In the world of business, it’s all about a competitive edge. As long as you have a competitive edge, you can move ahead and accomplish phenomenal growth.Until recently, data was considered to be such an edge.However, as businesses have all got the same kind of access to the traditional sources of information, the question is, how to obtain an edge over others?
In comes Alternative Data!
Yes, Alternative Data is the new stream in the world of data. It’s something that big companies have begun to leverage to get ahead of the market
What is Alternative Data?Alternative Data is a kind of data which is derived from untraditional sources. What qualifies as alternative data would differ depending on which industry you operate in. It will also depend on the kind of data sources that your rivals are using. Your alternative data would be data which is untraditional and less acessiable by others. You might wonder what kind of data it is. Well, with the scaling up use of mobile devices, websites, satellites sensors, there’s a massive stockpile of data that is being created. It has led to large stack of structured, semi-structured and unstructured data. This is not the traditional data that businesses use for decision-making. However, this data has the potential to complement and assist the decision-making. At times, Alternative Data can give insights where the traditional data sources may insufficient. This is excaty why there’s a growing emphasis on gathering Alternative Data. Once collected, Alternative Data can then be mined for business insights
8 Vital Types of Alternative Data
- App Usage
- Credit/Debit Card
- Geo Location
- Public Data
- Social or Sentiment
- Web Data
- Web Trafic
3 Major Ways to Access Alternative Data
Alternative Data is extraced from a variety of sources such as mobile devices, sensors, websites, sensors, etc. It means vast quantities of unstructured data. Accessing Alternative Data would require mining this unstructured data and collect actionable insights. There are three esantial method to get hold of alternative data. First one would be to hire a data scientist on board. You will need to have a data scientist who will churn these large chunks of data in order to eventually come up with the insights you need. However, it depends on your budget because an average data scientist would cost you $110,000 or more per year. Second one would be to work with a third-party specializing in this kind of niche such as Alternative Data. All you need to do is tell your needs and they will come by the Alternative Data that you need. It could be product reviews or online browsing activity or any other type of data. This would also come at a cost because this sort of firms would charge heavy fees for providing data. Third one would be to get hold of some powefull web scraping software that can extract any and every kind of data that you need. This is relatively more cost-effective as it’s a one-time expense. It could help you customize and provide tailor-made data that you need. It can save a lot of time and energy of coordinating with a third-party company when you have the software right with you.
15 Reasons Why Alternative Data is Important?
1 Powering the Advertising
Alternative Data can be extremly useful in the advertising field and its potential is yet to be fully explored. As it is known, online browsing is one of the top sources of Alternative Data. For example, it is possible to track online browsing habits in order to study consumer interests related to different product categories over a period of time. This can reveal new insights related to how consumers interact with different product categories and how advertising campaigns can be aligned to this.
2 Charting Business Risks
Which companies are at a higher risk? It is possible to find out by tracking credit quality and applying machine learning techniques to the big chunks of data collected through different sources.At times, Natural Language Processing algorithms are used to decode the corporate communication text data for similar purposes. A bunch of business insights can be derived in this way by processing Alternative Data.
3 Tracking Credit
There is a lot of data related to loan issuance, default levels, loan pricing, borrower credit quality. This data can be extract and process for actionable insights. It is also possible to track overall credit quality in some countries. This provides one to understand the credit cycle properly and pan out the credit strategy properly.
4 Understanding Consumer Purchase Behavior
This data draws heavily from three different sources such as merchant level transaction data, product-level purchase data, and macro-level data. The merchant level transaction data would include data from retailers, airlines and varied service providers. The product level of purchase data would include electronics, foods, beverages, etc. This data can be analyzed in different ways. While it could be analyzed to study the revenues, it could also be used to understand consumer purchase behavior.
5 Employment and HR Trends
There is data regarding jobs available now with help of job listings. This kind of data can be extraced in order to derive insights regarding how a particular industry is growing, changes in corporate strategy and direction and demand for particular skills. HR issues such as cuhrn rates in specific companies can also be studied using this data
6 Environmental, Social and Governance (ESG)
ESG standards is very significant for companies nowadays, Alternative Data can offer a lot of intriguing insights. It is possible to monitor the ESG criteria using social media, satellite and public data, etc. Even monitoring the sources that capture business complaints, employee compensation, business reputation, and hiring trends can also be quite helpful.
7 Decoding Expert Views
Sentiment analysis in the general sense is important, it is also important to track how experts think about different issues. They might have specific inputs that may help to see different dimention from the general trends. Natural Language Programming (NLP) can be usefull in summarizing the sentiment contained in the vast variety of niche blogs and other platforms where in experts’ ideas get expressed.
8 Tracking the Business Growth through Location
Location data has come up as one of the important sources of Alternative Data. Analyzing of location data of people may provide the visitation trends and more. Amusement parks, restaurants, retailers, hotels, transportation, etc. can provide valuable data in this regard. Based on this, it is possible to identify the impact of promotions, marketing, brand loyalty, etc.
9 Connecting the Dots of Business through the Internet of Things (IoT)
Data derived from devices connected to the Internet rapidly increase. Sensors can provide various kinds of insights related to traffic, activity around warehouse distribution centers, agricultural crop health, track flow volumes in oil and gas pipelines. This will provide better and more effective decision-making.
10 Analyzing Online Search for Consumer Interest
Online search is still another vital source of Alternative Data as search engine captures a lot of data regarding search behavior. Amount of search can give some light on economic activity. It can also be interpreted as an indicator of consumer interest in a product or topic. Search engines can provide a lot of Alternative Data as it contains 10 years of search history which can then be utilized to provide new insights regarding terms and search trends.
11 Following Revenue Trail through Pricing
Pricing data of goods and services is now available to access for evryone. This kind of data can bring new insights into revenues of corporate and industry competition. Also it has been possible to create alternative measures of inflation via web crawled pricing data.
12 SoMining the Public Sector Data for Socio-Economic Insights
Governments keep publishing large scale of datasets which can be used to churn out new inputs in terms of social-economic activity and industry dynamics. This data comes in different varieties. It could be granular at the local level and it could be aggregated at the national level. Hence, it becomes very dificult to handle this data. However, if studied carefully, it is possible to gain new insights that nobody has explore it before.
13 Analyzing Reviews and Ratings for Spotting Business Trendse
There is a lot of data accumulating on the web which can be accessible on sites for reviews and ratings of products and services.This data can be extract for different trends and topics. The reason why reviews and ratings important is because when consumers post positive reviews, it leads to increase in sales. Likewise, negative reviews can lead to decline in sales. Hence, the data related to reviews and ratings could help gauge the trend.
14 Analyzing the Sentiment
Mining news feeds and social media posts is a well-known way to gauge sentiment. Whether it is investor commentary, consumer attitudes toward products and brands or mainstream news feeds, sentiment scoring can be applied to an array of avenues.
15 Gleaning Brand Insights from Social Media
Data which gleaned from social media platforms can be used to analyze how brand loyalty going on, how product launches are received, whether customer satisfaction is on the rise or decline, to track product sales and promotions, to trace the political and social movements and customer engagement.