43 percent of marketing organizations sell data

Why is marketing running the show here, and at which point will these companies create a dedicated business unit?

vintage cash register antique old sales
Credit: Flickr/ell brown

According to a survey of more than 300 marketing leaders in large organizations, released last month by analyst firm Gartner, the sale of data (such as aggregated customer data) is the third most common type of revenue generated by marketing organizations which have their own P&L or share a P&L with other divisions (72 percent of respondents).

This sale of data is only distanced by what you would expect marketing to generate revenue from: digital advertising and digital commerce. In many organizations indeed, these businesses are not managed by the sales teams but by the people who run the websites: marketing. So no surprise here.

But seeing "sale of data" mentioned as a revenue generator by 43 percent of respondents, more often than telesales or licensing/royalties, is baffling. Of course, I can understand that telesales are declining and are being replaced by digital commerce. And surely, not every company is in a position like Disney to generate billions of dollars of royalties from their characters. But still, this ranking is impressive.

Four out of ten of the companies out there sell data, and chances are, unless they are Dun & Bradstreet, this was not (and still isn't) their primary business model. But somehow, someone figured out that in today's digitalized world, they were sitting on a goldmine and it was a waste not to leverage it.

There are a few notorious examples out there. GPS navigation company TomTom collects billions of data points from their customers' two-way GPS systems, and resells consolidated (and anonymized) speed data to local highway authorities to help them plan roadway improvement and reduce congestion areas. Tire manufacturer Pirelli leverages data from the sensors that measure tire pressure and wear-and-tear on trucks, to provide monitoring of the drivers to both fleet managers and insurers.

But why are these revenue streams included in the marketing P&L? Sometimes, it is there simply because the service was thought out by someone in marketing. In other cases, it is because marketing is assumed to have ownership of customer data, the same way they have ownership of web properties. Therefore, if they are able to make a "side business" by selling online ads, or monetizing customer data, the revenue belongs there. And in other cases, it's because marketing is the default receptacle of everything that does not belong anywhere else… (I have been running marketing organizations long enough to be speaking from experience).

There are probably very few companies that have reached a point where the sale of data becomes big enough to warrant the creation of a dedicated business unit -- but this time will come. There is however a parallel that is very easy to make: Amazon Web Services. Initially, the Amazon cloud was born from a brilliant idea to monetize spare server capacity from the e-commerce sites. It is now the giant business we know, and of course is managed as such. Initially, this "renting out spare capacity" was probably accounted in the P&L of Amazon's IT Operations. It certainly isn't this way anymore....

Are you part of the 43 percent of companies that are selling data? Do you have examples of such businesses that have reached maturity? I would love to hear about it: please feel free to share your experience by commenting on this post.

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