Data Monetization is the process by which companies generate revenue by selling data collected from their businesses and customers.
This practice is becoming more widespread, as data can create value both to demand (data buyers) and to supply (data sellers).
In 2022, the market value of Data Monetization is about $2.9 billion and is expected to grow to $7.3 trillion by 2027 with a CAGR of 19.5% (Source: Marketsandmarkets, 2023).
However, in Italy, the Data Monetization market is still immature and expanding. Today the market leaders are TELCO companies, thanks to the widespread use of SIM cards and the information available to customers (both private and institutional)
Specifically when it comes to Data Monetization, the main players are:
- Data providers (those who make their data available)
- Data processors (those who collect and process large amounts of data)
- Data buyers (those who buy data for different uses)
In the current market, when we talk about data we mean the processed data that allows the buyer to make some important managerial decisions.
Examples may be retail chains that use the pedestrian data provided by TLC companies to identify the most suitable areas for opening new stores. Another example may be banks that use pedestrian data for scheduling the reloads of ATMs on the road. In some cases even institutional entities (e.g. municipalities) have purchased pedestrian data combined with weather data to offer a better security service to citizens.
A not inconsiderable aspect of this issue is clearly the regulatory one. In fact, everything concerning Data Monetization (but also data in general) has been strictly regulated at European level through the GDPR (General Data Protection Regulation). This regulation is a crucial factor in Data Monetization, as companies must comply with a multiplicity of constraints for data collection, processing and sale. In the case of TLCs, for example, the data is always anonymised and the identifiable information is never used for marketing purposes directly addressed to the final consumer.
Data Monetization is therefore a great opportunity for companies to draw value from the data collected, but this requires a non-trivial processing capacity and the respect of strict regulatory constraints.
In the future, only those companies that are ready to develop innovative business models can fully exploit the potential of data and generate new revenue streams.
