By Adam Paulisick, Chief Product Officer

I am often times asked “What’s my data really worth to digital advertisers?” Bringing in dollars not previously accounted for is a dream of every CFO. And while many companies don’t want to sell data in any form, those that do are reaping the spoils. Before deciding whether to sell your data, here’s a way to size the value for using your data in just a single use case, digital advertising.

Data DNA
The question to ask is – does my data have value?  To keep things simple, I’ll focus on payments or transaction data. Let’s say you have data related to quick serve restaurant sales (think McDonald’s), not the largest digital spenders today but poised for massive growth in spending habits as mobile and more addressable media catch up with the reach of localized broadcast media. Here is one way you could calculate your data’s value, starting with total spend of the advertisers you hope to sell it to (or at least their agency or buying technology in some form).



The first step
is to quantify the total media dollars spent on the industry that your data could inform on audience selection, media optimization, or ad measurement. I typically choose to focus on the top spenders, but have showcased both top spenders and total category here. Thanks to Kantar Media we can observe what the top 25 spenders contribute. In 2014 the top QSRs spent a little over 5 billion within measured media in the US.

Chain (Parent) Rank 2014 Measured-Media Ad Spending
McDonald’s (McDonald’s Corp.) 1 $935,096,000
Subway (Doctor’s Associates) 2 $532,554,000
Taco Bell (Yum Brands) 3 $356,603,000
Wendy’s (Wendy’s Co.) 4 $284,130,000
KFC (Yum Brands) 5 $251,913,000
Domino’s Pizza (Domino’s Pizza) 6 $240,078,000
Burger King (Restaurant Brands International) 7 $237,025,000
Pizza Hut (Yum Brands) 8 $232,901,000
Sonic Drive-in (Sonic Corp.) 9 $206,956,000
Applebee’s (DineEquity) 10 $165,438,000
Olive Garden (Darden Restaurants) 11 $155,115,000
Papa John’s (Papa John’s International) 12 $143,758,000
Dunkin’ Donuts (Dunkin’ Brands Group) 13 $131,641,000
Little Caesars (Ilitch Holdings) 14 $131,569,000
Red Lobster (Golden Gate Capital) 15 $126,795,000
Chili’s (Brinker International) 16 $120,879,000
Starbucks (Starbucks Corp.) 17 $103,486,000
Outback Steakhouse (Bloomin’ Brands) 18 $100,946,000
Arby’s (Roark Capital Group) 19 $99,170,000
Popeyes (Popeyes Louisiana Kitchen) 20 $95,852,000
Dairy Queen (Berkshire Hathaway) 21 $86,579,000
Buffalo Wild Wings (Buffalo Wild Wings) 22 $82,317,000
IHOP (DineEquity) 23 $77,285,000
Panera (Panera Bread Co.) 24 $71,090,000
Jack in the Box (Jack in the Box) 25 $68,286,000
Total   $5,037,462,000

source: Kantar Media AdAge QSR 2015 Whitepaper



Next…
you need to isolate the spend on the medium you believe you can enable. Below we can see the spend relative to the total and identify the 3% of spend that roughly went to digital. This is small compared to the 44% of spend that went to broadcast TV. QSRs have lower digital ad spending primarily because of the need for hyper-local coverage, strong native app investment and a lack of fresh, real-time data to target and measure with.

Medium 2014 Measured-Media Ad Spending % of Total
Broadcast TV $2,825,000,000 44%
Cable TV networks $2,145,000,000 33%
Syndicated TV $362,000,000 6%
Magazine $114,000,000 2%
Newspaper $154,000,000 2%
Radio $336,000,000 5%
Internet $176,000,000 3%
Outdoor $301,000,000 5%
Total $6,412,000,000 100%

source: Kantar Media AdAge QSR 2015 Whitepaper



Then you have to make some assumptions…
about the role that data can play in audience targeting and campaign feedback (optimization or measurement).

  • Behavior based targeting can impact 50 percent of total media that is served
  • About 10 percent of media costs are used on data for targeting
  • About 10 percent of media cost is spent on measuring the impact of advertising
Medium 2014 Measured-Media Ad Spending % of Total Analytics $ Audience
Broadcast TV $2,825,000,000 44% $282,500,000 $141,250,000
Cable TV networks $2,145,000,000 33% $214,500,000 $107,250,000
Syndicated TV $362,000,000 6% $36,200,000 $18,100,000
Magazine $114,000,000 2% $11,400,000 $5,700,000
Newspaper $154,000,000 2% $15,400,000 $7,700,000
Radio $336,000,000 5% $33,600,000 $16,800,000
Internet $176,000,000 3% $17,600,000 $8,800,000
Outdoor $301,000,000 5% $30,100,000 $15,050,000
Total $6,412,000,000 100% $641,300,000 $320,650,000

You can see that the total data value in both audience and measurement is almost 1 billion USD. Specifically, the potential digital value for data is north of 25 million, conservatively.

But what if advertisers increased digital spending because they had better data and analytics capabilities, and it tracked more with other categories… closer to 30% of spend?  We can see a different story for data owners.

Medium 2014 Measured-Media Ad Spending % of Total Analytics $ Audience
Broadcast TV $1,667,120,000 26% $166,712,000 $83,356,000
Cable TV networks $1,603,000,000 25% $160,300,000 $80,150,000
Syndicated TV $320,600,000 5% $32,060,000 $16,030,000
Magazine $128,240,000 2% $12,824,000 $6,412,000
Newspaper $128,240,000 2% $12,824,000 $6,412,000
Radio $320,600,000 5% $32,060,000 $16,030,000
Internet $1,923,600,000 30% $192,360,000 $96,180,000
Outdoor $320,600,000 5% $32,060,000 $16,030,000
Total $6,412,000,000 100% $641,200,000 $320,600,000

In this circumstance, digital data is worth over 275 million and provides a much larger pie to take a slice from. Not to make light of the hundreds of millions of dollars left to measure and inform other mediums as they become more data enabled.

So is the number big enough? If the answer is yes (and this process can be applied to any industry your data can inform), here’s the quick checklist of questions you’ll still want to answer before jumping into the data business:

  • Use cases – How will you allow your data to be used?
  • Pricing – What price will you charge for each use case?
  • Permissions and Paperwork – Who signs off on what?
  • Auditing and Reporting – What is the process?
  • Path to Market – Who can sell your data, manage consumer IDs, and sell on your behalf?

Hopefully this quick math helps answer the question: “Should I sell my data?” And if you have not entered the data market yet, good luck!

Adam is CPO of Commerce Signals. He is an industry evangelist for data-driven advertising, most recently as an SVP for Nielsen Catalina Solutions. Adam also helps to educate the next generation as an Adjunct Professor of Entrepreneurship at Carnegie Mellon University’s Tepper School of Business .