I recently spoke at Empiricon, an event which considers deep-tech solutions for sustainability. Our panel focused on what it will take to build a ‘data economy’, a potentially amorphous term. Definitions frequently centre around the ability to monetise data. That is certainly part of it, but it is easy, particularly for marketers, to think of this too narrowly.
Speaking to my fellow panellists gave me a different perspective. The data economy is of course about using data. But we’ve paid insufficient attention to the bigger ecosystem; the context of how data will be stored, controlled and used in the future.
The signs are there in our immediate circle: data breaches amongst media titans changing consumer perception and trust, GDPR changing consumers’ control of their data, hopes and fears in equal measure for future media-buying transparency. These signs point to a wider trend in how technology, data actors and the user applications these enable will change. And as an industry, we need to be ready.
Think of the data economy as a mechanism whereby data is a common means of value exchange.
This goes well beyond Bitcoin. Consider a step change in how data can be stored, verified and shared, leading to market forces assigning a value to the data. Clear ownership and control of data can then be used to facilitate commercial and social transactions. Such interactions could look as different to today as a cryptocurrency does to banknote.
To give a practical example, consider an individual with rare genetics. Their health data is valuable to medical researchers. If the individual has control and traceability of their data, then they can choose who has access to that data. They may opt to donate their data to researchers working to cure a given disease; in the same way they could currently give to a charity. What if a different scientific team wanted to use the data towards genetic engineering though, or any purpose of which the individual was less supportive. The individual could elect to either place a high price on their data, or simply refuse for it to be used in this way. In the UK, the NHS’ latest move towards routine genomic testing makes such a scenario plausible.
What will we see change?
The idea of distributed ledgers, a database-like register which no single actor owns, changes the trust needed to use data. The theory existed long before a blockchain, but Bitcoin popularised and applied it in a very visible manner. A register open to anyone for inspection suggests there is an undisputed truth, on which every party can rely. In reality, such tools are still open to negative aspects of of human behaviour. As with any tool, bad data in means bad data out, and speed of processing can be an issue. With more people examining the potential applications and solving for such criticisms though, decentralisation technology will improve and grow.
2. Data actors:
‘Data actors’ covers both the people who need to come together and the data protocols they must establish if the technology is to be of practical use. Beyond individuals, this area spans consortiums with a commercial and/or social purpose in mind through to regulators. Consortiums are helpful in working towards data standardisation—else its lack of fungibility presents a fundamental issue to the growth of data economy applications. They also enable inefficiencies in the technology to be navigated more readily. For example, if the audience scrutinising a ledger is controlled, the speed of processing transactions can increase. Regulation is typically welcomed in this area. We’re seeing rapid development, with the US, China and EU taking fundamentally different approaches, which can be characterised as privatisation, nationalisation and democratisation respectively.
The applications that come from a new way of looking at data are almost infinite. It is interesting to study sectors that handle the most sensitive data; if the data which people consider most personal can be handled successfully, other uses become more straightforward. Equally, it is perhaps the least sensitive data with which people will be prepared to experiment and therefore, the area with more immediate commercial potential.
What should marketers think about today?
What about marketing? We routinely present our audience with a data value exchange. Data in return for free services—from Facebook and Gmail to cheaper ride hailing—has been foundational to digital’s proliferation. But how might our treatment of the data we collect change if the person providing it could verify how it had been used and by whom? Would it change which data we collect and the commercial models these underpin? How might it change the customer experience? Is an individual even the most appropriate custodian of their data or is that better aggregated by specialists?
These are big questions. And there’s no shortage of venture-capital money chasing the answers, with talk of these shifts having the same impact as the smartphone in terms of what will be built on top of the new functionality. According to Tim Berners-Lee, the change is sufficient to reinvent the web.
Three points stand out for today’s forward-thinking marketer to consider:
- How you manage customer data
- The data value exchange you offer your customers
- How the data economy’s growth will affect who holds data
How to manage customer data
We spend a lot of time looking to build a complete customer view; to establish, personalise and prolong the brand’s relationship with a person. This is critical in meeting current customer expectations. But can those efforts also be used to meet the customer’s data requirements? Be that from a regulatory perspective or just to meet changing expectations of how a brand handles an individual’s data?
It stands to reason that without a pan-organisational, consistent means of identifying which customer a data record belongs to, brands will struggle to meet a regulatory-imposed right to be forgotten.
What if a customer expects to see where their data has been shared and for what purpose? Data sentience isn’t so different to the ‘woke’ movement, albeit less catchy. What relationships, and legal agreements, does a brand hold with its existing and future data partners to collaborate in managing that data in such a manner? Could a brand turn this challenge into a competitive advantage? With a trend towards ethical branding, why not market a focus on data transparency? Could a brand act as a data custodian for an individual and help them directly curate and monetise their data with those willing to pay?
The data value exchange you offer your customers
Consumers face a data dichotomy. On one hand, they are more conscious than ever about their data. On the other, with a proliferation of data sources; from wearables, to voice assistants, to IOT-connected devices, and the everyday nature of the tasks these are involved in, they share more data subconsciously. How a brand responds to this; the value they offer in return for data, as well as the control they offer, will determine the depth of relationship they are able to build with their customers.
This is critical to brands’ immediate and long-term future, which is why we as marketers must invest in understanding this value exchange better, as this example shows.
How the data economy’s growth will affect who holds data
Google and Facebook’s marketing data duopoly (at least outside of China) is something that marketers must tackle today. But it is also a precursor to what may follow. There are macro and micro aspects of data strategy to consider.
At the macro level, we already see new data collectors and brokers emerging: commerce marketplaces, ‘open data’ collaborations, and privacy-focused initiatives such as Solid. Brands must think through their relationship with such organisations in the context of customer expectations in the emerging Data Economy. Both Google and Facebook have succeeded in the first era of digital data value exchanges; will this legacy help or hinder them to do so in the next one?
At a micro level, first party data, which a brand collects, and in current thinking ‘owns’ (although that default position may change in time) is a clear part of any response to reducing dependency on external data holders. To the points above, being a responsible custodian, offering clear benefit and control from such data usage will be an entry-level requirement for brands. But which data does the brand use and how? This is fundamental to data strategy. What quantity of data can deliver competitive advantage? The answer partly depends on how machine learning evolves; we’re already seeing efforts to reduce the size of dataset needed to answer a given challenge. But beyond that, how might the dynamics of a future data economy disrupt a brand’s industry? Data collection and access is only one part of the puzzle, but it is critical.
Let’s not get carried away
There are a number of reasons why the data economy isn’t yet more prevalent. Change will take time. However, given the advent of new technology, the collective enthusiasm to put that into practice and the commercial opportunity it presents, the emergence of a data economy beyond what we see today seems inevitable.
That is unlikely to make individuals into data millionaires overnight. As those who have tried have discovered, the market forces are not yet well defined nor efficient.
However, marketers can make smart decisions now. Joining and managing their customer data well, considering the data relationship they’re building with their audiences and determining which data they must have access to will separate the next generation of brands in the data economy.
Jonathan Edwards is regional head of data, analytics and operations at iProspect APAC.