In today’s blog, I would like to comment on the “value” principle. This concept takes on a myriad of dimensions.
Value is defined in many ways, often dependent on the perspective or the analysis one is making. For example, there is value to an individual. There is value to a company. There is value for governmental purposes. And there is societal value. All are important, but they don’t always have equal weight. In fact, the weight may be culturally or legally defined, depending on the geography.
If we take a look at the value to the company and society, a study reported in late 2013 by the Data Driven Marketing Institute classifies the net revenues from the data driven marketing economy (DDME). It breaks out the value by the kind of data and media. Traditional direct marketing and interactive media, which includes mail, email, telemarketing services along with certain mobile-native media, account for about half the total size of the DDME base on revenue. Agencies and database marketing-services firms account for the remainder.
One of the more surprising and counter-intuitive findings of this report is that a large, even disproportionate, amount of the DDME occurs in the off-line, non-digital economy. This becomes clear as one analyzes the strategic role data plays in customer, prospecting, or audience segmentation and its tactical role in marketing communications and media design, production and distribution. The contribution to the cost and efficiencies varies from medium to medium in both its strategic and tactical applications.
The study reports, “Most of the value created by the DDME was dependent on exchange of data among firms: While some firms used the ILCD (individual-level consumer data) of their own customers and did not rent, buy, sell, or exchange data with third parties, they tended to be large and self-sufficient. Exchange and use of ILCD was tightly woven into business practices throughout the DDME, creating a high degree of interdependence among firms and practices. Overall, about 70% of the DDM economy, or $110 billion, and 475,000 jobs, were found to depend directly or indirectly on individual-level data exchanged among firms. If individual-level data could not be transferred among firms, it would cost the U.S. economy significantly more than $110 billion to match buyers and sellers at the same rate and maintain U.S. output at current levels.”
More on other aspects of Value in our next few blogs.
Other key issues to watch include:
- There is good news on the political front – a national security and data bill has been introduced which does not include a lot of other non-security related issues. This significantly increases the likelihood that a national data breach standard will be enacted.
- As we predicted, political interest in regulating marketing data brokers – companies who sell or license information about their customers or users to other companies for marketing purposes – was introduced in the Senate this week by Senators Rockefeller and Markey. We will provide a full report on this legislation in our next blog.
- We are still awaiting the FTC report from their investigation into data brokers. This report is taking longer to be released than anticipated, and it remains to be seen what the results and recommendations will be.