Data Exchange: A Practical Overview

DATA EXCHANGE:
A PRACTICAL OVERVIEW

SECTION ONE
Contents
Introduction ............................................................................................... 3
Section 1 What is data exchange?................................................................ 4
Section 2 Data talks: Seeing more than 1% of your audience....................... 8
Section 3 Stop wasting your data: Total data liquidity.................................... 14
Section 4 Secure and ethical DX: Legal and ethical compliance.................... 18
Section 5 Next steps.................................................................................... 22
2DATA EXCHANGE: A PRACTICAL OVERVIEW

SECTION ONE
Imagine yourself at the starting line of a
motorcycle race along a twisting country
road at night. Way up ahead is the finish
line – your competitors are on either
side of you, all of whom want nothing
more than to be the first one across that
line. As the green flag drops and you
accelerate down the road, you run into
a problem: your front headlight is faulty,
dim and keeps cutting out.
You need to go faster than your rivals if you
want a chance at winning, but you can barely
keep your bike on the road as it is. As your
rivals’ taillights disappear into the darkness
ahead, you are forced to slow down.
Running an organization without adequate
data about existing and potential customers,
markets and other critical areas is much like
being that half-blind racer. With no way to
accurately view and characterize your
audience, most businesses struggle to
effectively connect them with the goods and
services they require. Data exchange (DX)
is a powerful tool that, when implemented
correctly, can illuminate the best path
forward for your business.
This ebook introduces the concept of
data exchange, outlining the benefits
it can bring to businesses, non-profits
and governments, and offers a basic
primer on how to integrate it into an
organization.
We will also explore how secure
data exchange can turn the data
your organization collects into a
valuable profit center.
“Data exchange (DX)
is a powerful tool that,
when implemented correctly,
can illuminate the best path
forward for your business.
Introduction

SECTION ONE
WHAT IS DATA
EXCHANGE?

What is data exchange?
Data exchange is the sharing
of data between systems,
organizations and individuals.
More specific to our purposes, commercial data exchange (DX) is the
sharing of data that offers a buyer valuable business intelligence or
other advantages in exchange for payment.
The data being exchanged between organizations can vary wildly
depending on the industry, or insight-seeker’s business problem, but
it generally serves to deepen the buyer’s knowledge of their customer
or market. It also makes their product and marketing activities more
personal and relevant.
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SECTION ONE
Flight or other travel data that allows a
bank to deliver better customer service,
i.e. not cancelling personal credit cards
while a customer is overseas.
Location or GPS data used to inform
upgrades to urban infrastructure and
public transport that more accurately
accommodates peak times and reflects
residents’ lifestyles.
Consumer preference data, such as that
gathered from a major grocer’s loyalty
program, used by retailers and service
providers to identify life-stage propensity,
personalized marketing strategies and
loyalty offers.
Fraud prevention through the pooling of
non-identified claims data to help identify
data triggers and patterns associated with
multiple false claims and fraudulent credit
card transactions.
Real-time marketing applications via
targeted offers, provided by retailers
based on a customer’s proximity to
its stores.
More effective media attribution and
reporting on ROI – marketers are able to
tie media directly to transactional data and
compare campaign delivery by location.
Real-time application of transactional
data to support shipping, the allocation
of product and store rollouts.
The applications are extensive, but examples include:

SECTION ONE
Used correctly, data exchange offers
businesses and governments significant
productivity improvements and social
benefits.
It can increase accuracy of marketing and communications activities
to particular audiences, as well as return on investment (ROI). More
importantly, it allows organizations to more effectively provision
services and resources based on real, up-to-date data, rather than
on guesswork. It’s about leveraging information that was previously
inaccessible in order to deliver a more effective outcome.
As the digital economy expands and markets are continually disrupted,
the liquidity of, and access to, a wide variety of data sources will be
central to an organization’s ability to navigate yet unmapped paths
to success.

SECTION TWO
DATA TALKS:
SEEING MORE THAN 1%
OF YOUR AUDIENCE

SECTION TWO
Many organizations already collect and analyze data
in-house through sources such as customer-facing
websites, social media accounts, customer service
email accounts and customer purchase data.
While useful, these types of efforts can be limited. There is,
after all, much more to an individual or market segment than
the 1% of time they spend with your business, brand or service.
DX can be a real force multiplier in this respect. It not only gives
organizations insights on customer behavior and preferences
from the 99% of the time they aren’t interacting with you directly,
but it can also turn data that was previously a business cost
(and a considerable one at that) into a profit center.
Let’s look at what this means in action.
Imagine you are an insurance company that has an “arm’s
length” relationship with its customers. Aside from an annual
policy renewal process and some infrequent claims, you possess
few details on your clients.
You may know a little about the applicant from initial policy
application details, but you completely lack an insight into their
daily lives, passions, changing life goals and typical behaviors.
As such, you’re finding it difficult to measure the impact of your
major above-the-line campaigns on customer retention. It’s a
challenge for you to maintain brand value and remain relevant
with customers because you have zero contextual information
about them.
So, how can secure data exchange
help solve this problem?
Data talks:
Seeing more than 1% of your audience

Building more accurate personas
By combining your customer data with data sets from retailers,
loyalty programs and grocery providers, you are able to build a
more rounded understanding of your customer segments.
They’re no longer 45+ male with 2.5 kids. You know that they’re more
likely to shop at BCF than Bunnings; that they travel on average three
times a year and that they over-index in preference for health foods
compared to their peers.
This isn’t biased data from a sample focus group – it’s robust, observed
and measured data. These segment-level attributes are valuable, as
they can be used to inform your future marketing offers, loyalty rewards
and communications strategies.
SECTION TWO

SECTION TWO
Home and contents and
real estate application data
Information about customers shopping for
a property would be helpful in managing
retention and prioritizing “home and
contents” cross-sell messages.
Car and third party and
auto application data
Details on customers’ habits when
researching cars, as well as their
broader car-buying behaviors, could
inform retention and reveal opportunities
for additional policy sales.
Life and income protection
and retailer data
Data on changing retail habits, like an
increase in visits to a specialist baby
retailer, could indicate a latent need to
insure the lives of parents to protect the
interests of their dependents. Taking on a
mortgage can be a further indicator of the
need for this type of cover.
Identify life-stage changes and leverage cross-sell opportunities
Exchanged data can also reveal a propensity for change in life-
stage; providing the insurer with the context to offer the right
services, at the right time. In this example, here’s how second
party data could be used intelligently by the business:

When it comes to second party data, it’s important to remember that
the privacy and ethical expectations of the customer must come first.
Especially when leveraging exchanged data to deliver targeted product
offers. Every organization is required to obtain proper customer consent
in order to exchange and utilize matched behavioral data.
Secondly, the relevance of the message to the needs of the customer
should not be underestimated. This, alongside the mode of delivery,
can spell the difference between welcome personalization and a
negative brand experience. Or, worse yet, a feeling of intrusion.
As Data Republic has mentioned
before, ethical personalization
is integral to the success of a
targeted marketing campaign.
SECTION TWO

Heading
Subheading
Copy copy copy copy.
Ultimately, DX gives you access to
the contextual information needed for
granular personalization; information
that you might not get from more
limited interactions.
It expands your view of the customer and allows you to communicate with relevance.
What many organizations don’t realize is that DX also offers the ability to monetize
or unlock the latent value of data that has been collected but not analyzed, used
or applied in any way.
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SECTION THREE
STOP WASTING
YOUR DATA:
TOTAL DATA LIQUIDITY

SECTION THREE
Thus far, we have discussed
some of the advantages DX can
offer the buyer. In this section,
we will explore the advantages it
provides organizations planning
to commercialize or sell data.
Until fairly recently, data was largely
seen as an indirect resource for most
companies and organizations. It was
something departments within a
business gathered from their interactions
with customers, prospects and other
departments. The purpose of this data
collection wasn’t to generate revenue,
but rather to help the organization better
design and market its revenue-generating
core goods and services.
Secure data exchange infrastructure
changes this equation by empowering
organizations to make their data more
“liquid”, expanding its role from a resource
for strategic decisions to an asset that
generates revenue directly.
Data liquidity has the potential to be a real
boon for many organizations, particularly
given the scale of data that is gathered
every day but never effectively used.
Humans currently create 2.5 quintillion
bytes of data on a daily basis, which, as
Peter Levine of Andreessen Horowitz
says, is the equivalent to a “new Google
every four days.” Astonishingly, it was
estimated that less than 5% of all data
created in 2013 was actually analyzed.
While much of this data may be of limited
to no use to a given organization, there is
plenty of real value to many others.
Stop wasting your data:
Total data liquidity
“Humans currently create
2.5 quintillion bytes of data
on a daily basis, which, as Peter
Levine of Andreessen Horowitz
says, is the equivalent to a
“new Google every four days.”

The astonishing disparity between created data and utilized data opens up
a real opportunity for those who possess data to recoup their collection and
analysis costs – and even turn a potentially significant profit.
Indeed, a recent McKinsey report found that more than US$3 trillion in economic
value could be generated each year through the enhanced use of open data. As
the report states, the sources of value that come from “opening up” and making
data “more liquid” include improved revenue, savings and economic surplus in
seven domains:
1. Consumer finance
2. Consumer products
3. Education
4. Electricity
5. Healthcare
6. Oil and gas
7. Transportation
SECTION THREE

SECTION THREE
Note that the benefits of data exchange
for organizations go beyond potential
revenue generation.
Data has the power to change the world for good; to find cures
for cancers and other ailments; to better direct social and charity
services; and to identify the sustainable generation and delivery
of food resources.
The key to making this happen is to secure the supply of data,
and appropriate technology infrastructure, to enable non-profit
organizations, charities and other worthy causes to derive and
apply insights. The secure exchange of data for social good
projects is a cause close to our heart at Data Republic.
Organizations interested in these sorts of programs are advised
to learn more about Minerva, a Data Republic-affiliated not-for-
profit that specializes in these issues.

SECTION FOUR
SECURE AND
ETHICAL DX:
LEGAL AND ETHICAL
COMPLIANCE

SECTION FOUR
The regulatory and legal standards for buying
or selling data via data exchange varies by
country, industry and the type of information
or data being exchanged. It’s critical that any
organization looking to engage in data exchange
complies with all applicable legal, regulatory and
consumer privacy standards.
Australian-based companies must abide by the Privacy
Act, which requires that the subjects of data collection
give consent for its collection and use, including being
sold to third parties. Beyond this, additional regulations
may apply, depending on your situation.
It’s important to note here that the opportunities
data exchange offers do not come without risk.
Organizations must effectively manage the governance
around data exchanges with external parties to ensure
the protection of customer privacy and the ethical
application of the insights garnered.
They should carefully consider what information is safe
to release from an enterprise perspective – and to what
types of users. For example, an organization looking
to expand their product line into another industry
may be conservative around the exchange of their
data to existing players in that industry. A governance
framework around data exchange is essential so an
organization can define the function and availability of
specific data assets.
Secure and ethical DX:
Legal and ethical compliance

Typically, the permitted use of any data is
agreed to by all involved parties during a
negotiation period – usually prior to any
data being exchanged.
Adhering to the expectations of the customer should be the first
priority when negotiating access to, and use of, data. Poor execution
of marketing personalization can result in a breach of trust between the
consumer and the brand, brand damage and legal ramifications.
Alongside customer protection, data security is a key consideration
for organizations considering data exchange. What methods are being
used to exchange the data? Will you be able to audit and track how
the data is manipulated and eventually used?
The parties involved need to ensure that the actual exchange
happens in a secure manner and that appropriate privacy
is maintained.
SECTION FOUR

Here at Data Republic,
our purpose is centered around
delivering world-first secure
technology and legal infrastructure,
which enables organizations to
effectively manage these risks and
appropriately govern data exchanges.
Whether you’re seriously considering exchanging data with another organization or
you just want to ensure your team is prepared for the emerging data economy, it’s
a good idea to have a comprehensive data strategy in place that spells out all of the
above factors.
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SECTION FIVE
So far, we’ve explored the basics of data exchange and
examined the benefits that buying and selling data can
bring to organizations.
We’ve outlined a few of the ethical and regulatory concerns
that organizations should consider before getting started and
established some of the core concepts to consider when
integrating DX into an entity’s operations.
This ebook is intended only as a basic overview and
introduction to data exchange.
If you’d like to find out more, you can read about our
platform at www.datarepublic.io or explore the latest
developments in data exchange technology at
www.datarepublic.io/resources-and-blog/.
Alternatively, reach out to us directly – we are happy to answer any
questions. Data Republic has offices in Australia and the United
States and clients all over the world. You can contact us at:
Non-profit organizations, charities, social welfare organizations
and enterprises interested in the value of data for corporate social
responsibility can learn more about Minerva – Data Republic’s
affiliated not-for-profit – at www.datarepublic.io/minerva.
Next steps
Are you ready to utilize exchanged data to light the way forward for your organization?
Data Republic Sydney Office:
Level 1, 50 Bridge Street
Sydney, NSW 2000
1300 138 254
enquiries@datarepublic.io
Data Republic San Francisco Office:
415 Stockton Street
San Francisco, CA 94108
1-866-899-9886
enquiries@datarepublic.io

Data Exchange: A Practical Overview

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Data Exchange: A Practical Overview