How Much Is Your Personal Data Worth

How Much Is >Your< Data Worth? At Least $240 per Twelvemonth. Likely Much More.

This is the beginning article in a serial of posts that addresses the value of personal data.

In this series of articles, we will shed light on the value of one of the most important assets in the modern age: Personal data. Since today's consumer data marketplaces provide niggling access and limited pricing information to the average consumer, nosotros will take a variety of approaches to estimate the marketplace value of different categories of personal data that can be used for advertising, credit scoring, marketplace research, and fifty-fifty personalized wellness care and the training of AI systems. Our ultimate objective is to develop valuation techniques and a comprehensive estimate for the total present value of the average consumer'south personal information, what factors affect value, and how that value might abound over time.

Part 1: Digital Advertisement

An average US consumer can brand $240 per yr monetizing their data for digital advertising

Valuing personal data is difficult. Even though consumer data — like age, gender, location, purchase history, and browsing behavior — has go an increasingly disquisitional ingredient for the fast-growing digital advertising industry that now generates tens of billions of dollars annually, there notwithstanding aren't any high-volume marketplaces where personal data is transparently priced and traded. In other words, the average person doesn't have any good way to determine the value of their own personal data.

Most likely that's on purpose. Big digital players know that if consumer data was an efficiently and transparently priced asset, consumers would be less likely to provide the advertisers, information brokers, and tech giants that dominate the personal data economy the nearly unfettered admission to the information that they now enjoy.

How much is our data really worth?

As a way of answering this question, allow'south have a quick and dirty arroyo to how much social media giant Facebook makes with our personal data.

Facebook utilizes user data, like age, location, social relationships, interests, and browsing history, to target digital advertising on its ain properties, including Facebook, Messenger, Instagram, too as sites and applications in its broader third-party network. In 2016, Facebook generated nearly $27 billion in acquirement through its advertising products, which amounts to approximately $twenty per monthly active user or MAU per twelvemonth. Facebook users in more developed countries, like the US, generate more revenue for the visitor, on average — approximately 4X the ARPU of the typical global user — while users in less developed countries generate a smaller amount per capita.[ane]

Looking at the data value chain, the personal information Facebook collects — our data — only contributes a portion of the company's total advertising revenue. Marketers non just pay for the personal data that facilitates targeting, they also buy distribution, or admission, to eyeballs. Ad products are the combination of data and distribution. Without ane, the other is much less valuable. The critical question becomes what percentage of the full value is personal data and what is distribution?

Without having specific, non-public details nigh Facebook'due south operations, nosotros need to develop our own techniques and proxies from similar markets to develop estimates about the value of personal data. I particularly relevant market to investigate is online display advertising, since display ads are typically bought and sold through loftier-volume ad exchanges. These digital brandish advertisement marketplaces apply real-time bidding systems, or auctions, where transactions occur in milliseconds, or less time than it takes a web page to load. Here'southward a bones summary of how a display advertizement market place works:

As an ad impression is loaded in the user's browser, information about the user and the electric current page is passed to the ad exchange in real-fourth dimension. Advertisers decide which ad impressions to buy based on criteria, such as web browsing history and user characteristics. The cost of the advertisement, or impression, is auctioned off in existent time to the highest-paying applicant, or advertiser, with the toll determined by the market'south supply and need. The advertizement is immediately loaded onto the user'southward page.

An Baronial 2017 enquiry paper published by the University of Rochester Simon School of Business concern used online brandish advertisement exchange transactions to estimate the value of an individual's behavioral data. By examining differences inside comparable advert inventory, the authors found that advertisement impressions served to opt-out users (users for which the advertisers didn't have access to behavioral data) fetched 59.2% lower prices on average than impressions served to users with tracking cookies (users for which the advertisers had admission to behavioral data).[2] If we use this result to the $eighty ARPU for an American Facebook user, nosotros derive a value of approximately $47 for the boilerplate user'south behavioral data in 2016.

How much is the Usa Digital Advertising industry making with >your< data?

Expanding on the Facebook analysis above, we tin extrapolate the $47/year number to estimate the value of an average consumer'southward personal data to the broader digital advertising industry. In 2016, the US Digital Advertising manufacture represented $83 billion in revenue, with Facebook accounting for xix.7% of the full.[3] Using bones math we can quickly conclude that in 2016 the manufacture was able to generate value of approximately $240 per capita using >your< personal data to assist fuel the digital advertising ecosystem.

Although this is a rough guess using publicly available information and admittedly simplistic techniques, it provides a sense of the magnitude of the economic value of personal information. In all likelihood, the number is probably much higher when additional, high-value information — such as buy history, location, app usage, communication patterns, financial data, amongst many others — are considered.

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References

[1] Source: Facebook SEC Filings.

[2] Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3020503

[iii] Source: eMarketer, http://www.adweek.com/digital/u-s-digital-advertising-volition-make-83-billion-this-year-says-emarketer/

Images

Japanese collective Team Lab — https://www.teamlab.art/w/vortices/