How do companies make money from your data?
There's a lot of talk about big data with companies using mumbo jumbo like "enhanced verticals", "data-aggregating" and "visibility enhancement". We decided to cut through the guff to find out exactly how companies are using our data to make themselves money.
When we say money we're talking about over $3 billion this year alone. This is expected to hit nearly $50 billion by 2018. But where is all this money coming from?
There are four main uses: advertising, marketing, product development and data management itself. Yes, as this grows and data levels reach petabytes money is even made from managing that information. And with more data entry points like smart cars, smart wearables and smart homes this is only going to grow.
Big data advertising
This is probably one of the first ways your data was used to make money. Companies like Facebook and Google sell your information so that advertisers know the tastes of certain groups. Before this information companies were reliant on general group tastes like 18-30 year olds being more likely to go on a holiday to Kavos, for example.
Now, with more specific data, these companies can pinpoint more exact age groups, locations and tastes to advertise products. Ever bought something on Amazon and then spent the next few weeks being pestered with ads and emails trying to sell you more like you just bought? Yeah, it's not perfect yet.
While it might be a struggle to tell marketing and advertising apart for most people, they are different. Or at least they give more ways for companies to make money.
Much like advertising, marketing data is collected from people's shopping habits, social media posts and even online searches. But marketing then actively sells products to those people.
Netflix, for example, will use data from its mega-archive to create algorithms to offer better suggestions of what its users can view. So in this way it's often about offering a better service to keep customers, rather than buying in new ones.
This is a relatively new area where companies aren't just using information to sell more of their products, but are actually changing to work with big data. That may sound cryptic so as an example we'll use edo, an app developed to analyse people's credit card spending. This allow credit card companies, and shops, to offer deals on items specifically to the individual at the point of purchase. More apps that use data to create offerings are on their way no doubt, much like apps flooded the App Store when that first arrived.
Since people's patterns are analysed this data can help to build predictions of what people will want. This way sales, for example, can be adapted to offer even more specific deals. This can, more importantly, be used for health to help predict disease, illness and even help prevent accidents.
By 2016 it's predicted that data online will reach 1.3 zettabytes (that's the number followed by 20 zeros). Sifting through all that and pulling out what's useful is fast becoming a business offering in itself.
So finding hidden gems in data is becoming a new market, much like how Google offered a filter for websites when the net first begun. That in mind we could still see a company appear that will be Google big, or bigger, in the future.
With smarthomes, smart wearables and smart cars on the horizon there is going to be even more data floating about than ever before. What to do with all that will be worth a lot of money for those that can find uses. It looks like we're headed for another internet boom that gives programmers the chance to be rich. Let the gold rush commence.