Digital transformation builds upon a host of emerging technologies, including sensors, wearables, and machine learning. However, the true value of digital transformation will be unleashed only when companies adopt new data-based digital business models. As we have pointed out in past reports, this ability to strategically monetize data depends on the ability to share data across processes, products, functions, organizations, value chains, and industries.
Data marketplaces are becoming a critical element in reducing the friction surrounding the sharing of information. In earlier research, we analyzed key industrial data marketplaces for different industry sectors and what key features to look for while evaluating them. Compared with the industrial data marketplaces, there is little understanding of consumer data marketplaces, especially what the consumer data value chain looks like, what the types of consumer data marketplaces are, who the key players are, how those players are differentiated from one another, and how they will evolve and impact the business of Lux clients.
We will be exploring these topics in a series of blog posts titled, "The Road to Consumer Data Marketplaces." In this post, we focus on the position of data marketplaces in the consumer data value chain as well as their data collection modes.
The consumer data value chain
The consumer data value chain consists of four major entities:
Figure 1: The data value chain consisting of data generators, data collectors, data users, and data marketplaces that act as intermediaries between collectors and users
- Data generators are consumers, who are the source and owner of the data.
- Data collectors are organizations (such as credit card and social media companies) that collect consumer data during the course of their business operations.
- Data users consist of consumer product and service organizations (such as retailers and food and beverage makers) that use the consumer data to analyze consumer demand, identify market trends, and drive business growth by offering highly customized products and services that meet the unique needs of different consumers.
- Data marketplaces' primary function is to offer a platform that connects the data collectors to data users.
It is worth noting that there can be a lot of overlap between these different entities; for example, some data collectors, such as consumer device companies, credit card companies, and healthcare serve providers, also act as data users.
The four modes of consumer data collection
The emergence of digital technologies offers new modes of data collection that were not available in the past, thereby rapidly changing how the entities in the value chain operate and interact with each other. There are currently four available major data collection modes that have evolved over time:
- Traditional channels, which collect consumer data from various online and offline sources that are not personal electronic devices. Examples of companies collecting data through this mode are market research firms, polling companies, and membership clubs (like Columbia Records). Some of them have existed since the pre-internet era and manually collected consumer data in a painstaking manner. Data collected in this mode is usually population-level and comes with a significant time lag (like at a monthly or even annual frequency).
- Traditional devices, which mainly include desktop computers and laptops. Data collectors using this mode include a large group of companies that provide software programs, apps, and services to consumers, such as Google (search engine and Chrome), Microsoft (Microsoft Office), Amazon (e-commerce platform), and Facebook (social networks). Compared with the traditional channels, this mode can collect consumer data that not only is much more personalized and granular but also has higher timeliness (given that consumers use their computers several times per day).
- Smartphones and other similar mobile devices, which are the most prevalent personal electronic device nowadays. Data collectors using this mode include various developers of smartphone apps, such as those for social networks (like Facebook), the sharing economy (like Uber), personal finance (Mint), personal health (like Litesprite), entertainment (like YouTube), and online shopping (like Amazon). Compared with traditional devices, these devices can collect more diverse sets of data (due to the availability of diversified consumer apps) in real time.
- Emerging devices, which encompass a variety of personal devices, including wearable devices (like smartwatches and even neural interfaces), smart home devices, and smart vehicle devices with capabilities of sensing and human-machine interaction. Data collectors using this mode are developers of app and software systems running on these emerging devices. Compared with data collected from smartphone, data from emerging devices are real-time and more specialized. For example, wearable devices can collect biometric data like electrocardiographs (ECGs), electromyograms (EMGs), and electroencephalograms (EEGs), which is beyond the reach of smartphones.
In the next blog of this series, we will analyze these four modes of consumer data collection in terms of their ability to collect different types of consumer data as well as help data users offer customized products and services.
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