As Alex Woodie puts it in a recent Datanami article, a “sea change” is taking shape on the data monetization front. More organizations now realize data’s ability to grow revenue. Data monetization is now less about leveraging data internally and more about creating a product or service with this information and then selling the data to a third party. 

This trend, termed “external data monetization,” can encompass various approaches, including: 

Participating in Data Ecosystems 

Data has a multiplier effect, and it follows that companies can monetize their data by combining it with data from another organization. Participating in data ecosystems allows companies to bundle subsets of data together to create a specific data set or insight that is inherently unique—and therefore, valuable—because of its singular makeup. This approach works best with companies in the same sector but not within the direct competitive landscape. 

Spinning Out Your Data Group 

Kroger spun out its data group into 84.51, a retail data science, insights, and media company. It’s designed to help organizations be more personalized in their marketing efforts. Optum, which spun out of UnitedHealth Group, is another example. As more organizations realize their value lies more in their data than in legacy products or services, expect an increase in unique data-centric businesses. 

Outside Funding for Data Monetization 

It’s one thing to recognize data’s potential for insight monetization. It’s another to obtain the necessary resources to fund these projects adequately. This challenge is an opportunity for private equity (PE) firms to make strategic investments in data on behalf of organizations lacking immediate funds. Woodie notes that some firms have already begun offering this service, and he expects this will become increasingly common as more organizations seek to compete on data. In addition, there is also the potential for these investment firms to use the pooled data of their portfolio companies strategically. 

You can read more about the above approaches to data monetization here. And for more on key industry sectors ripe for data monetization, check out this previous APEX of Innovation post.