In April this year Tim O’Reilly, founder of O’Reilly Media and a man with god-like status in Silicon Valley, was interviewed by Forbes magazine in relation to ‘Where’, a technology conference he started. During the interview he made a statement that those of us who deal with online data instinctively know to be true: “The guy with the most data wins”. Data is not a sexy topic. So what does this statement really mean in the context of social media and online strategy?
Unravelling the meaning in the data comment requires a reasonably large intellectual leap to start with; you, me, everyone online and every company are now trading in two economies. The first economy is the cash-based one that we are all used to. I have a service or product that you want and you pay me cash (or equivalent) for it. The second economy is one that exists because of the internet and has been greatly accelerated by social media: the information economy.
The information, or data, economy exists because all of us have huge amounts of data associated with our online ‘personality’. Facebook for example collects gender, age, relationship status, education level, where you live, what you like and huge amounts more. This information is extremely valuable for companies wanting to efficiently sell products. If you know who to talk to and how to talk to them your marketing spend will be far more successful. The challenge is that companies don’t simply have access to this information however and whenever they want it. Thankfully a company can’t simply buy your data at will. This is where the digital economy comes into play. Companies need to provide something of value so the market will exchange their personal information. The mechanics aren’t difficult, it’s simply a bit of programming. The real issue is knowing what to offer. Defining what your digital ‘product’ is.
This means every organisation now needs to be thinking about what they can be offering their market before they ask them to purchase. They need to design an application with real value, an application that is more than simply ‘enter our competition’. Brands need to ask themselves ‘What do our customers want?’, and ‘How can we provide an online service that allows us to build a new customer relationship?’.
At an entry level a brand may create a system that makes their customer’s life easier, easer sign in, and customising website content based on your preferences for example. It could even be as simple as providing a product sample. Nike has gone much further with their ‘Fuel band’ which captures their customers activity and provides information back about their fitness and activity levels – which can be published on Facebook if the customer chooses. This means Nike understands a massive amount about each customer’s preferences and can market to them in a personalised way.
This is a very new space. The race to be the company with the most data is on. It’s time to learn how to trade in information.