With persisting and rising inflation leading to a slowdown in consumer spending, businesses are discovering new ways to generate revenue and maximize their marketing spend. Although still in its infancy, data monetization is a way for companies to maximize the value of the data they have to create new revenue streams.
Data Monetization: A New Way to Grow Revenue
Data monetization is an emerging discipline that is seeing high rates of growth. A report published by Allied Market Research shows the global data monetization market was valued at $2.1 billion in 2020, with a projected compound annual growth rate (CAGR) of 22.1 percent from 2021 to 2030.
A McKinsey Global survey found that respondents at high-performing companies “are three times more likely than others to say their monetization efforts contribute more than 20 percent to company revenues.” In another report published by Data Bridge Market Research, data monetization is forecasted to grow by 21.95 percent between 2022 through 2029.
How Prioritizing First-Party Data Enables Data Monetization
Forrester defines data monetization as “the process of leveraging your data to produce insights and decisions that grow revenue and improve your business.” Fast-growing businesses are using their first-party data to improve how they run their business, understand audience behaviors, optimize business offerings and develop more personalized experiences.
As a cookieless future looms closer, successful businesses are those with a plan to prioritize first-party data in order to monetize it. Customers value transparency and privacy. At the same time, customers are more likely to make a purchase from a brand with personalized experiences. You can only achieve that personalized experience by having access to data that a CDP centralizes for you and makes readily available.
By taking action on insights from first-party data, brands can differentiate from the competition as well. For example, Kaiser Permanente used its data insights about patients to improve how doctors and staff assist them. During the pandemic, usage of their telehealth system was at an all-time high of around 80 percent. With only one-in-four health systems having 25 percent of their patients using telehealth, they stood out from their competitors.
With the depreciation of third-party cookies and a growing number of global and U.S. data privacy laws and regulations, collecting and managing first-party data is more important than ever. Taking a consent-first approach to consumer data collection also builds a more secure relationship, and allows you to end a reliance on third-party data companies.
By prioritizing first-party data, businesses fill data gaps and centralize information to gain profits internally and externally. Given that data monetization depends on the ownership of first-party data, early success stories come from businesses that have improved their data collection efforts without relying on a third-party in the middle.
Data Monetization Success Story: Walmart
Walmart is another example of a data monetization success story. Their data platform, Walmart Luminate, “collects and identifies shopper patterns and then relays those patterns to the company’s merchants and suppliers.” Since using Luminate, Walmart has seen a 75 percent increase in e-commerce revenue growth and a 50 percent growth in the number of suppliers working with them.
Walmart’s data monetization is an example of how external or direct monetization – done by giving second parties or partners access to information – can benefit your business. Businesses have more reliable information because their data is directly connected to customer behavior and activities. Giving business partners access to data-based products or services allows you to partner with them to better advertise, target and engage with particular audiences.
A Centralized Data Management System is Essential for Data Monetization Success
A centralized data management system is a key element of your data monetization success. Before you can increase revenue through data monetization, you must effectively use your data to improve your business from within. In an article for Data Science Central, author Bill Schmarzo writes that data monetization is a waste of time for most companies unless their Data and Analytics functions have a seat in the C-suite.
Accessing first-party data is a challenge when distributed across different customer touch points, such as websites, apps, social media sites and more. A customer data platform (CDP) can not only consolidate information siloed across systems, it can also manage the often-complicated and murky waters of privacy regulations.
A CDP allows you to make better business decisions by bringing in missing pieces that marketing, sales, and customer success previously had to live without. By cutting out the middleman of third-party data, these teams can make improved business decisions with measurable outcomes.
A centralized data management system allows you to work with your vendors, suppliers, and partners to successfully build better marketing campaigns, personalize customer experience, and improve product offerings. By sharing data, you can generate profits, monetize owned data, and improve business relationships.