Data, oil or fuel?
Data in business has become a hot topic over the past years. New technologies allow firms to collect massive amounts of data about, well, us. Cookies, online profiles, search queries, device tracking technology and even facial recognition software allow firms to track our moves.
That this data is valuable stands to reason. Enough data on a person allows a firm to hit us with personalized content, target advertising and even location based notifications, all designed to influence our behavior and monetize our actions.
Just exactly how valuable is our data? Is it just a way to grease the wheels or is it actual fuel for the economy? Dutch insurance company Achmea recently announced that they are planning to give their customers discounts on their insurance if they allow Achmea to track their behavior and collect data on them. Initial plans include installing tracking and measuring devices in their cars and homes, hoping to modify customer behavior in order to prevent the need for claims. This would essentially put a very literal price on your privacy. As was to be expected, the announcement sparked a lively debate on the right to privacy and how firms should not be able to put a price on it.
In another case on online payment companies, the author puts forward the argument that instead of asking payment fees, these companies should monetize the data they collect on customer consumption behavior. In other words, if I buy a guitar online, why not use the data they collect on my purchase to target me for guitar lessons? Trust me when I say I am going to need them..
These companies would essentially forgo the need for payment fees and generate revenue through the data they collected, making everyone better off (I pay less, they make money, the guy who gives guitar lessons knows his ad is targeted to someone who actually cares).
These cases show that data has actual monetary value. However, Achmea only gives out a discount, they do not generate actual revenue. The payment companies do, but they are in a unique position. It is likely that some firms will generate revenue off of the data they collect, but this will not be the case for every firm. Most firms will probably use data as oil: to target the right guy with the right ad. Like me and my guitar lessons. Let me know what you guys think about companies making money off of our data!