Alternative data allows businesses to discover trends and financial opportunities without compromising consumer privacy. Tom Merritt explains the five things you need to know about alternative data.
People are expressing concerns about how companies use their data, but companies keep emphasizing that they need your data in order to make money. There's got to be a better way! Well, maybe there is. Something called alternative data lets companies monetize without having to compromise consumer privacy. Here are five things to know about alternative data.
- Alternative data means data about the world, not about people. It has its roots in data used by investors to evaluate a company or investment. Alternative data in that sense is data not found in financial statements, SEC filings, or other data sources coming from the company being evaluated.
- Alternative data is safer to keep. Since alternative data comes from somewhere else, not the company or the person, a breach is not a big issue. If you have personal data, you will always be in danger of a breach.
- With alternative data, the data is the product, not the person. Instead of data about people being sold to advertisers, alternative data is sold to companies looking to discover trends and financial opportunities from the data itself. Think shipping trends, crop growth, etc.
- People can still contribute alternative data. Instead of handing over address, email, and demographic info, people could have their Internet of Things usage data contributed anonymously to a large dataset. With differential privacy properly applied, it would be much less revealing than current methods.
- It won't work for everything. Just having alternative data doesn't mean it's monetizable--the data has to be accessible and valuable to subject matter experts.
No, this won't stop Facebook, Amazon, and Google from trying to track you, but it might cause some businesses to realize tracking you isn't the only way to make money.
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