Is it really that valuable? How much are these companies shelling out to purchase said data from other companies?
And what data are they typically selling/buying?
I’m a fairly boring person. I just can’t wrap my head around some company wanting to pay for information about who I am, what I like, etc.
Curious if anyone can share more information on this business model/practice.
In: Economics
First, to clear up a very common misconception, the vast majority of the time, your data isn’t being collected and directly resold. That data is super valuable to the company, and they don’t want it getting into the hands of their competitors. Instead, those companies create other products and services that make use of that data in a way other people want to pay money for, best example being serving ads.
When you want to advertise your product, you don’t go to an ad network and purchase a bunch of data. You sign up for their service and part of that service includes having your ads targeted to certain groups of people. The ad company provides a list of all the ways it can target ads and the advertiser simply chooses from that list. It’s far more profitable to the ad network to have advertisers coming back every month to spend their advertising budgets than it is to directly sell the data they use to target the ads.
In cases where data is directly sold, it is typically sold in aggregated forms and stripped of any personally identifiable information. The biggest consumer of this, from what I’ve seen, is Universities and other research focused institutions who want to use the data for research.
Your data alone is pretty worthless. Data in large quantities becomes increasingly more valuable because it starts to form useful patterns and correlations that can be used for more interesting things. If I try to market my product solely to you, my chances of making a sale are probably very slim. But, if I market my product to a million people who are fairly similar to you, the chances that some of you will want to make a purchase are significantly increased.
As for the the types of data typically collected/used, I’d say the biggest tend to be things like gender, geographical location, income level, and product categories you might be interested in. A lot of this data gets inferred from the types of websites you visit, things you’ve previously bought, keywords that you’ve searched for, etc.
tldr; The business model works because large amounts of data is valuable and people are willing to pay for services with access to it, but any single piece of that data set is not valuable by itself.
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