Monetising customer data

This is the last post in the monetisation series. We’ve explored ten ways to monetise large digital audiences, from simple advertising to selling products. This post discusses ways of making money from data.

Data monetisation is one of the newest of all the models we’ve discussed in the series. And it’s probably the most misunderstood. When Facebook bought WhatsApp for $19 billion, it proved how valuable user data has become.

But customer data isn’t that new. The market for sales-leads data has been around for ages. The difference now is how that data is collected and ‘mined’. Data used to be scraped from public sources such as Companies House and Yellow Pages. Now companies are setup with the sole purpose of collecting information from users.

User data is then used by the same website to up-sell premium digital content and other products. Some websites ask the user to enter data as a form of ‘payment currency’ to use the website’s service. Facebook is the most famous example of this.

The ITV Player requires some user data to watch content (for free) - a valuable exchange?
The ITV Player requires some user data to watch content (for free) – a valuable exchange in my book

Another example is ITV. ITV need to pay a third-party for the bandwidth to stream TV programmes to digital users (as well as the software development of the ITV player and website), so they cover this cost through video advertising and user data. ITV can then use this user data to understand more about their audience, create compelling content for that audience, and ultimately sell more relevant adverts at a higher cost.

There is also the uglier side of user data when it is sold on to third parties. This is one of the main sources of spam email. Facebook handle this by making all user data accessible to developers through an API, but those developers are not allowed copy the data – i.e. to store it in their own databases.

As we’ve seen, user data can be used to drive increased personalisation and an altogether more tailored, or relevant content cycle. It can also be combined with sponsorship and other forms of monetisation.

Over the last couple of years we have seen some innovative forms of data capture being turned into consumer insight and at Endava we’ve created some really interesting prototypes (unfortunately they are by their nature private and confidential).

As these data models become richer (i.e. deeper or more data about a single individual), there are more possibilities. I believe we’ve only seen the tip of the iceberg with WhatsApp, and we’ll see many more strategic acquisitions in the next few years.

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