In the mid ‘90’s I was part of a very successful internet media start-up. As we grew, and as the market exploded into hypergrowth, I recall our CEO (a baseball fan) constantly repeating this simple phrase, “and remember, we’re only in the 1st inning”. This line was great for our Wall Street investors, but it also turned out to be unequivocally true. I’d even argue today – with the benefit of hindsight – that perhaps we were just in the pregame warm-ups back at that time.
When we think about the enormous potential of data alliances, it’s easy to make a similar case. Trading and sharing of data for competitive advantage and mutual benefit is not a new business, so we can hardly claim that this is a new frontier. But we can assert, realistically, that we’ve just taken the field of play.
Consider the staggering fact that 90 percent of the data in the world has been created in the last two years alone. The amount of data generated and available for consumption, and competitive leverage in business, is staggering. Unlike the traditional laws of economics and commodities where greater supply drives diminishing value, just the opposite is holding true for data. But this comes with a caveat; data must be properly mined, combined, and aligned (to address specific market demands and user needs) for it to increase in value.
Back in the 1990’s internet media heyday I coined “in print, in person, and online” for the industry and the aforementioned media start-up. So today, I’ll introduce “mine, combine, and align” to serve as a framework to discuss the value-added data marketplace – which is at the center of the expanding data alliance market phenomenon.
Data alliances are emerging everywhere
As consumers, when we think of how companies are leveraging vast amounts of data we probably think of ecommerce, search and social media giants like Amazon, Google, and Facebook. We conjure-up imagined (or real) fears of Big Brother-like invasions of privacy and personal information.
But away from the mainstream consumer headlines there are hundreds of partnerships and collaborations forming between B2B information providers. They’re busily combining data assets to deliver new value for customers, while generating higher profits for themselves and other participants.
The financial industry is perhaps farther ahead than most, serving as a good example of what is possible and what is occurring across the business landscape. Bloomberg is a well-known early pioneer of the data alliance model, creating an empire based on data aggregation. More recent upstarts include Moody’s Analytics Data Alliance Portal, which is adding significant value to the credit markets by managing a “portal” for market data contributors. In some cases, barter exchanges are emerging, where you contribute data, to get data.
On the marketing front, global advertising giant WPP has established The Data Alliance. Its mission is to leverage WPP’s vast resources and scale of internal data, combined with a network of external strategic partners, to deliver data that helps clients succeed. While it’s not earthshattering for a marketing agency to leverage internal know-how, it is groundbreaking for a leading agency to create a specialized operating division to acquire, partner, and deliver data and analytics. As an illustration of the value-added data marketplace framework in practice, WPP is mining internal data resources, combining this with external data to build enhanced solutions, and aligning the output to meet specific client needs.
Data alliances are shaping the non-profit and “public good” sectors in new ways as well. One such example is the Research Data Alliance (RDA). Founded in 2013, the RDA is a collaboration of government entities and the global scientific community with a vision of “researchers and innovators openly sharing data across technologies, disciplines, and countries to address the grand challenges of society”. Now in its fifth year, the RDA alliance boasts more than 7,100 members from 137 countries.
While the engagement terms of data participants can vary widely with different models (for-profit and non-profit), the fundamental premise of data alliances is that the data contributed increases in value by virtue of its contribution to a larger solution (think 1+1=3). In data alliances, data providers generate greater returns from their data sets than they might achieve if they were marketed solely on a standalone basis.
Starting the journey
When thinking about how to unlock the value of data assets, B2B information providers are rightly starting their journeys by thinking about their opportunities in terms of these critical questions;
- How does the industry work? Who needs information, and when?
- Where do our data assets fit in with industry processes?
- Does our data deliver enough value as a standalone data point, or is its value accelerated when combined with specific third-party data?
- What about distribution, do we have access to all potential buyers in volume, and do we have the marketing efficiency and resources to reach them?
- What about the user experience, can we deliver data in ways that are easy for it to be consumed and used? Or is it better as part of an established platform?
- Who are the competitors, what products are they launching organically, and with whom are they partnering? How do we respond?
- What strategic value can we offer to other data providers (or they offer us) in our industry’s workflow – or for that matter, adjacent and non-adjacent markets too?
Answering these questions thoroughly is an enormous and significant project for any organization, but with increasing frequency the conclusions at the end of the analysis are pointing to one thing – exploring data alliances.
Delivering real growth today, versus aspirational fantasy
Historically, many B2B information providers have envisioned success as owning outright as many pieces of their industry’s data and workflows as possible. While it’s an understandable business reflex to define growth primarily in two dimensions – organic product development and outright acquisitions – this thinking is fast changing. B2B information providers are now considering where and how they should play with greater precision, and they are considering new models for partnerships and distribution.
Aspiring to “own all the data” in today’s digital economy – especially with the rapid proliferation of data – is akin to an auto manufacturer trying to own marketing and distribution, assembly, parts manufacturing, steel fabrication, and even iron ore mining and extraction. As crazy as this notion would be in the automotive market, this kind of deep vertical integration is similarly not viable or sustainable in today’s world of increasing data scale and specialization.
Data alliances, data exchanges, data portals, and data consortiums all offer a growing alternative to traditional go-it-alone data development and delivery models. They are enabling major markets and industries to operate with superior products, solutions and end-user experiences. With scale, they can even ward off potential disruption and competition in B2B markets from data powerhouses like Google. And, they are reducing risk to data providers, helping them focus and expand core capabilities, while accelerating growth and profits. Yet, this is barely the 1 st inning.