Data monetization has become a critical aspect of the digital transformation journey for businesses. With the emergence of the data economy, the volume, velocity, and variety of data available are overwhelming. Europe alone has projected the impact of the data economy on GDP to grow from 2.6% to 4.2% by 2025, according to the European Commission. Furthermore, IDC has estimated that 95% of organizations will consume some form of outside data KPIs digitally by 2023. However, gaining access to the right data is challenging. In a recent study that covered 400+ companies across 34 countries, only 1 in 12 firms is fully monetizing their data. This can be attributed to the fact that most firms don’t have the infrastructure to collect and store data, let alone use it to generate insights. Additionally, many companies don’t have the resources or expertise to analyze the data they collect and turn it into actionable business decisions.
Data monetization is the process of extracting economic value out of data and information. It involves trading data and information assets for cash or something equally valuable. Companies with a strong data-driven culture focus on internal data monetization, using data to improve business processes, streamline decision-making, cut operational costs, elevate User Experience (UX), generate new revenue streams, and boost employee productivity. Data-driven companies such as Amazon, Meta, and Apple focus on data-driven business models to develop new products and services, improve CX, and generate additional revenue streams. For example, Amazon uses its data-driven approach to understand customer buying behavior, identify their needs, and create new products, services, and experiences that satisfy their needs.
The global data monetization market is expected to grow from $2.1 billion in 2020 to $15.5 billion in 2030, a CAGR of 22.1%. This will be driven by the increasing magnitude of generated data, awareness of data monetization, and emerging tech opportunities such as Business Intelligence and Analytics (BI&A), cloud computing, blockchain, IoT, social networks, and post-Covid-19 pandemic business approaches and strategies.
Examples of data monetization include upselling or cross-selling opportunities with targeted marketing, insurance companies charging dynamic premiums by monitoring vehicle drivers’ performance using telematics, or a logistics company using data to streamline the supply chain by analyzing the optimal patterns of distribution. The data analytics market is expected to reach $329.8 billion by 2030, growing at a CAGR of 29.9%. (Source: Globenewswire.com). Organizations can reap the benefits of data monetization by utilizing customer data to gain insight into products and services they may be interested in, or to develop personalized customer experiences. With the exponential growth of data, the potential for data monetization is immense.
Building the right data monetization model is not easy, as companies face layers of challenges, including limited usage of advanced analytics, onboarding the right talent, compliance with regulatory issues, and reimagining legacy organizational structures. To develop a robust data monetization strategy, companies need to drive it from the C-Suite, analyze existing data, plan for future collection, choose their audience, identify their goals, and mind the legal tangles. Crafting the perfect data monetization model is like painting a masterpiece. All the essential elements—including the correct colors, materials, and tools—must work in harmony to create a beautiful result. Without the proper combination of these elements, the piece will remain unfinished, and the results may be far from the desired outcome.
In the future, enterprises will leverage data monetization to generate new revenue streams through targeted advertising and data marketplaces. Innovative data products and services could also emerge, enabling companies to foray into untapped markets and move ahead on the curve. Companies can also develop personalized products and services tailored to individual users, taking UX to an unimagined frontier. Any crystal-gazing on data monetization will help you realize that it isn’t only about minting money from data. By leveraging the power of data, companies can create a more engaging customer experience. This will result in customers being more loyal to the company and willing to pay for the products and services. Additionally, data-driven insights can help companies identify new opportunities in the market and develop products that meet the needs of their customers.
Data monetization has significant benefits for businesses and customers. By monetizing data, businesses can generate additional revenue streams, cut operational costs, streamline processes, and improve decision-making. Customers, on the other hand, can enjoy personalized products and services tailored to their preferences, leading to a better customer experience. Data monetization is not just a catchword; it is an emerging megatrend that can differentiate businesses on their digital transformation journey. The potential of data monetization is enormous, and its impact on the global economy is significant.
The article has been written by Jayajit Dash