Almost three years ago, in Febraury 2010 (yeah, I know – three years!) the Economist ran a supplement called “The Data Deluge“, about Big Data and how it was transforming businesses all over the world. In the middle of the supplement was an article called ‘Clicking for Gold‘, in which there’s a quote from Tim O’Reilly, who says that companies like Google, Amazon and Facebook ‘…are uncomfortable bringing so much attention to this because it is at the heart of their competitive advantage. Data are the coin of the realm. They have a big lead over other companies that do not ‘get’ this.’ For the intervening time, I’ve been quoting this to telcos all over the world, and they nod their heads, and – for the most part – don’t do much about it.
It’s not because they don’t get it, as O’Reilly suggests. It’s more due to institutional inertia, that civil service DNA and anti-entrepreneurialism that infects so many former government monopoly utilities. Even mobile operators, born of those former PTTs, are similarly afflicted. The world is changing, though, and changing fast.
Coupled with the rise in the value of data is the rise in the accessibility of data. Volume is no longer an issue. Even latency is becoming irrelevant as an obstacle. But what’s really making this exciting as an opportunity is the maturation and automation of the data monetization space, in particular through advertising. This, however, is only the beginning.
Automation in advertising, and areas like real-time bidding, is optimising inventory and messaging matching, becoming better targeted, more relevant, and more efficient. In effect, each individual match of eyeballs and inventory is being personalised, to the extent that those eyeballs – i.e. you – are going to not only be much more likely to engage, but you’re also less likely to be put out by it. The recent trend of “dressing” home pages (like www.irishtimes.com) with blanket advertising based on content profiling is regressive – the general trend is towards automated, specific targeting.
Concurrently, commerce systems are being integrated, based upon real-time analytics, and being exposed to all channels. As a result, when companies try to sell stuff to their customers within owned channels, like the retail store, the call centre or the website, it is increasingly likely that the messaging will be more personalised, relevant, and useful. Those same companies are beginning to use demand side platforms – either platforms that they own, or that they invoke through agencies – to manage the acquisition of inventory and targeted eyeballs. See where we’re going with this?
So we have data driven commerce, and data driven marketing. The acquisition of new customers and the conversion of prospects becomes analytically driven (i.e. data centric) and automated, while integrated with automated commerce systems. The next logical step is towards interactive advertising, so that display advertising in particular becomes more like a storefront, and less like mere signage.
Today, cellist Zoë Keating is out demanding an end to the royalties farce that has dogged the music industry since Apple decided to redesign it. Instead of getting $0.0011 for each time one of her pieces is played, she wants data. It would serve her much better, she argues. Other businesses are seeing this value. The intellectual property business – newspapers, for example – have long relied on it. Will books, now that they are being digitised? Hard to see a publisher not deciding at some point soon releasing a ‘free’ book, only an e-edition, with ads in it, controlled by the Kindle platform (with shared revenue from Amazon). I’m thinking it’ll be Stephen King. The commerce ecosystem is so integrated and automated, and so heavily dependent on data, it’s pretty easy to see how all other businesses that have the potential to harvest data will soon be integrated at some level as well.
This is grand change. It’s neither good, nor bad, it’s just new. Commerce becomes increasingly frictionless. The advertising business is dead – long live advertising! The retail business is dead – long live retail! And telco? Well, we all need connectivity, I guess.