Data Monetization aims to provide cutting-edge market information to help decision makers evaluate investments. It also identifies and analyzes emerging trends along with key drivers, opportunities, and challenges.
What is data monetization all about?
Data monetization consists of generate profits from all available data sources. In other words, it is the transformation of data resources into revenue. Nowadays, every operating company is a company data-driven. This means that it uses data in order to reduce costs and increase revenue.
Converting data into a revenue-generating stream is difficult, but essential to a company's economic growth. Much customer data is now easily accessible from websites, mobile apps, online transactions or social media platforms.
Data Monetization market highlights market developments, global market size, and industry challenges. Growing at a compound annual growth rate (CAGR) of 16.42%, its size is projected to reach up to $4.76 billion by 20261.
Thus, Data Monetization is at unprecedented levels. Moreover, the increase in the volume of user information has led to a boom in the data market. Thus, more and more companies are getting involved in this market.
Direct or indirect monetisation
A company can decide to opt for two different types of Data Monetization. You can choose, in fact, between direct and indirect monetization depending on the type of business. Here are their main characteristics:
Data monetization indirect: insights for business development, creation of new services and business models based on the data you get from your products or services
- Direct monetization. It refers to the process of directly converting data into revenue for the business. It can be done by selling products on their website or app, selling their own data segments or through PPC (Pay per Click) ads. A company that implements direct monetization monetizes directly from its own sources.
- Sale by data coarse ex. Data sets, API
- Sale of analyses and insights derived from the data e.g. Derived from the construction of complex models built on the basis of internal and external data
- Indirect monetization. It refers to the creation of new services and business models based on data you obtain from your own products or services or from third-party sources. For example, through the sharing of derived data or the publication of ads from partner brands. We can say, therefore, that indirect Data Monetization helps companies to reduce costs, improve productivity and efficiency, develop new products or services and discover new types of customers or business categories.
- Optimizations data-based
e.g. Building an advanced DMP on advertising targeting by reselling the know-how/platform to third parties
- New business model data-driven
ex. Using data to discover new business opportunities, customer types and segments to develop new services or products or improve existing ones
Top players in Europe
Although the United States is the main player in the sector, Europe remains an important part of the world economy. Within it, the Germany will add over $110.8 million to Europe's size and influence over the next 5-6 years. Over $138.5 million of expected demand on the continent will come from markets in the rest of Europe.
Most of the major companies in the sector are from the United States. However, among the top thirty, we find two European ones:
- SAP (Germany) - in fourth position
- Emu Analytics (United Kingdom) - in twenty-fifth position
It is assumed that the COVID-19 slow down the adoption of data monetization tools and services. The pandemic, as we all know, has not only affected the healthcare industry, but also the global economy. The global desire for media and entertainment is creating a major increase in streaming services.
Companies offering data streaming services, however, are not having an easy time. The huge traffic of data is generating quite a few problems within data analytics. In fact, these companies continue to:
- suffer network slowdowns and failures
- Implement analytics strategies that fail to monetize more traffic leads.
Benefits of Data Monetization
Several companies have decided to opt for data monetization in Europe. Let's take a look at what are the main reasons behind this trend. The main benefits brought by the adoption of Data Monetization are:
- optimization of data usage
- customer loyalty
- the reduction of operating costs
- increased compliance
- increased profitability
- strengthening partnerships
- improving customer experience and understanding
- adding maximum value to products and services
- optimization of planning and decision-making activities
- improving collaboration and data sharing between external and internal stakeholders
- increased marketing and targeted product or service offerings.
Moreover, Data Monetization is expected to become crucial in supporting business intelligence for several business opportunities. Among these we can mention, for example, mobile marketing.
So the reason behind this trend is clear. In a world where finding customer data is becoming easier and easier, Data Monetization is one of the most important tools in the industry. win-win practice in many ways.
A weakness of Data Monetization in Europe
The regulatory bodies are implementing new policies to incorporate them into the regular operation of businesses. Employees may have access to some type of information while they must be abstained from others. Organizations must, therefore, be very careful, integrating data from different sources and making it available to employees. This process can take a lot of time, and authorities need to be aware of the policies.
For example, the General Data Protection Regulation (GDPR), approved by the European Union, replaced the previous Directive 95/46/EC. Its function is to:
- protect and empower the privacy of all European citizens
- Reshape the way European organisations deal with data privacy.
Following the implementation of GDPR there have been many changes for businesses. Organizations are constantly having to make changes to Data Monetization solutions to stay up to date with changing regulatory policies.
Data Monetization: the reasons for growth
We have analyzed the benefits brought by the implementation of data monetization, namely its consequences. But let's take a step back and focus now on the factors that have led to the exponential growth of this practice.
The emergence of advanced technologies (artificial intelligence, Internet of Things (Iot), cloud computing) has paved the way for the growth of the market. The ability of data monetization to synthesize and incorporate thousands of data and apply artificial intelligence and advanced analytics has encouraged several entrepreneurs to invest in it.
In addition, the growing shift of companies towards Data Monetization has also accelerated the development of cloud-based technologies. We know that storing and maintaining large amounts of data on hardware media is quite expensive. In this context, cloud-based solutions offer a huge advantage. This has created more opportunities for cloud-based data monetization.
In addition, cloud technology allows companies to share data in real time. Cloud computing is expected to pave the way for subscription-based information sharing platforms. This will also lead to market growth.
Enterprise size data
Le large enterprises had the largest market share (77,11%) in 2019. This can be attributed to the increasing presence of large organizations with global dominance. The Data Monetization market includes large companies in the retail, financial, and telecom verticals. These are companies that have customers present across the globe.
They have adequate technical expertise, effective business strategies and good capital. There is an increasing demand for advanced technologies such as cloud computing and artificial intelligence in the market. Large enterprises can easily invest in these new technologies to maintain business continuity.
And the rest of the market share belongs to whom? It is expected that the SME will expand at the maximum level of compound annual growth rate of more than 25% 2020 to 2027. Increasing adoption of Data Monetization by SMEs to sustain the competitive market is expected to fuel the segment growth.
In addition, SMEs are expected to face a shortage of resources. Consequently, the complexity of businesses will lead to an increased need to optimize costs. In this context, the growing presence of cloud-based Data Monetization is expected to play a key role in ensuring:
- reduced operating costs
- greater efficiency.
This will positively influence the growth of the segment.
Several factors have contributed in recent years to an increasing trend by European companies to implement data monetization. These certainly include technological evolution and the use of AI. On the other hand, other factors, such as the regulation of privacy regulations and the outbreak of the COVID-19 epidemic are hindering its path. All in all, however, we can say that we are in a historical phase, in which Data Monetization has reached unprecedented volumes and only the advance of time will confirm or not the positive forecasts that currently exist in this regard.