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How User Data Is Becoming the Ultimate Marketing Commodity

Research and data have always been at the forefront of marketing campaigns, but the type and complexity of data available in the modern age is drastically reshaping marketer expectations, and setting the course for marketing developments in the future.

Old methods of gathering data relied on qualitative analysis; marketers and creative types would use focus groups, interviews, surveys, and other inquiry methods to gain insights on their target demographics, and cater to them using that information. But today, massive amounts of quantitative data on those same users is available, and because that user data is so vital to marketing success, it’s becoming commoditized in the marketing community.

Why Quantitative User Data Is Superior

There was never anything wrong with market research conducted using interviews and focus groups. For decades, marketing and advertising companies found the secrets to success by analyzing the information gathered through these strategies. But having access to widespread, quantitative data holds certain advantages over the old way of analyzing user demographics and behaviors:

  • The grouping bias disappears. No matter how randomly you attempt to select a pool of candidates, there’s going to be a bias that interferes with your data. Geographic, age, background, or other individual differences could compromise your results and give you a skewed view on your core questions.

  • Data becomes easier to interpret. Hearing someone say that they “like it, but not that much” gives you a vague understanding of a person’s thoughts on a product. Seeing them rank it a 5 out of 10 gives you a more specific understanding. Seeing a thousand people rank it an average of 5.763 out of 10 gives you an even better understanding.

  • Data is easier to obtain. Because of advancements in technology, marketers can now purchase user data quite easily, or even gather it using automated means. In effect, marketers can gather objective information on thousands of subjects just as quickly and cheaply as they can gather subjective information on a handful.

  • Data is more specific. Because user behavior and characteristics can be tracked and measured in infinite new ways, marketers have insights to problems they could never penetrate before.

The Rise of User Data: Facebook, Twitter, and Pinterest

Social media platforms like Facebook, Twitter, and now Pinterest have been attempting to monetize their otherwise-free services by gathering and selling user data to marketers. Previously, these social media platforms would monetize by offering advertisers the choice to display ads to their user base. This continues to be a profitable endeavor, but the addition of user insights makes it an even more appealing option.

Other companies, like big data firms and research-based enterprises, are also taking advantage of the increased demand for such massive amounts of user data. The trend is likely to continue as more companies realize the importance of capitalizing on such information.

How the Commoditization of User Data Will Affect the Future of Marketing

In the short-term, marketers can enjoy the surge of new user data. In a way, it’s like striking oil in the marketplace—a bona fide resource is available in ways it was never available before, and it can be used to fuel bigger, better, more impressive campaigns.

However, in the long-term, there will be two problems for marketers to face. First, the commoditization of user data will become compartmentalized as businesses compete with each other to provide the greatest type of data. As demand increases, so will prices, and businesses will become reliant on an increasingly expensive resource. Second, the sheer volume of user data available will make it nearly impossible to figure out which bits are significant and which are not. There will be too many choices, too many variables, and too many possibilities to drive a significant change.

Nevertheless, modern marketers should look to the commoditization of user data as an opportunity. The companies who take advantage of it the best will reap the most significant rewards.