Introduction
Selling your data to asset managers can be a profitable venture. Understanding how to market your data effectively and set appropriate pricing is crucial to sell data. This guide provides practical advice on these aspects. For more insights, you can also access our Complete Guide To Selling Data for data providers.
Understanding Asset Managers’ Needs
Asset managers seek data that offers a competitive edge. They value datasets that provide unique insights, enhance decision-making, and improve investment strategies. Selecting the right data set is key for effective asset management, and asset managers are willing to invest more for quality data.
Why Asset Managers Need Alternative Data
Asset managers are always looking for ways to outperform the market, and alternative data gives them a competitive edge. Traditional data is widely accessible, making it harder for asset managers to gain unique insights. Alternative data—non-traditional information used in investment processes—provides the edge they need.
Here are five key benefits of alternative data for asset managers:
- More Data: Increased volume of data and information.
- Unforeseen Insights: New perspectives that traditional data can’t provide.
- Competitive Advantage: A powerful edge over peers.
- Fiduciary Duty: Enhancing decisions that align with their responsibility to clients.
- Efficiency: Streamlining processes for better outcomes.
The demand for alternative data is rising, with asset managers predicted to spend over $2 billion on these datasets. Among them, consumer transaction data is the most accurate and heavily invested category, but B2B datasets are expected to see significant growth in the future.
Assessing Your Data’s Value to Sell Data
Evaluate your data’s uniqueness, accuracy, and relevance. Understanding your data’s value drivers is essential for effective pricing.
Pricing Your Data In Order to Sell Data
Setting the right price is vital to sell data. Consider the following factors:
- Data Quality: High-quality, accurate data commands higher prices.
- Market Demand: Align your pricing with current market needs.
- Value Proposition: Ensure your pricing reflects the value your data provides to asset managers.
- Micro vs. Macro: The scope of the dataset.
- Quantitative vs. Discretionary: The type of data and its application.
- ROI/ROD: Return on investment and data delivery.
- License Structure: How the data is sold and licensed.
- Pricing Comparisons: Benchmarking against competitors.
- Realistic Pricing Strategy: Developing a competitive and sustainable pricing model.
- Feedback from Targets: Listening to customers’ pricing feedback.
It is wise to price your data competitively to gain wider adoption and lower the inhibitions of potential customers so that you can sell data.
Marketing Your Data
To effectively market your data:
- Identify Target Clients: Focus on asset managers who would benefit most from your data.
- Highlight Unique Features: Emphasize what sets your data apart from competitors.
- Provide Clear Samples: Offer potential clients a clear understanding of your data’s value.
It is very important to understand your target clients and their specific needs when marketing your data.
Selling to Asset Managers: Where to Start to Sell Data
When considering the number of asset managers to target with your data, there are five key factors to take into account:
- Exclusivity: Does offering exclusivity benefit the sale?
- Asset Manager Types: Which asset managers are best suited to your data?
- Asset Class Relevance: What asset classes does your data apply to?
- Sellside Sales: Should you sell to the sellside as well?
- Routes to Market: The channels through which you sell your data.
Distribution Channels to Sell Data
Choose the right channels to reach asset managers:
- Direct Sales: Engage with potential clients through direct outreach.
- Data Marketplaces: List your data on platforms where asset managers search for new datasets.
- Partnerships: Collaborate with firms that have established relationships with asset managers.
Eagle Alpha offers a comprehensive guide for alternative data providers, including strategies for pricing and marketing data.
Expert Insights from Successful Data Vendors
We spoke with 10 data vendors who have successfully marketed and sold their data to asset managers. Here are some of their key tips:
- How asset managers use your data: Understanding how data is applied in investment processes is crucial.
- Data monetization trends: Stay informed about current trends to stay competitive.
- Challenges in selling: Overcoming the barriers that may prevent asset managers from buying.
- Maximizing revenue: Key actions you can take to boost your sales and maximize the value of your data.
Legal and Compliance Considerations
When it comes to alternative data, staying on the right side of regulations isn’t just a good idea—it’s essential for building trust with asset managers and ensuring your data is actually usable. The alternative data world is constantly changing, so asset managers need to be proactive, especially when it comes to compliance. Legal experts recommend that data sourcing teams do some initial screening to spot potential problems before handing things over for a full compliance review (including those detailed due diligence questionnaires, or DDQs).
Industry leaders collaborate with organizations like FISD to standardize compliance processes and integrate tools into buyer platforms. Some of the big topics in alternative data include web scraping, privacy concerns, fraud, ESG issues, AI-washing, and the use of sensitive data.
Conclusion
Effectively selling and pricing your data to asset managers requires understanding their needs, assessing your data’s value, setting appropriate pricing, and choosing the right marketing and distribution channels. By following these steps, you can enhance your data monetization efforts and build successful partnerships with asset managers.
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