within—and externally—for new ways to derive economic value from data.
When it comes to methods for data monetization, most initiatives fall into one of two categories, as stated in the article. First, direct data monetization is more transaction-based with specific, measurable value derived—usually in the form of new revenue. Second, indirect data monetization is tied to more process-oriented activity that delivers some form of economic benefit. Indirect data monetization can be more difficult to quantify than direct methods, as the economic returns can be less explicit than revenue generation.
To help companies better navigate the path to data monetization, the Forbes article lays out some effective ways for companies to get there, including:
- Licensing data or insights to others. The article suggests selling data outright is the “most obvious” way to generate new revenue streams. Since few companies are set up to sell data directly, data marketplaces are a common option, handling the marketing, sales, access, and licensing of data.
- Bartering or trading with data. According to the article, “Exchanging data in return for goods and services is more common than you might imagine.” Examples include customer loyalty cards that offer discounted prices and special promotions—in exchange for data on buying behaviors and personal preferences.
- Enhancing existing products and services with data. Building data into your current offerings can deliver economic value in the form of “competitiveness, benefits, and a price premium,” according to the Forbes article. For example, a forecasting tool that has access to a broader range of external data sources, such as open data, social media streams, and web content, can pinpoint better indicators and make more accurate predictions on business performance.
- Digitizing existing products and services. Taking data enhancement to the next level, digitizing offerings completely is another way companies, as well as entire industries, are monetizing data. For example, the healthcare industry is leveraging image sharing and video consultations to digitize the patient experience, delivering a higher quality of care at a lower cost.
- Inverted data monetization. According to the article, companies should not shy away from data monetization due to privacy concerns and data protection regulations, such as GDPR. While this may restrict selling your customer data directly, it’s still possible to share information with others for a fee or commission.
If you’d like to learn more, read the complete Forbes article.