Monthly Archives

July 2012

Uncovering the Potential in Your Data

By | Big Data, Data Asset, Syndication | No Comments

The world of “Big Data” has become a very interesting place. As companies large and small mine their data repositories for new insights, a number of new and exciting opportunities are becoming apparent.  One opportunity that is too often overlooked is the fact that “Big Data” offers not only a new source of valuable insights for the company that owns the data — but it can also offer valuable insights to the company’s customers and prospects.

How does this work? Companies typically store transaction data from interactions with each of their customers in a database.  This information has value and is therefore referred to as a data asset.  Yet, access and use of this data asset is rarely provided to parties outside the company (such as customers, prospects and suppliers).

For example, if I sell an accounting system in a software-as-a-service model, I see as a by-product of delivering my service the individual financial transactions of my customers. Both the individual transactions and the identities of every customer are kept strictly confidential and are never disclosed. However, my database is rich with information that, when used in an aggregated and anonymized manner, could help me to identify valuable usage patterns among my best customers. That, in turn, can help me do a better job in targeting my prospects.

Furthering this concept, I may discover that companies with large physical inventories are better customers for me than companies that have no physical inventory. Armed with this knowledge, I will focus my future marketing efforts on prospects with large inventories. I will repeat this targeting analysis to continually refine my prospect universe– using my aggregated transaction data to refine my business decisioning.

Extending this approach one step further, I may decide to use this aggregated transaction data to provide a new decisioning resource to all of my customers. For example, I might be able to help one of my best customers determine that the number of days outstanding for their receivables was 10 days longer than the norm for businesses similar to theirs.So while my customer may have thought they were doing a great job on collections, my aggregated data could show them that they are, in fact, below the norm. This would be an insight that my customer could not derive from their data alone.

As a result, offering data from internal operations to outsiders (syndication) offers a large number of new and valuable insights.  These insights, when made available to your customer base become a key advantage of why a customer should do business with you and not your competitors. We call this approach “Collaborative Big Data.”  It is going to become a significant competitive advantage for companies that embrace it.

Employing data in this manner can create a valuable new revenue stream for the company that owns the aggregated data.  Not only does this approach create a competitive advantage for the firm, it can produce significant high-margin revenue. Potentially, you can charge your current customers for access to this unique and valuable decisioning data. In addition, there may be totally independent new markets that may want access to this new Collaborative Data asset and be willing to pay a premium price. It is an exciting process for every company to examine its transaction data and ask the question:  “Can I provide unique and valuable insights to my customers and others?”  If so, you are well on your way to a new, high-margin revenue stream.

One last but very important point is that all this must be done the right way, making the privacy concerns of all involved paramount. More importantly, the approach must be compatible with the company’s core business. It’s irresponsible to try to make money on the backs of our customers.  Instead, this offers a way to deliver them added value.

We need to develop applications that benefit our customers. The first rule for Dr. Data is to do no harm.

-Dr. Charles Stryker

The Opportunity for CMOs to Exploit “Big Data”

By | Ad Spend, Big Data, Big Data Strategies, CMO, Competitive Analysis Tool, Crowd Sourcing, Innovation, Profit, Search Web, Social Web, Web Crawling | No Comments

Everywhere we turn these days, “Big Data” is top of mind.  For CMOs, the hype of “Big Data” will soon become a reality. When I think about “Big Data” from the CMO perspective, I divide the world by data source:   the Search Web, the Social Web, Web Crawling, and Crowd Sourcing.

Then, for each of the categorical sources of data we, at VDC, are building an inventory of use cases. For the CMO, for example, for the Search Web, the sources of data include both first-party (e.g., Expedia, Cars.com, etc. ) and third-party sources (BlueKai, eXelate, etc.). When we view these companies as data sources, we can begin to create valuable, often-transformational applications using these new sources of “Big Data.”

For instance, by observing and understanding the quantity and geography of searches over time, we can improve the efficiency of a media buy.  Example:  if I am the CMO of a hotel property and I am a national advertiser using television, I can adjust the timing and targeted market(s) using these new sources of data. In this illustration:

  • If search volume for hotel bookings is currently low in Chicago but high in LA, I can adjust my television ad spend accordingly.
  • If search volume for hotel bookings are off-the-charts high, I can not only optimize my ad spend by market, but I can increase my overall ad spend in those markets that have exceptionally high traffic to capture more share. Another significant benefit: I can also increase my room rates.

Since high search volume is a leading indicator of the future high level of booking, I have an opportunity to set my rates and maximize profits.

In addition to using search data as a leading indicator of future bookings by market, the CMO can also use the data as a competitive analysis tool. This search traffic can further be broken down by brand:

  • How does the directed search volume for my property compare to that for my competitors?
  • How does it breakdown by market?

This data is not only useful for competitive analysis purposes but can be used to adjust the advertising message by market – and to emphasize my brand’s advantages over the competition.

Of course, this approach does not only apply to television, it applies to all targeted media:  direct mail, e-mail, display, mobile, etc.

Think about the power of these new data sources. What better leading indicator of future demand for a product could there be than to understand how consumers are planning to buy the product in the future as represented by their search activity today?  This data surely will transform our marketing processes.

This description represents just one use case of using search data to optimize ad spend and yield superior management strategies. There are many other use cases under development for the search web and there are an equal number of use cases under development for the other “Big Data” sourcing categories:  the Social Web, Web Crawling, and Crowd Sourcing.

While this example was for hotel properties, this same use case applies not only for many other aspects of travel-related services but also applies equally well for an almost endless array of consumer-driven industries:  auto, financial services, healthcare, etc.

This simple example illustrates the transformational power of “Big Data.” The capability to extract these insights from “Big Data” are here today and the practical application of these concepts to address the CMO challenges of today is just around the corner. It is truly a very exciting time for those of us who work in the “Big Data” business.

– Dr. Charles Stryker

Understanding “Big Data”

By | Big Data Strategies, Innovation | No Comments

So much is being written lately about “Big Data,” and the huge business opportunities that accompany this emerging science.

The Venture Development Center, Inc. works in the heart of what is known as “Big Data.”  As such, and as a result of having worked to develop Big Data strategies with some of the most innovative and forward-thinking companies in the space, we have a unique perspective.

To understand the business opportunities associated with Big Data, some historical background is necessary.  Although it is hard to imagine, before 1975, there was no computerized information being used for business decision-making. It was not until the mid-1970s that the power of computing became sufficient to create practical, albeit limited, computer-based data assets. Before the mid-seventies, there were no computer-based credit bureaus, no computer-based marketing lists, etc. In this early period, most of the current providers of information services were launched, including Acxiom, InfoGroup, Nielsen, Catalina Marketing, Harte-Hanks, and LexisNexis. These companies led the way and, collectively, created the Information Service Industry.

The next milestone in the evolution of this industry occurred in April 1993. That is the date that Mosaic shipped the first commercial Internet browser.  To put the world of Big Data into perspective, between the dawn of the information services industry (mid-1970s) and the shipment of the first browser (April 1993), about 1 billion gigabytes of data were created and stored that described people and business behavior.

Due to the increasing power of computing and the ever-increasing volume of data being collected through digital means, by 2003, 5 billion gigabytes of data were collected and stored about business and consumer behavior.

Today, we collect and store over 5 billion gigabytes of data about the behavior of businesses and consumers every day, and this volume is still growing exponentially.  Within this reality lies VDC’s business opportunity.

Due to this rapid growth in the amount of data captured and stored about human behavior, there exists a very inefficient marketplace for this new, yet valuable and available data. The decision systems of corporations– large and small – simply have no means to examine all the data available and determine what data can transform their decision making process. Conversely, the companies large and small that own the data have no means to identify what firms need it. This problem is further complicated by the need to have a powerful analytics engine that can extract from this massive pool of available data the insights needed to support a particular business use case.

In addition, there is an added complexity that this process needs constant vigilance — when you think you have the process mastered, every day there are 5 billion gigabytes of new data that need to be examined and integrated into the decisioning process. The inefficient marketplace, the magnitude of the data, the dynamic nature of the data, and the significant processing challenge to extract appropriate insights have resulted in corporations of all sizes simply not realizing the benefit of using these new data sources to transform their decisioning processes. These companies operate only seeing a very small fraction of the data they could see to inform their decisioning. The Venture Development Center solves this problem.

I welcome you to follow this blog to find out from time to time what we at VDC see as the emerging opportunities in “Big Data.”  And I welcome your comments and suggestions so that, together, we can engage in intelligent dialogue about this exciting and rapidly changing discipline.

-Dr. Charles Stryker, President/CEO/Founder