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Showing posts with label saas. Show all posts
Showing posts with label saas. Show all posts

Wednesday 25 June 2014

How Valuable Is the Data Economy with SAAS - B2B


In business, data has quickly gone from being a mere asset to being a potential revenue stream—a substantial one. The result: a burgeoning market for data. Capturing its scope and opportunity, though, isn’t easy.

Like other financial assets, data can be created, accessed, traded, transferred and monetized. For this reason, it’s increasingly being viewed as a commodity. Unlike other commodities, though, its value is “TBD.”

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"When people say data is a commodity, it's because they see statistics about huge pools of data out there," says Randy Giusto, an analyst with Outsell Inc., a research and advisory firm focused on media, information and technology. "It feels like a commodity because of the huge number of companies in this space.” However, estimates on the actual value of that commodity can be tough to pin down.

The Data-Value Disparity 
For example, last year, a data analytics company serving the auto industry used software code to track websites visited by consumers. Using a technique called “history sniffing,” the data company tracked user browsing histories. It transferred the data—400,000 consumer names, phone numbers, e-mail addresses and vehicle preferences—to a data broker for a mere $2,500 payoff (which would eventually go to a $400,000 settlement to the State of New Jersey, since “history sniffing” is illegal).

On the flip side, a survey of large companies last year, conducted by Tata Consultancy Services (TCS), found that those selling their digitized data earned, on average, a hefty $21.6 million in 2012. The survey also revealed that telecoms and utilities, in particular, are likely to monetize their data, while insurance companies get the biggest return.

Getting a true handle on the value of data as a commodity is made even more difficult because most data isn't sold: TCS discovered that only 27% of its survey respondents were selling their digitized data (though that number is expected to jump to 43% by 2015). Plenty of companies still barter their data, swapping with other companies to mutual advantage—something not considered in most valuations of the data economy.

Where the Growth is
So for many companies right now, the core of the data economy is a small but growing segment—the information two billion-plus global Internet users create when they click "like" on a social media page or take action online. Digital customer tracking—the selling of “digital footprints” (the trail of information consumers leave behind each time they surf the Web)—is now a $3 billion segment, according to a May 2014 Outsell report. At the moment, that's tiny compared to the monetary value of traditional market research such as surveys, forecasting and trend analysis. But digital customer tracking "is where the excitement and growth is," says Giusto.

Real-time data that measures actions consumers are actually taking has more value than study results that rely on consumer opinions. Not surprising, businesses are willing to pay more for activity-based data.

Striking it Richer
Outsell Inc.'s analyst Chuck Richard notes that the specificity of data has a huge affect on its value. In days past, companies would sell names, phone numbers, and email addresses as sales leads. Now, data buyers have upped the ante. They want richer data—names of consumers whose current "buying intent" has been analyzed through behavioral analytics. Beyond the “who,” companies want the “what” and “when” of purchases, along with “how” best to engage with prospects.
"Some companies are getting a tenfold premium for data that is very focused and detailed," Richard says. "For example, if you had a list of all the heart specialists in one region, that’s worth a lot."

Tapping into New Veins
Moving forward, marketers will increasingly value datasets that they can identify, curate and exploit. New technology could increase the value of data by gleaning insights from unstructured data (video, email and other non-traditional data sources); crowdsourcing and social media could generate new types of shareable data; predictive modeling and machine learning could find new patterns in data, increasing the value of different types of data.

Given all this, the data economy is sure to keep growing, as companies tap into new veins of ever-richer and more-specific data.


NARRATIVES by WSJ. Custom Studios for SAS

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