The ability to share consumer data, rather than simply collect it, creates much of its value in the marketplace. That's a main takeaway of a new report commissioned by the Direct Marketing Association, which pegged the data-driven marketing services industry in the U.S. at $156 billion in 2012.
"The Value of Data" report, conducted by professors from Harvard Business School and Columbia University, also found that data-driven marketing services employ 676,000 people. The researchers studied the revenues of more than 650 companies that it considered part of the sprawling marketing data and related services industry.
As concern over privacy and security of consumer data grows, it's no surprise the DMA is touting the findings. The trade group released its report yesterday in conjunction with its DMA2013 conference in Chicago this week.
The research indicates 70%, or $110 billion, of the data-driven marketing industry relies on individual-level data exchanged among companies for things like ad targeting or email marketing.
With the release of the report, the DMA clearly aims to counter continued pressure from government and privacy advocates by quantifying the impact the marketing data industry has on the economy.
The DMA's Data-Driven Marketing Institute "commissioned this study to give policymakers in Washington and beyond the facts about the vital role of responsible data use in fueling innovation and economic growth, the benefits that the [Data-Driven Marketing Economy] provides to individual businesses and the U.S. economy as a whole – and what would be lost if regulation impeded responsible exchange of data across the DDME," the organization noted on its institute site.
The two largest industry sectors creating value from consumer data in 2012 were commerce -- particularly e-commerce -- and postal production (think direct mail). Each accounted for around 20% of the marketing data economy, according to the report, which also counted revenues from agency services, analytics firms, and telemarketing companies.
"Because it is much more expensive to reach someone by the mail than by email or display advertising, the [direct mail] channel would cease to be viable without data to steer away from people who are not going to buy," noted the report.
Large retailers represented a significant portion of the money spent on data-driven commerce. The report estimated 20% of sales -- $17 billion -- at Amazon, Staples, Apple iTunes, and Walmart involved data-driven marketing.
The study was conducted by Professors John Deighton of Harvard Business School and Peter Johnson of Columbia University.