Accelerate your business with 'data exhaust'
As modern digital platforms replace old publishing models, any organization that earns revenue from publishing should learn to leverage its own “data exhaust.”
That means taking maximum advantage of the organization’s main by-product: data on customers’ actions and usage. This data can also generate new offerings that can augment and even dwarf the business value of the legacy offerings. Let’s examine the exhaust emitted by one type of product, a directory or buying guide, and see what that can mean for your business.
Directories and buying guides are commonly sold by many of dPrism’s B2B information company or member association clients. The traditional model for these products was simple: The business aggregates product and service information through an editorial curation and collection process. Users pay a subscription fee to access the directory. Subscription revenue is often augmented (and sometimes dwarfed) by advertising revenue. In the advertising model, industry vendors compete to influence directory audiences with paid messages, banners or enhanced listings embedded within the directory user experience. However, frequently and especially in B2B media, the paid user subscription model is not tenable, failing to generate sufficient numbers of users. In these cases the publisher may choose to make the directory free to users, leaving the success of the entire business dependent on revenue from vendor advertising.
This legacy publishing model has an obvious flaw. The needs of the end user (“help me find the best, cheapest, most efficient etc. provider”) and the need of the service provider (“help me get as many people as possible to see and buy my service”) are not aligned. And, if done poorly, the directory may even appear to be influenced by the advertisers and come to be viewed by both users and providers as “Pay to Play” model, causing the business to suffer.
How to avoid this issue? One approach is to not monetize the vendors through advertising and rather focus on revenue from users. Consumer Reports is a well-known example of this approach. It has a valid and respected editorial product, which drives the success of its subscription model. But it too is experiencing declining revenue and is struggling to turn around a $5.4 million 2017 operating loss.
However, there is another model and source of revenue when a buying guide or directory is built on a modern digital platform. When this is done properly, you have the opportunity to monetize the directory in new ways for industry vendors without compromising the user experience with a clutter of advertising messages. In fact, done properly you can actually help industry vendors by providing them with user data that can greatly improve their understanding of their markets, competitors and customers.
This is what we mean by monetizing “data exhaust”. You can gather essential analytics by tracking how your users interact with information in your directory and then packaging that information into actionable insights that the vendors will find valuable for their own product and marketing efforts. Packaging this data (anonymized unless you have explicit permission from the users) becomes a compelling subscription product for these for the vendor community, perhaps in some cases more valuable than traditional advertising. What vendor wouldn’t want to know how your users are searching and interacting with products and services they are considering, who they are evaluating, and who the users are choosing in terms of buying decisions? This analytics and insight data can be sold as a subscription and, unlike advertising, it is completely unique to your company and product and cannot easily be commoditized or purchased elsewhere.
Of course, developing the best data and insights that your platform can provide takes time and a bit of technology investment (although not as much as it used to). Don’t forget to speak directly with your product and service vendors to get a clear handle on what data and insights would be most helpful. Done right, this sort of data-exhaust business becomes a win for all sides, providing a better user experience, better vendor data and better financials for your business.