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Big Data Short

By Jennifer Polk | April 13, 2016 | 1 Comment

Is the big data bubble bound to burst? Consider the possibility of a big data bubble.  “The Big Short”, a film based on a book by Michael Lewis, shows how the housing  bubble formed and how a handful of funds saw the risks in the mortgage market and took short positions against mortgage backed securities, financial instruments that were once thought to be a sure bet.

Since the burst of the housing bubble in the early 2000s, many have been on the lookout for the next bubble. Will we face another technology bubble, perhaps another crash of dot-coms? Possibly. But, it could be more likely that we will see a big data bubble. Consider for a moment the number of marketing and advertising technology companies that are developing software and platforms designed to manage, move and manipulate massive amounts of customer data. Think about the market of third party data providers.

Try to count the number of agencies, consultancies, and systems integrators that have added droves of data analysts and millions in fees for services like data strategy, integration, cleansing and analysis. Then, ponder the number of companies that are actively monetizing their customer data.

Big data, and the growing market that surrounds it, is based on the several assumptions:

  • Consumers will continue to share data
  • Consumers will continue to share data for free
  • The data consumers share is “reasonably” accurate

But what if we’re wrong?

Recent shifts in consumer behavior suggest we could be approaching the end of days in terms of relatively consumers allowing relatively free and easy access to their data. Ad blocking tools and changing perceptions around privacy threaten marketers’ ability to leverage consumer data. Furthermore, consumers are becoming more digitally savvy. And, as their use of digital technology increases, so does their awareness of the value of their own data. Could we be nearing mainstream adoption of software that enables consumers to monitor and monetize their own data?

No doubt marketers will adapt to this situations. But what of the broader market around big data? How heavily invested are marketers in social networks, advertising platforms, media companies and technology providers that depend on big data? Can we unwind these positions? Equally important—where are the next arbitrage opportunities? Who will find these opportunities first? And, as in the case of the housing market, who will supervise these activities to prevent more nefarious characters from exploiting the market for big data and the consumers and households behind it?

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1 Comment

  • Michael says:

    It’s a valid question, but I think you’re wrong on consumer sentiment. The market is mostly divided in two camps: those that don’t know, and those that don’t care. Together, they make up 80% of people. The remaining 20% care deeply, and they’re camping out in Zuccotti Park and cheering on Edward Snowden every chance they get.

    By and large, the older generation doesn’t understand *what* they are giving up, or realize that every time Facebook changes a setting, especially one where they have to send you an e-mail, it pretty much reverts you to the default – all open – settings. Thereby, you’re offering up everything to advertisers. They’re not particularly disadvantaged by this, as things come in a seemingly natural way — ads and the like — that fit their needs/lifestyle.

    The major shift I think this blog doesn’t recognize is that 51% of people (roughly, think of it in terms of people that could potentially see this post) are the sub-35 “Millenials”, or “Digital Natives.” (I’m lumping Gen & Y here) This group posted their first kiss on Facebook, dating fails on snapchat, and effectively when they were hired and fired is a matter of nearly public record on LinkedIn. In short, they don’t care about privacy. They treat information differently.

    As you elude to, they do know the value of that information, though – and I think the next phase for marketers is to understand the “quid pro quo” that will be fair in the future. What will consumers expect in return for their information that lets advertisers narrowly target them with things they are highly likely to buy? It’s a concept almost abstract, but not as much as it would have been 20 years ago.

    The conclusion, I believe, is that the Big Data Marketing models will need to change – as this isn’t all free and easy – but some of it needs to be ‘sniffed’ and gathered in the background, so as not to present any friction to the consumer.

    Michael
    https://twitter.com/mphnyc