A Market for Alternative Data
In Capital Markets, investment strategies are normally driven by traditional data that comes from a number of data sources; stock prices, bids/asks for, commodities, performance, events and so on. Outside of this traditional data realm is alternative data, which can be considered the ‘thinking outside of the box’ data. For example, confirmation of which car manufacturers are the most popular among consumers can come from auto insurance registrations– a form of alternative data.
As an alternative data provider, your data is valuable today, as it is for the future. The question to ask is ‘How can you effectively and efficiently sell your alternative data?’
Should You Sell Directly or Indirectly?
Data is a valuable product. What differentiates it from a physical product is that it’s an intellectual product. Naturally, this would pose challenges in its distribution. Being intangible, the challenge with intellectual products is that it’s easily copied, pirated, and can be polluted and/or diluted.
Impressively, technology has evolved to solve and address these pain points. The next question to ask yourself is, ‘Should you use this technology directly to grow your own brand?’, or ‘Should you use the technology already offered by data marketplaces online and grow their brand?’
There are advantages to both selling data directly and indirectly. Perhaps your strategy is to use multiple distribution channels on various online marketplaces. This would alleviate the need to hire a sales and data distribution team. But have you considered what is already technically possible for you to do? TickSmith’s Data Monetization Solution features automated, cutting-edge technology that can help you distribute your data, your way.
Selling Your Data Indirectly
Using a data marketplace allows you to leverage their brand. For example, Refinitiv and Quandl are well known names in the alternative data market space. You may benefit from a slight competitive edge when buyers simply visit those marketplaces in search of datasets.
Keep in mind that potential long-time buyers, who are interested in the data that only you can provide, will eventually prefer to deal with you directly. Other buyers may request specific datasets that you may have not anticipated. In this case, a smart strategy could be to have a few offerings on a data marketplace, with the goal to direct buyers to your data web store.
Data Does Not Sell Itself
As an alternative data seller with integrity, it makes sense to have 100% control of your intellectual data throughout the whole distribution flow. Let’s dive further into the three C’s of this distribution flow – Customization, Control and Customers.
Customize Your Data
With your own web store, you can easily customize your data and target specific client niches. For example, data can be split historically, tagged into different categories and priced accordingly.
This is opposed to the marketplace’s offering, which could be called an ‘all or nothing’ proposition, controlled by the reseller. Typically, your data comes in one form and is accessed by all interested customers at one price point.
Control Your Data
Which ‘shelf’ is your data sitting on at the reseller’s marketplace? Is the data reseller already dominated by one of your competitors? How can you stand out among the other data providers? These are some of the marketing issues that may come up when using an alternative data marketplace.
In addition, can you control how your users access your data? For example, can you offer a subscription model for certain datasets? Are you able to impose a time limit to how long the buyer can download the data? TickSmith’s Data Monetization Solution offers these features so you can fully control data access.
Gain Insights on your Customers
As a data vendor, it’s important to know who you are selling your data to. This information can help you with your future business goals and strategy. When you don’t have a direct relationship with your clients, the worst case scenario could be that you are selling your data directly to your competitors.
90% of All Data Didn’t Exist Two Years Ago
All the information that exists in this world– from financial data to online data– only 10% of it existed over two years ago. You could be one of the thousands of alternative data providers who’s sitting on the 90% of new valuable data– and not even know it.
In the financial world, buy side investors and hedge funds need this alternative data to help with their institutional investment strategies. In a nutshell, they need to make predictive analysis on future trades. These institutions are looking for content that can help them make the right investment decisions and validate their hypothesis.
On top of that, artificial intelligence is a billion-dollar driving force for change in the world. Yet, artificial intelligence is only as smart as the data that is fed into its algorithms. It’s clear that data is the new GOLD. Contact TickSmith to learn more about our out-of-the-box Data Monetization Solution and get started with your own online web store today.