Did you ever think of your personal data as an asset like your car or home or investments? If not, think again. In the data broker industry, everything from personal identifying data to social media data to health data is packaged and sold to the highest bidder for annual revenues of almost half a billion dollars per year. That would be $1.76 for every adult 18 and older in the US. But what data is sold? Where is it collected? The following infographic from MBA@UNC looks at the business of data brokers, how they get their data, and what they sell it for.
But this is not the end of the story. Sources of highly detailed and granular information can be very valuable to companies.
Take the digital advertising market. Google and Facebook dominate the digital advertising market by using your data to allow marketers better targeting options. They use the personal data they acquire to enhance users’ experiences and provide more personally relevant services. In addition, online platforms allow businesses to market their products/services to selected audiences, and reduce the noise of irrelevant advertising for those audiences by enabling interest-based advertising that is based on users’ personal data and demographic characteristics.
This is a very lucrative market. In 2014, 2013, and 2012, advertising accounted for 92 percent, 89 percent and 84 percent, respectively of Facebook’s revenues. Advertising is also a major revenue generator for Alphabet (Google), contributing more than 90 percent of the company’s total revenue within the last decade. In 2015 advertising revenues reached nearly $76 billion in 2015, or $276.68 for every adult 18 and over in the U.S.
Firms not only pay for data-based advertising on online platforms. They are also actively expanding their user databases and analyzing qualitatively the trends on the demand side. This can lead them to increase their market shares by designing new products and services that better suit consumer preferences.
It is difficult to quantify the added value of such processes for firms. But projections seem to indicate the increasing importance of personal data for private and public organizations.
It’s estimated that in Europe applications built on personal data can provide quantifiable benefits of as much as €1 trillion annually by 2020, with a third of the total accruing to private and public organizations, and two thirds accruing to consumers. This means a benefit for firms of about €330 billion annually by 2020.
Personal data is the oil that lubricates the e-commerce machine. How do you as a consumer feel about that?