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Why Data is the New Oil

Why Data is the New Oil

Oil has traditionally been considered one of the most valuable physical assets for the last few centuries. But this important commodity may have a new replacement: Data.

The arrival of the computer and subsequent evolution of internet has created a human reliance on technology. It has given birth to the importance of data. The top five giants of the tech world – Apple, Amazon, Facebook, Google, and Microsoft – know more about our daily interaction with gadgets than we ever will. These companies are collecting vast amounts of data from tens of millions of users every single day.

How Google Uses Your Data

When using Google Maps, you are, knowingly or unknowingly, sharing your location information with Google. Your data is then combined with more users to recognize traffic patterns. When a lot of vehicles are moving slowly along the same street, the map can suggest a faster route. It is the data from you and your fellow drivers that enables Google to make Maps effective.

Along with this, YouTube can predict your video preferences based on your location, trends, popularity and your search history. Google Assistant is evolving the way tech companies leverage the data they collect. Google itself has shared this information here.

How Data Drives Advertising

The primary job of an advertiser is to optimize every single dollar that he or she spends on marketing campaigns. To keep marketing expenses within budget, it is vital that the advertisement reaches the right audiences.

Data helps predict customer behavior. It also helps to target people who may have an interest in your product. This is vital information for companies that want to find individual customers based on their needs, rather than trying to guess.

Are Facebook and Google Really Free?

As per this article by Investopedia; Facebook generates the majority of its revenue from digital advertising, which isn’t possible without the data it collects from its 2 billion users.

The ‘free’ service that we use from Google or Facebook is not actually free. Each website (or app) that we use and each page we view on the internet is recorded. While browsing, we are inadvertently leaving behind our digital footprints and tech companies are able to leverage on it and monetize our data. If the product is available to you for free, you’re the product!

For example, take Facebook. Facebook knows what each of their users do across the web, even when they log out. It keeps track of the sites they visit, what time they visit, and shows them advertisements accordingly. All this is done in the name of giving the user a “personalized experience”.

How Data Helps Us

Keeping the cons aside, this information availability has changed the human relationship with technology. Self-driving cars wouldn’t exist without the availability of maps and the data of human behavior on roads among other things. We wouldn’t be able to make weather predictions and plan ahead without the availability of data.

Data visualization is the best way to communicate a story and put out facts in a way that captures human interests. The world has become organized and the quality of life has drastically improved because of the availability data of the population at large.

Data is to the Information Age as is Oil to the Industrial Age.

How we make products, solve human problems, and use data in a constructive way will define the next wave of technology. Oil has evolved the world into a better place by creating an enormous amount of wealth and prosperity. Data perhaps holds the similar potential and is already responsible for creating four of the five most valuable brands in the world.

Data has become the most valuable resource on the planet. However, it needs to be ethically extracted, refined, distributed and monetized. Like the way oil has driven growth and produced wealth for powerful nations, the next wave of growth will be driven by data.

Sumeet Santani

Sumeet Santani

Sumeet Santani is a first-year graduate student pursuing his master's in Information Management. While he does plan to pursue CAS in Data Science, Sumeet is also learning project management and consulting skills at the iSchool. Sumeet has 2 years of business experience including co-founding a tech startup aimed at organizing the shipping sector back in India. His love for writing is not new and he has been writing since his undergraduate years. He also occasionally publishes his work on his personal blog.

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