Information, as they say, is power.
Analytics & data are words that have become very popular now. “Black gold” & “Information is the new oil” are some of those catch statements that are now used constantly.
This has led to creation of “Infonomics,” a term coined by Gartner’s Doug Laney, which describes the act of quantifying, managing and leveraging information as a formal business asset. Although accounting principles do not require the reporting of information assets on the balance sheet, infonomics deems that organizations acknowledge that information is more than merely a resource. Imagine if companies had to present a “Customer Flow statement” along with their Balance sheet & cash flow!
It’s crazy that companies have better accounting for their office and furniture than for their Information assets. You can’t manage what you don’t measure.
Corporate holdings of data and other “intangible assets,” such as patents, trademarks and copyrights, could be worth more than $8 trillion, according to estimates by the Federal Reserve Bank of Philadelphia for the US alone.
Facebook, eBay and Google have combined assets minus combined debt of $125 billion. But the combined value of shares is $660 billion. The difference reflects the stock market understands that the companies’ prize assets, such as search algorithms, patents and enormous troves of information on their users and customers, don’t show up on their balance sheets.
So is Personal data becoming a new economic “asset class”, a valuable resource for the 21st century that will touch all aspects of society. On an average day, users globally send around 47 billion (non-spam) emails and submit 95 million “tweets” on Twitter. Each month, users share about 30 billion pieces of content on Facebook. The impact of this “empowered individual” is just beginning to be felt. Almost 78 percent of consumers think it is hard to trust companies when it comes to use of their personal data (Orange, The Future of Digital Trust, 2014). And yet Personal data has become a currency today. All of us are leaving our data behind in a digital exhaust that has begun to worry us as consumers.
As some put it, personal data will be the new “oil” – a valuable resource of the 21stcentury. It will emerge as a new asset class touching all aspects of society.
Richard Thaylor, a professor of economics and behavioural science at the Booth School of Business at the University of Chicago has this very interesting proposition.
This is what Richard provocatively suggests: “If a business collects data on consumers electronically, it should provide them with a version of that data that is easy to download and export to another Web site. Think of it this way: you have lent the company your data, and you’d like a copy for your own use”.
I think this is a powerful idea and can have a huge impact on consumers and also create a huge number of intermediary companies who help consumers make sense of their data. The idea of using analytics as “personal power” will definitely be resisted by organized companies and governments, but it has the power to allow the customer to control and manage her relationships with Telecom, Retail and a myriad other companies.
On another note, Data’s value increases when it's shared, and you can add value by sharing it. Sharing data allows marketers to better understand who their best customers are, which consumers they should market to, and with what specific offers.
With their Android and iOS mobile operating systems, respectively, Google and Apple know the location of every customer's Wi-Fi-enabled phone—far more location data than any other company could access. The Silicon Valley giants aren't allowing access to such data by outsiders as yet.
But Google, Facebook, and Amazon have all commercialized the data they possess on customers' purchasing habits. The information, which is hugely valuable to advertisers looking to target specific demographics with digital ads, is sold to advertisers at high premiums.
What about more traditional industries and companies? E-commerce players have a far richer and laser sharp profile of their customers. Traditional retailers have struggled to get such a clear view of their customers and have been attempting new forms of collaboration including coalition programs to try and get a more complete view of their customer profiles. Examples of such collaboration include, Payback (Germany,Poland, India and Mexico)Nectar (UK,Chile and Italy), Kooperative FörbundetKF (CooperativeFederation) in Sweden, FlyBuys in Australia and New Zeeland. It takes a lot of analytics maturity to dig for consumer insight “gold” in this data though!
But all of this does not come cheap. The financial demands of storing and managing this big data will lead 30 percent of businesses to directly or indirectly monetize their information assets by trading, bartering or outright selling them by 2016, according to Gartner.
This is leading to some interesting business models. A Washington start-up Personal wants users to entrust their data to Personal and then give it out to advertisers in exchange for discounts. Your data matched with your purchase intent could yield massive efficiency for advertisers, some of which would be passed on to you in the form of discounts.
Supermarket operator Kroger records what customers buy at its more than 2,600 stores and also tracks the purchasing history of its roughly 55 million loyalty-card members. It sifts this data for trends and then, through a joint venture, sells the information to the vendors who stock its shelves with goods ranging from cereals to colas.
Good data is like good ingredients. Some combinations can be extremely appetizing and even nutritious. Will companies learn to share data or will the Indian crab syndrome come in the way.
Companies that want to unlock the value in data need to be able to demonstrate that they can do it in a way that preserves privacy. So consumers are happy to share personal information as long as they see a “value add” for themselves. And organisations with trust-based information sharing relationships with customers will have significant competitive advantage over those with traditional data gathering relationships.
What does this mean for marketers? It would be interesting to ask that if given the appropriate checks and balances, would consumers like to be given the option to make some of their data public. Assuming that shared data would make their life easier, you just might have consumers saying yes!
This has many implications regarding data privacy and marketers will need to learn to deal with this reality. Marketers will also have to learn how to partner other companies if they want to increase the value of their data! Marketers will have to bring on more “left brained” players in marketing teams who can make sense of this data and monetise it. And finally for true value to be extracted by companies, marketers will need to bring conversations about customer data into the board room.
-- Ajay Kelkar, Chief Operating Officer, Hansa Cequity
Updated Date: Jan 14, 2015 16:19 PM