Monetizing Your Personal Data

hands swap cash for goods through tablet computer screens, illustration

During the initial wave of commercialization of the Internet in the mid-to-late 1990s, companies began collecting personal information from visitors to their Websites. The value proposition laid out by Internet companies seemed simple: allow companies to track and capture user behavioral and demographic data, in exchange for free access to content, as well as a more personalized and tailored experience that was based on an individual’s browsing and shopping habits.

However, few users or market observers could have projected the evolution of the market for data, which has become far more complex and valuable than previously imagined. In fact, large companies such as Google, Facebook, Amazon, and Alibaba, among others, have generated massive profits by leveraging the data collected, not only using it to improve the personalization and usability of their own sites, but by reselling that data to advertisers, to the tune of billions of dollars per year. In fact, March 2021 data from eMarketer indicated the Internet advertising market generated $378.2 billion in 2020, and projected that figure will rise to nearly $646 billion by 2024.

“Everything you do creates data that’s being bought and sold,” says George Stella, chief revenue officer of BigToken (bigtoken.com), a data broker that enables consumers to collect revenue from the use of their personal data. “So, the ad tech industry has collected a ton of information from people without their permission over the last 20-plus years, and made billions and billions of dollars off of it.”

A key barrier to empowering people to generate revenue from their data is awareness. “Less than 200 or 300 million people out of 7.1 billion people globally are even aware that their data is being used or sold, and that they can actually benefit from these sites,” says Sagar Shah, client partner with artificial intelligence (AI) technology firm Fractal (www.fractal.ai).

While the Internet advertising market is massive, putting specific monetary value on each individual user’s personal data is highly variable, not only due to people’s different demographic profiles, but also to the type of data and its relative level of abundance or scarcity. For example, data on demographics that are in limited supply (such as data on Middle Eastern male consumers) is more valuable than demographic data on white millennial women. Similarly, the browsing data of individuals seeking to purchase a Tesla or Ferrari automobile within the next month would be valued more highly by data brokers and advertisers than the data of someone browsing for the best deals on a used Chrysler minivan.

Regardless of the type of data, personal data has value on both the legitimate advertising market and the black market, where stolen records can be sold to various parties. Data broker Invisibly (www.invisibly.com) provides a listing of various types of data available for sale on the dark web, ranging from a Social Security number (valued at just $0.53) to a complete healthcare record ($250). There also is significant value attached to personal information that is collected, bought, and sold through legitimate operations, such as data brokers and Internet advertising firms.

Left out of this equation are the end users generating that data who, for the most part, do not share in any of that revenue. Enter companies such as the aforementioned BigToken, Invisibly, and Killi (killi.io), each of which serve as middlemen or brokers between consumers and the companies that collect data. The goal is to create a user ownership model in which consumers retain more control over their data, who is permitted to capture it, and who can profit from it.

“There’s a whole industry built around the unscrupulous gathering of customer data to optimize sales,” says Rick Hoskins, founder of Filter King, a seller of HVAC filters via its eponymous online site. “We take a lot of care not to source customer data unethically. As a business owner, allowing normal people to monetize their data would take a massive weight off my shoulders. It would cut the knees out from under this sketchy shadow industry stealing people’s information for profit. Not only would it give us, online marketers, access to more data, it would let us access it ethically.”

The goal of data brokers is to allow consumers to decide which information may be shared with advertisers, then share in some of the revenue generated by its use. These services ask users to sign up on the Web or via an application, connect their social media and Web accounts, then ask them to answer specific questions about their interests. Based on the data provided and collected initially and over time, the brokers will place users into segments, and advertisers can purchase access to data from one or more segments for use in personalized advertising. Each time their data is shared, or advertisers purchase access to a segment in which the user’s data has been placed, the user can earn points, rewards, or cash. All the data brokers note that they store their user data on the cloud using a variety of encryption and security protocols, and that the end users with whom they work can opt out of having specific data shared if they so choose.

The goal of data brokers is to allow consumers to decide which information may be shared with advertisers, then share in some of the revenue generated by its use.

Still, ascertaining the actual value of data that can be returned to individuals is difficult to pin down, according to market participants. This is because the real value comes from aggregating data from hundreds, thousands, or millions of users with similar characteristics and intents, and then selling advertising to appeal to these segments. The value of an individual’s data in legitimate commercial scenarios is simply not very high. “Invisibly would love to give people lots of money for their data, but the marginal contribution of your own personal data and its value is surprisingly low,” says Don Vaughn, head of product at Invisibly.

Furthermore, because each of the largest brokers that make payouts to consumers generate less than $10M in revenue per year (based on published revenue figures or estimates), the potential payouts through these types of companies to consumers is a tiny fraction of the overall Internet advertising market value.

In terms of real-world payouts today, BigToken’s Stella says, “Our users are averaging about $15 a week, which is pretty great.” Stella adds that other nonmonetary remuneration, such as reward points, coupons, and special offers also may be accumulated by the licensing or sale of personal data.

Killi, meanwhile allows users to accumulate Killi points based on the amount of their data that is captured in four categories: Profile, Shopping, Browsing, and Device. The points can be redeemed for cryptocurrency or gift cards, or the points can be donated to a variety of charities. Indeed, for users that opt in to being tracked by a broker, they can expect to see a few hundred dollars per year in actual revenue at most, although the actual amount is determined by the user’s demographics, the amount of browsing they do, and the breadth of online and real-world accounts (such as bank accounts) users are willing to connect and allow to be tracked.

Confirms Fractal’s Shah, “Most people will not consider this as a primary source of income because it’s not going to be very high amount of money per year, probably just $100, $200, or $300 per individual.”

However, Invisibly is taking a different approach, focusing more on control over the content a user sees, rather than on a specific monetary amount paid to customers. Instead of simply asking customers to link their accounts, they have set up a platform that will act as a “walled garden” that will allow users to control the types of content they see across the Internet and on social media, then be paid for providing this data to the platform, which will then provide content and ads based on these choices. “The platform will search the Internet to bring you the things that are most worth your attention, from products to news, to events, to anything out there,” Vaughn explains. “It’s all based on data that you provide a thumbs-up and thumbs-down, and matched to an algorithm you control,” he says.

Based on user inputs and choices, the platform serves as a control layer to digest almost everything worth knowing about, and the algorithm is designed to deliver content that closely matches a user’s overall, long-term interests. This, Vaughn says, can be contrasted with the more typical browsing or app model, which may return ads or results based on a limited number of clicks that don’t match your long-term interests. “Instead of licensing data out to other platforms, Invisibly empowers the community to get value directly from it,” Vaughn says, essentially creating a user-curated experience. “And then you’re going to get paid for it, because your data brings value for the whole community.”

On its surface, it seems the ability for consumers to control and generate revenue from the data they create should benefit both consumers and advertisers. Consumers can better protect their personal data, and that data should be more valuable to advertisers, since it is being shared directly by consumers themselves. However, the lack of specific regulation around the use of data brokers may give pause to some consumers.

“Most people will not consider this as a primary source of income because it’s not going to be a high amount of money per year, probably just $100, $200, or $300 per individual.”

“We are entrusting this data to companies that are ungoverned and unregulated and which may need to pivot their business models if they are ultimately not successful with their original business thesis,” says Ollie Whitehouse, Global Chief Technical Officer at NCC Group (www.nccgroup.com), a global security consultancy. “While we have data protection regulations such as the California Consumer Privacy Act or the General Data Protection Regulation, users will need to consider what opt-outs are being taken, for what purposes, and for how long. We must also be prepared for these start-ups to suffer security breaches or similar attacks, and consider the cybersecurity implications of their data aggregation.”

In addition to data security concerns, the very nature of Internet advertising makes it difficult to compute the true value of an individual’s data, and then to properly calculate a fair level of compensation to the user that makes it worthwhile for individuals to utilize these services.

“Data in bulk is expensive, but your data as an individual is not,” says Stephan Baldwin, founder of Assisted Living Center (www.assistedlivingcenter.com), a company that provides marketing services to more than 19,000 senior communities around the U.S. “How do you incentivize someone to sell their personal information, if something so valuable is so cheap? Along with monetary incentives, companies need to follow up with a combination of cash, goods, and services that [catch] people’s attention, because the benefits of offering someone your information does not outweigh the risks at the moment.”

Further, selling one’s personal data may open up individuals to predatory advertising or solicitation for predatory schemes, particularly those who might be financially vulnerable. “I worry folks interested in selling their data might not understand the full scale of what’s at stake,” says Scott Spivack, marketing director of United Medical Credit (www.unitedmedicalcredit.com), a company that assists people in securing financing for medical procedures, who cites the need for clear communication protocols between the data broker and the individual.

Spivack is concerned personal data programs could “quickly become predatory, preying on individuals experiencing tougher financial circumstances looking to make money fast.” He says without strong regulation, some personal data-monetization programs could become akin to payday lending programs or certain mortgage refinancing programs, which “intentionally target certain communities and individuals, and also have a history of unclear terms and conditions that ultimately hurt the consumer more than help.”

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