Data Monetization — What It Is & How It’s Done
Introducing data monetization
People are intrigued by the idea of hidden treasure. Stories of priceless paintings and valuable antiques hiding in dusty attics and charity shops fuel the fascination and give us hope of finding our own golden ticket. Unfortunately, most of the junk in our homes really is junk and is worth only pennies instead of millions.
The news is better from a corporate perspective, however. Most companies today do have millions — or even billions — of dollars worth of unrecognised value hidden in their organisations. We’re not talking about art or antiques — we’re talking about data.
Data is one of the most valuable corporate assets in today’s business environment, but most companies fail to recognise its potential value and take action to maximise it. In this article, we intend to help you learn how to unlock your data’s value through data monetization. You’ll learn what data monetization is, why you should monetize your data, and how to do it effectively.
What is data monetization?
Data monetization is taking action to generate measurable economic benefit from your organisation’s data.
Companies such as Amazon, Facebook, and Google have monetized their data and used it to fuel the growth of trillion-dollar businesses. Inspired by their success, organisations across all industries are taking a closer look at their own data to uncover opportunities to create value.
There are three basic ways you can monetize your data:
1. Selling or licensing your data to third parties
Chances are very high that some of your data is moderately useful for you but extremely valuable to someone else. You can turn this value into measurable economic returns by selling or licensing your data to interested third parties either in raw form or as a set of analytic insights.
For example, our client Highways England discovered that the traffic and road condition data they routinely collected was very valuable to delivery services and wayfinding apps. Highways England had previously given the data away for free. Once they understood its potential value, they were able to monetize their data by selling it to the interested parties for a fair price.
2. Driving internal optimization and innovation
You don’t have to sell your data to third parties to monetize it — you can create measurable value by using data to drive improved internal performance or launch new products and services for your own business.
This kind of data monetization happens in several ways. Data-driven insights help you better understand your customers, identify opportunities for cost-savings, streamline your operations, recognise market trends, and lower risk. The result is better, faster decisions, improved customer experience, more targeted marketing, and innovative new revenue streams — all of which lead directly to measurable economic benefits.
To give an example, construction companies across the UK are realising the power of data to help them improve safety and identify factors that commonly lead to cost and time overruns. By analysing data from past projects, they’re able to able to reduce costs, prevent delays, avoid accidents, provide better estimates, and operate more profitably. The data monetization is less direct than selling to third parties but still results in significant economic benefits.
3. Open exchange or sharing of data with partners
Some companies attempt to monetize data by sharing or exchanging it with partners in return for favorable terms or cooperation in other areas. For example, you might share select customer data with banks in exchange for favorable financing terms.
All three of these data monetization models are increasingly popular, but, for the sake of clarity in this guide, we’ll focus on the first two and save discussing the third for another time.
Why monetize data?
Now that we’ve answered the basic question “What is data monetization?”, let’s turn our attention to the most important one — “Why monetize data?”
The short answer is that you should monetize your data because it’s vital to your success both now and in the future, but we’d like to offer you a more thorough explanation. In our view, there are four key reasons why you should monetize your data.
1. Intangible assets have tremendous value in today’s business environment.
Take a look at the chart below. It demonstrates how the percentage of corporate value attributed to tangible and intangible assets has steadily shifted over the last 45 years. Today, intangible assets represent 90% of corporate value.
2. Data asset trading is the future
Monetizing your data provides economic value now, and positions you to take advantage of future opportunities. Data asset monetization and data trading are relatively new trends and the data market is immature, but all signs point toward data becoming the next big traded asset class.
By taking steps to increase your data maturity and start monetizing your data now, you’ll be ready to take advantage of strategic data asset trading opportunities as they arise instead of scrambling to catch up later.
3. Data monetization provides a significant competitive advantage.
It’s difficult to get ahead of your competitors and even more difficult to stay ahead — especially in mature industries with established brands and products.
Whether you use your data to make better decisions, streamline operations, improve product quality, launch new products, spot trends, understand your customers, or sell to third parties, data monetization helps give you the competitive edge you need.
4. New revenue streams are essential to continued growth
Data monetization represents an opportunity to use something you already have to create new revenue streams to support your organisation’s continued growth.
The new revenue can come from selling or licensing your data externally or from developing new products and services based on data-driven insights. Either way, monetizing your data leads to measurable value creation.
How to create a successful data monetization strategy
Watch this to learn how to think strategically about selling, exchanging, or licensing your data.
- 01:20 – Data is one of the most undervalued assets
- 02:20 – Data will likely be the next big traded asset class
- 03:25 – Barriers to data monetisation
- 04:12 – Barrier 1 – Data is not viewed at scale
- 05:49 – Barrier 2 – Data is a unique asset class
- 07:04 – Barrier 3 – Lack of definitions and standards
- 07:56 – A strategic approach to data monetisation
- 09:54 – An example of the approach in action
- 11:30 – Introducing our panellists
- 26:40 – Educating the board and getting buy-in
- 32:38 – Setting up data trusts
- 38:59 – Data monetisation costs
- 44:22 – Most boards do not understand the value of their data assets
- 45:59 – Proving the value of your data assets & changing the conversation around data
- 50:35 – Leveraging non-financial value from data
At Anmut, we’ve built our business on the idea of helping organisations understand and extract value from their data using a data asset management approach. Our experience has shown us that a successful data monetization strategy involves five key elements, which we’ve captured in our data monetization framework.
1. Understand the value of your data to your company
First, you must understand how your data assets support the delivery of strategic initiatives and enable efficient operations and the value this creates. This includes understanding things like how your data assets are used in key business workflows and decision-making processes and how data drives the share price of your company.
2. Look for data assets that can be monetized externally (arbitrage opportunities).
Some of your data may be of little value to you but great value to others. Examine your data assets to find data that fits these criteria and can be licensed or sold to third parties without risking company secrets or sacrificing your competitive advantage.
3. Understand the value of your data to external stakeholders.
Once you’ve identified data assets you can monetize, you must work to determine who outside your organisation values your data and how much it is worth to them. The result is a list of stakeholders who could become buyers, and a clear understanding of your data’s potential sale or licensing value.
4. Assess the cost to monetize your data.
There are costs associated with consistently delivering high-quality data for sale. Assess the actions and investment needed to improve the condition of your data, deliver it reliably, and ensure it creates value for buyers.
5. Manage & deliver the data.
Introducing data asset management
Now that we’ve explored what data monetization is and why you should pursue it, it’s time to discuss how it’s done. We can’t do that, however, without introducing the fundamental concept of data asset management.
We’ve labeled data as an intangible asset and discussed data asset trading, but most companies fail to properly recognise and manage their data as an asset. Data asset management is an approach to data that involves intentionally treating data as a strategic corporate asset instead of a business input or a cost associated with IT.
When treating data as an asset, you assess its value to your business, set goals for utilising it, make plans for investment, and measure the ROI of your data projects. In other words, you manage your data just as you would tangible assets like products, equipment, or real estate.
Data asset management is absolutely essential if you want to monetize your data. It’s particularly helpful in overcoming some of the key barriers to realising the full potential value of monetizing your data.
One of the biggest barriers to maximising the value of your data is viewing your data in terms of individual data sets and use cases instead of the broader business context.
A data asset management perspective helps you look beyond single use cases and consider how different data sets are combined into data assets that support business outcomes and objectives. This enables you to understand the scale of your data’s importance to your organisation, communicate it to non-technical stakeholders, and identify opportunities to monetize it.
The second major barrier to full data monetization is determining the value of your data. While there’s been a recent explosion of data monetization exchanges and platforms, the market is still immature and can’t yet be trusted to set a fair value for your data.
Much of the data available for sale is poor quality, meaning if you’re buying, you end up with data that can’t be trusted, and if you’re selling, you don’t have a good way to determine a fair price for your data.
The market can’t help you figure out how much your data is worth, but data asset management can. Part of data asset management is investing in rigorous data valuation to ensure you understand the value of your data to your own organisation and to third parties who may be interested in buying or licensing your data.
Ready to explore how data asset management & data monetization can benefit your organisation?
At Anmut, we’ve assembled a team of experts with years of experience in data asset management and data monetization. We believe data has the power to add tremendous value to your business both now and in the future, and our clients’ results have proved our belief to be true.
If you’re ready to learn more about how to better manage and monetize your data assets, contact us. We’ll be happy to answer any questions you have and talk about how we can help you realise the full value of your data.