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The Past is Prologue … to Profit

With the arrival of a new administration in Washington, government websites have been in the news, as many groups have been closely watching them as a way to read the political tea leaves. And the new administration has not been shy about making changes. Within days of the Inauguration, there were reports of substantial changes to the White House website, with whole categories of content suddenly disappearing. Similarly, controversy erupted over removal of content from the Environmental Protection Agency website.

Leaving aside the highly-charged politics driving these actions, there is an important point here for data publishers: online data doesn’t last forever. And that’s a big area of opportunity for publishers.

Company websites are a useful source of current information on companies. They generally do a great job of keeping information on their leadership teams, office locations, products and the like all current and accurate. But while current data is what most people want, those who really want to understand a company also want to know what came before. Even more importantly, if you have enough history, you can start to see trends. But as I just noted, websites only tell you about the present, and they tell you about the present in a way designed to put them in the best possible light.

For example, knowing the name of a company’s current CEO has some value. But there is often as much or greater value in knowing the name of the company’s prior CEO – perhaps she is a recruiting target, or perhaps her biography can provide insight into the changing focus and strategy of the company. And if you keep track of all prior CEO’s and how long each served, you can, among other things, offer high-value insight into the stability of the company.

It’s the same idea with product information. Companies generally announce new products with great fanfare on their websites – usually a press release and often much more. But when new products fail and are discontinued, most companies scrub their websites to remove all traces of these products. There are lots of use cases where knowing what a company is no longer doing is at least as valuable as knowing what it is currently doing. But this kind of information disappears quite quickly online, except in cases where a savvy publisher held onto it.

Perhaps the most intriguing example of preserving online data is The Internet Archive, which takes periodic snapshots of millions of websites. This non-profit project has become a goldmine for researchers, lawyers, investigators, historians, analysts and even savvy salespeople looking to understand how companies have grown and evolved over time.

While it’s easy to conclude that “everything is online now,” the fact is that a lot of information, particularly company information, disappears fairly quickly from the web both by accident and design. Smart publishers are the ones to understand this, and who set themselves up to capture and preserve this information as a way to enhance the value of their own online data products.

 

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Paradigm Lost

The operative paradigm in almost all forms of publishing is to centralize information. At one end of the spectrum are companies like Factiva that aggregate thousands of data sources for their customers to access for all kinds of uses. At the other end of the spectrum are media such as newspapers that scan a specified body of information, then curate it, bringing to their readers only the information they feel is most important and relevant. Data publishers fall somewhere in the middle of the spectrum, both aggregating and curating, with the added step of normalization.

What’s implicit in this centralization, however, is that the customer comes to the content in some central location. There are obvious advantages to this approach, the biggest of which is that all the content can be accessed via a single, consistent search interface.

But centralizing data isn’t always easy. This is particularly true with some types of product data. In some industries, manufacturers, for reasons good and bad, want broad distribution of their product data to qualified prospects but nobody else. Sometimes this is driven by regulation; sometimes it is driven by competitive fears. So how do you centralize data when the market doesn’t want it centralized?

One early innovator we liked was a company called Innovodex (now owned by Underwriters’ Laboratory). It worked with companies in the materials industries who wanted only qualified engineers and designers to have access to their new product data. Innovadex took on the job of screening and vetting new users, granting access to those meeting certain criteria. It was  effectively a giant extranet of product data from participating manufacturers.

Recently, we’ve seen another spin on this model. A new initiative in the pharmaceutical industry called Align Biopharma (sponsored by the always innovative Veeva Systems) wants to centralize login credentials for physicians. Much like LinkedIn and Facebook offer single-credential logins to third-party sites, Align Bipharma wants doctors and other healthcare professionals to be able to access any pharmaceutical company product information site with a single login.

Align Biopharma has other interesting data standards initiatives, but what jumped out to me was that in a fiercely competitive industry where manufacturers all want to do things their own way, it may make more sense to centralize the logins than to centralize the content.  And of course, the data gleaned from sitting in the middle is a worthy prize in itself.

Centralized users and distributed content. Sometimes great new ideas come not from thinking outside the box, but inverting the box. 

 

Reviewing an Imperfect Model

We all know that online ratings and reviews are increasingly popular, with some large and successful companies based entirely around providing them (think Yelp and TripAdvisor). Ratings and reviews are not only popular, they have become a profoundly influential tool in helping consumers decide what to buy and where.

Not surprisingly, as ratings and reviews have become more important to consumers, they have also become more important to businesses, many of whose revenues rise and fall in line with the quality of their online reviews. And the outsized importance of these reviews has attracted scammers and spammers. Some even argue that this ability to post online reviews puts too much power in the hands of consumers, many of whom exercise it thoughtlessly and mercilessly.

The most important rating and review systems are invariably operated by third parties, who provide critical market neutrality. But many of the biggest ratings providers got into this business with no idea how powerful they would become. What they did know was that they needed to amass lots of reviews quickly to build consumer adoption. Making volume their top priority drove down the quality and integrity of these reviews. But the review site operators deeply believed in the concept of the so-called “wisdom of crowds,” and that with enough volume, the honest reviews would overwhelm the false reviews and everything would ultimately work out just fine … at least in the aggregate. But that’s little comfort to an individual business that is suffering from an onslaught on underserved bad reviews. Horror stories abound for all of the major review platforms:

Where’s the law on all this? “Desperately playing catch-up” sums up the situation very well.  Interestingly, the review platforms themselves are well protected by federal law that views them essentially as innocent messengers. Individuals who post reviews can be exposed to lawsuits if their reviews contain defamatory or inaccurate information that causes financial or other harm, but it can be hard and expensive to track them down. A recent federal law makes it illegal for businesses to prohibit customers from posting reviews about them. And an increasing number of government agencies are cracking down on businesses that pay to have positive reviews about themselves posted.

In short, the law is increasingly acknowledging the importance of reviews in commerce, but the whole field still lacks adequate checks and balances. In particular, businesses still have a weak hand. But forcing review platforms to take responsibility for the accuracy of reviews would be such a complex and expensive task it would likely put many of them out of business.

Reviews are powerful. Consumers depend on them to determine where and with whom they spend their money. Businesses are impacted by reviews – for better and for worse. Yet the major review platforms, well insulated by current law and all seeking scale at the expense of vetting and customer service, come down heavily on the side of consumers. Ordinarily that would be fine (success comes from knowing and fiercely supporting your audience), but consumers have shown limited interest in paying to support the big review platforms (think Angie’s List). At the same time, businesses have shown only limited enthusiasm for supporting review sites where they can’t have significant control over what is said about them.

Bottom line: rating and review sites represent an important but imperfect business model. Those who benefit most from they don’t want to pay for them. The platforms themselves don’t want the cost and hassle of vetting reviews. And businesses don’t want to advertise in a place where they can’t control the message. We’ve seen some innovation along the lines of verified reviews, where the reviewer must be a known customer of the business being reviewed, but this is not a full solution to what ails this model.

Opportunity knocks for someone who finds a kinder, gentler but still useful spin on this important category of content.

Making Introductions, Profitably

An interesting article in the New York Times highlighted a company called Legal Services Link. As you might infer from the name, the company works to connect lawyers with those who need legal services.

Lead generation? Yes, but with a twist. In this model, buyers are actively seeking sellers and the intermediary is attracting these buyers and adding value by actually matching buyer to seller. In many cases, the buyer is asked to complete a requirements survey, which is then matched to a database of qualified sellers. The intermediary (usually a data company), identifies usually from one to three vendors best qualified to help the buyer, and puts everyone in touch.

The benefit to the buyer is that a small number of pre-screened, qualified sellers make immediate contact with the buyer – enough sellers to have some choice, but not enough to be overwhelming or annoying. You may possible be surprised to learn that a hidden value-add of these matching services, is that they monitor the sellers to make sure they get in touch with the buyer quickly. Yes, even with sellers paying sometimes hundreds of dollars for a hot lead, they still manage to drop the lead on the floor!

What’s also nice about this model from the perspective of the intermediary is that there is no chance of “leakage” – a term for when buyers or sellers circumvent the intermediary, often to avoid paying a commission.

This model works well for both B2C and B2B. It seems to work best for high-value purchases that the buyer only purchases sporadically. This irregular buying pattern is key because it means the buyer can’t keep up with what seller offers what product, or even the products themselves. Markets with rapidly changing technology are especially good.

Since the buyer fills out the requirements survey with full knowledge she will be immediately hearing from salespeople, she makes an enormously high value lead. And since the seller has a good understanding of what the buyer needs before making contact, the initial conversation is more productive and the sale tends to close faster.

This is a strong model that makes more sense than ever in a world that’s rapidly getting used to apps that speed the delivery of everything. If you see the right fundamentals in your market, it’s a model that’s well worth exploring.

The Next Data Gold Rush

A recent article in the Harvard Business Review, entitled “To Get More Value from Your Data, Sell It,” jumps on the data bandwagon, arguing that many companies own valuable data that can be monetized through sale to third parties. The authors do a good job pointing out that many companies don’t realize that the data they generate as a by-product of other activities has value. Even more usefully, they point out that some companies automatically treat all their data as top secret, and lose revenue opportunities as a result of this lack of discernment.

But where the article goes a bit off the path is its implicit view that almost all data are valuable. They’re not. As I pointed out in a post just a few weeks ago, there are a lot of reasons any given dataset may have little or no commercial value. And sometimes company data really is too sensitive to be resold.

Later in the article, the authors laud Cargill for building and selling a database of seed information. While the authors correctly note that getting into the data business is a risky move for most companies, the authors felt this was a low-risk move for Cargill because Cargill had “already developed a database to support seed development.” As every data publisher knows, having a database and being in the data business are two very different things. To create a saleable product, there is a lot of investment and work to develop a user interface. Then there’s the challenge of bringing a data product to market. Cargill knows farmers and Cargill knows seeds, but Cargill knows very little about subscription data products. It’s extremely rare when a non-data company, however good its data, suddenly decides it wants to be in the data business and finds success.

We can expect the idea of companies monetizing internal data to become mainstream. But once the hype settles down and reality kicks in, these companies will be very receptive to working with data publishers to optimize the value of their data, because they’ll see both the opportunities and complexities involved in monetizing it.

The flipside is that data publishers should start to look to non-data companies as potentially rich information sources. Many companies do indeed have valuable datasets built as a by-product of other activities. Finding and licensing these datasets could be a quick way to market for a data publisher, and can also yield that rarest of things: a high value dataset with none of the traditional compilation hassles and the possibility of licensing on an exclusive basis.

Finding internal company datasets isn’t easy, but as the concept of turning internal data into dollars gets more visibility, companies will start to actively look for potential licensees. Stay alert for these opportunities, and be prepared to move quickly because licensed internal company data could be the next data gold rush!