It’s estimated that each of us generates thousands of tidbits of data every day, and companies pay big money to collect that data.
But many companies don’t know what to do with that information, says Andreas Weigend, director of the Social Data Lab at Stanford and Berkeley.
"Social data is the new oil," he says. "But in order for oil to be actually useful, we need refineries. Who is extracting stuff out of these raw data that allows us to get value out of it?"
A lot of companies, actually. The data analytics industry is currently worth at least $5 billion and is growing at a rate of nearly 60 percent a year. That has attracted big companies like IBM, Dell and Hewlett-Packard to the business. And there are a growing number of players that do only data analysis, like 1010data. It analyzes data for The New York Stock Exchange, Coca-Cola, PepsiCo, Sonic, Vitamin Shoppe, among others, using everything from sales receipts to social media to help clients boost profits.
Discount retailer Dollar General came to 1010data in 2008, hoping to make sense of the data from its more than 10,000 stores.
1010data CEO Sandy Steier says his company was able to draw several conclusions from Dollar General's data. The first?
"They realized that their stores were not open the right hours," he says. The data showed some Dollar General outlets saw heavy sales right up to closing, meaning they should extend their hours. 1010data also showed Dollar General what products customers purchased together, like certain brands of soda and chips.
Dollar General wasn’t the only one interested in that information; the retailer saw a little black gold in them thar data. Dollar General started selling the analyzed data to its vendors, like Pepsi and Unilever. Those companies can see how their stuff is selling and, if they pay Dollar General a little more, they can even see how their competitors’ stuff is selling.
"This data is so valuable that companies are willing to pay Dollar General," says Steier, "which means that their data infrastructure becomes a profit center rather than a cost center."
Dollar General declined to discuss its burgeoning data business.
Soon many companies will realize the data they collect is a tradable commodity like oil, says Ben Woo, managing director of consulting firm Neuralytix.
"We’re going to see a lot more companies sell their data in different ways and we’re also going to see a lot more proessed data being sold as a service as well," he says. "The economics and the trade and the value of data is going to change dramatically over the next 10 years."
So the Jed Clampett T-shirt maker will sell data indicating your love of Jed Clampett to a company that sells DVD box sets. That company might show you an ad for the "Beverly Hillbillies" DVD box set the next time you check your email and, suddenly, that piece raw data has been refined into marketing gold.