Good Databases Are More Than Just Good Data

We can look to the UK for a case study of how a government agency, after several tries, couldn’t build a user-friendly data product, creating a giant opportunity for a for-profit data company.

The story begins with a regulatory agency called the Financial Conduct Authority (FCA) that among other duties, registers and regulates financial advisors and advisory firms. The FCA has a searchable database on its website, but like so many government websites, it is optimized for one purpose: checking the registration status of a known individual or firm. As a tool to assist you in identifying an advisor to help you with your investments, it’s pretty useless.

In recognition of this shortcoming, the FCA called on a quasi-governmental organization called the Money Advice Service (MAS) to help build a better adviser database, and MAS accepted the challenge. I took a look at this website when it first launched, and though I saw some design issues, it had potential.

But even though MAS nominally had the freedom to build a creative database with almost any business model behind it, its need to avoid controversy ultimately resulted in a very limited and timid product. And when, unsurprisingly, there wasn’t a lot of revenue to be had with such a product, MAS buried the database three levels down on its website and moved on to greener pastures.

With two free databases of financial advisers out there, you think there wouldn’t be much opportunity left for anyone. However, a company called Unbiased saw things differently, and said there was indeed an opportunity … for the right product.

Unbiased has been a big hit in the marketplace, and the way it differentiated itself from the free government services with the same basic listing data holds lessons for us all

• Greater visibility – Unbiased wants to be found because its business model depends on driving lots of traffic to its participating advisers
• Deeper data – ratings, discount offers and detailed profiles
• Strong user interface – clean, inviting design and both parametric search and a custom matching service         

If you have ever wondered how you could compete against a free, government online database, Unbiased provides the answer: data presentation can be as valuable as the underlying data itself, particularly if you are serving a consumer market. And aggressive promotion of your online database will let you run circles around government agency databases, that are generally hard to find in addition to being hard to use. 

Data Democratization: A Timely Trend That Empowers Users

“Democratization” is the latest trend in data. While it is rapidly acquiring multiple definitions, the one I find most useful suggests that there is a growing opportunity to open up complex datasets to people who could benefit from them, but haven’t traditionally used them.

With this definition, data democratization usually involves some combination of pricing and user interface design. Reduced pricing is meant to make a data product more broadly accessible, and user interface design is about making the data incredibly easy to use. Putting these two together, those employing a data democratization strategy believe they can significantly expand their markets. In addition, a powerfully simple user interface should result in reduced support costs by enabling less sophisticated data users to start getting the answers they need directly, by themselves.

The best opportunities for data democratization? Look for data silos.  The data provider combines several datasets, doing all the complex normalization and matching that is required. The user interface then lets users painlessly do what amounts to cross-tabulation and filtering with all the complexity carefully hidden. Results are usually in the form of highly visual data presentations.

Data democratization is not “dumbing down” data. Indeed, a democratized data product often has all the power of much more complex and expensive business intelligence (BI) software. The nuance is making the user interface more accessible and less scary, and reducing the price point so that the product isn’t a major purchase decision.

You can see an analogy of sorts with what happened with computers, moving from centralized, expensive installations operated by a few with specialized skills to the amazing desktop computing capabilities we all enjoy today. Whether data democratization is an opportunity of the same scale and profundity as the computer revolution is unclear, but it certainly bears close watching because this is a strategy with a powerful first-mover advantage.

To see a great example of data democratization, check out one of this year’s Models of Excellence, Franklin Trust Ratings.

Better yet, meet the founder behind it. John Morrow, at this year’s Business Information and Media Summit, Nov. 13 – 15 in Ft. Lauderdale. There will be lots of other data trendsetters there too! 

Monetizing the Middle

Regular readers know that I am focused (fixated?) on a concept I call “central market position.” I use this term to describe companies (typically media and data companies) that occupy a trusted, established and neutral position in the markets they serve. Central market position is important because it can be monetized.

Traditional data publishers collect data themselves, whether via manual or automated means. They scrub it, organize it and otherwise add value to it, then turn around and sell it This is a solid, established and successful model, but companies with central market position have a much larger opportunity.

With central market position, you have the potential to do things that nobody else can, things that would otherwise be viewed as impossible. You can, for example, ask all the companies in your industry to share their customer lists with you, their sales data, employee information, their prospect lists – practically anything. How is this possible?

Well, two conditions must exist. First, this privileged information will only be provided if it is directly used to solve a major need or problem in the marketplace. Second, the intermediary who will be handling the information has to be established, trusted and neutral. The natural intermediary is a company that has a central market position.

Consider a product called PeerMonitor, a Thomson Reuters product. PeerMonitor literally hooks into the accounting software of participating law firms and sucks out all their billing information, right down to line item detail. Why would any law firm allow this? Because the need to know the going market rate for, say, a bankruptcy attorney in Atlanta far outweighs the reflexive need to protect information like this.

Consider also a company called SQAD in the media world. Advertising agencies electronically submit their purchase orders to SQAD. Are they giving away key company secrets by doing this? Yes, but it’s worth it because the data that comes back to these agencies – namely the real prices being paid for television and radio advertising – is more than worth it. And SQAD, as discussed, is a central, trusted neutral player that normalizes, de-identifies and aggregates the data in such a way that companies can give away their secrets without giving away their secrets. It works for everyone involved. Another interesting company is MDBuyline. Here, participating hospitals submit price quotes for medical devices and other hospital equipment. MDBuyline aggregates the data so that all participating hospitals can see the true going rates for medical equipment, not the meaningless list price. Again, the benefit is sufficiently large to justify supplying confidential information to a third party.

What you need to do is recognize your central market position, and start identifying market needs you can address as the central collector and aggregator of critical industry data that would otherwise never be shared. Trust me, the opportunities are endless. 

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.