Monetizing Data: Your Next Revenue Stream?

The costs of capturing, storing, transforming, and protecting data are significant. Some organizations look to recoup these costs by attempting to monetize data – that is, productizing and selling their (and potentially their customers’) data. Similarly organizations see this internal data as an untapped asset and seek to derive value from it.

There is no shortage of willing participants in this trend. Data scientists, technologists, and marketers are all chomping at the bit to do something new and different with these volumes of data already on hand.

Data monetization initiatives are complicated programs, however. Often, getting lost in the minutia of data can distract precious resources and disrupt core functions of the business.

Watch your step

There are several pitfalls businesses should consider before wading into data monetization waters. Data privacy and liability concerns are probably the most important and deserve the attention of legal teams up front. End user license agreements (EULA’s) and privacy policies for the original data need to be examined. Rights to reformulate and redistribute data need to be negotiated up front and downstream customer agreements for data usage need to be understood.

Does your business have the legal, statutory, and/or ethical right to market consumer data? Without the proper rights and protections in place, you should stop right where you are. The one thing no business needs is another risk trigger.

Look before you leap

These are important and legally complex questions. But they aren't the only things companies should consider in building a data monetization strategy:

• What's your data business model? What product or service is the company going to offer and how will it make money? How does it align with the rest of your business? How will you structure your data business? Careful planning is an important first step.
• Do you have the right resources in place? Is technology in place to bring the data product or service to market? What additional tools, technology and skill sets are needed? Consider the gap between what's in place now and what is required in terms of integration, sales, support, and marketing costs involved.
• Is your data “good enough”? While your data products may be ripe with analytic and predictive value, the risk of selling inaccurate, regulated, or poor quality data should not be underestimated.  Even the most established data brokers have some real issues with their data (see my article on Data Brokers here) The evolving data quality and data brokerage landscape -- and the associated liabilities -- make the data accuracy issue a potential landmine.

The real data monetization question – “Can we make money off all this data, or not?” – is difficult for companies to answer, perhaps because there aren’t all black-and-white answers. It's more of an equation, where a company has to ask: “Can we leverage these data assets for the advantage of others without creating disadvantage for the organization?”

That’s one question you have to resolve before deciding if a data monetization initiative makes sense. If it diverts the focus of the company’s core business and larger strategic goals, then it’s probably a good idea to stick to what the business already does well -- and do it better.

Are you considering a data monetization strategy? Please let me know your thoughts on how your are considering getting it done. I hope to hear from you.

Follow me on Twitter (@johnlucker), email me at [email protected] and read more about this topic in Deloitte’s 2015 Analytics Trends report—available in interactive and PDF formats.