- The Strategy unit at PwC estimated revenue from commercializing data will grow at a rate of $300 billion per year.
Data is the new oil.
It has an immense amount of uses and drives nearly all facets of the consumer-driven market. It’s important to understand the worth of your data because the vast majority don’t. At the moment the data market is predominantly a business to business marketplace. Businesses using other businesses data to increase their marketing strategies and target consumers more accurately. Companies are now looking into allowing consumers to sell their data from personal devices like smartphones, cars and wearable technology. Data is huge, and it continues to grow at an exponential rate. Companies are reporting that the amount of data being collected is increasing by 40% per year.
Because of such a data-driven market, the quality is very important. Sifting through hundreds of terabytes of data is virtually impossible to do manually. Valuing data is complex and extremely context dependent, these factors are hugely important but difficult to quantify. The data values will also change over time in response to an ever-changing marketplace.
Huge data-focused companies like social media websites, for example, Facebook, can earn somewhere between one to two thousand euros for a single users data per year. Data is constantly being collected from us and not only does the user not realise this, most companies don’t either. Companies that do understand the value of data are struggling to keep up, most data sources are increasing by 40% per year. The Strategy unit at PwC estimated revenue from commercializing data will grow at a rate of $300 billion per year, in the financial sector alone. In other words, the marketing opportunity for data monetization is massive.
So what can your company do to create a formula for data valuation?
Firstly you need to look at the value of the data you are using. The use of data can be defined by its application and by the frequency of the data’s use. Data needs to be seen as a strategic asset for the company. This data asset can be sold, traded or acquired, generating a monetary value. This value can also be generated indirectly when a new product or service using this data is created but the data asset remains unsold.
Data value differs from other assets in that it can often increase in value the more it is used. Meaning the data that is being used frequently can be viewed as an asset exhibiting an increase in returns vs use. Then you need to look at the costs of the data asset which is usually the collection, storage and maintenance. From there you can start creating a sense of what value your data has to your company.