Data monetization is going mainstream. It’s no longer just the domain of digital disruptors. Companies across all industries are jumping in, re-designing their existing business, and exploring new business models altogether.
A recent MIT Sloan Management Review article, titled Demystifying Data Monetization, discusses the two primary ways that companies are achieving financial gains through better collection and use of data. This includes efforts to reduce costs by optimizing internal processes or creating new external revenue streams.
Some examples cited in the article and already offered by companies like Verizon, Deutsche Telekom, and John Deere include:
- Geo-targeting and geofencing for retailers and tourism
- Forecasting, predictive analytics, and conservation improvement for agriculture
- Smart targeting and click-stream insights for brands and digital advertisers
- Internet of Things (IoT) applications for a variety of companies
From preparation to pathways to platforms, the article outlines the key areas companies should focus on to accelerate their data monetization efforts and increase success rates. Here’s a quick summary:
Preparing for Data Monetization
When it comes to getting ready for data monetization, the MIT Sloan Management Review article noted three key focus areas: increasing the value of data, sizing the market, and maximizing potential.
In general, data monetization often requires partnering with external parties to expand your data sources and add value to the data you currently have. A clear understanding of the market, including the internal user or external customer, how they benefit from the data, and the overall value of the data, helps keep efforts focused on business outcomes over pet projects.
Pathways to Data Monetization
Leading companies are leveraging data monetization to make giant leaps in productivity and efficiency. Companies are re-engineering the way they operate with improved capabilities to proactively manage issues, better predict business conditions, and better manage profit margins.
Personalization is another key area where data is delivering big returns. By looking at a broader range of factors with artificial intelligence (AI) and analytics, including demographics, behaviors, and purchasing habits, companies are able to create closer customer relationships and develop new product offerings based on more accurate preferences. Data monetization is even spurring new business models for companies, including data as a service, insight as a service, and analytics-enabled platform as a service.
Setting Up a Data Factory
According to the article, “Companies should set up a ‘data factory’ that automates the process of collecting, enriching, transforming, and deriving insights from data.” In addition to having a sound data strategy, this requires a robust data platform. Data platforms help bring your data monetization initiatives together by uniting all your data sources. They also ease the analysis and modeling of data that is required by today’s employees.
Whether companies choose to build, buy, lease or partner, factors to consider when building a data platform include: its ability to deliver meaningful business insights and outcomes, as well as how they impact your operating model, governance, privacy, and cybersecurity.
Turning Data into a Strategic Asset
Finally, the article concludes with what is perhaps one of the biggest changes in mindset required when it comes to realizing data monetization: turning data into a strategic asset for your business More than ever, data is creating value for companies. It’s no longer just for reporting and the IT department, but rather, it’s being increasingly embedded into digital business models.
To accomplish this, you must identify data monetization opportunities, appraise the value of your data, and make sure you have a sound strategy to maximize value.
To learn more about how to monetize your data, read the complete MIT Sloan Management Review article here.