Tons of data, but does it help?

Some interesting data via mediapost sourced from Andreas Weigend, over at the Harvard Business Blog.

In 2009, more data will be generated by individuals than in the entire history of mankind through 2008. Information overload is more serious than ever.

Andreas is the former Chief Scientist at Amazon.com and an expert in data mining and computational marketing. He currently teaches the graduate course Data Mining and Electronic Commerce at Stanford University.

The second data revolution brought about a new dimension to data creation: users started to actively contribute explicit data such as information about themselves, their friends, or about the items they purchased. These data went far beyond the click-and-search data that characterized the first decade of the web.

There is no doubt that this data is going to help researchers better understand the human network and interactions. But will all this data help companies make money by enabling better targeting?

Well so far, opposite seems to be happening. The places where there is most amount of data – like Facebook etc. – are really struggling with their monetization efforts. In fact not only are these companies not profitable, they are also lagging well behind other traditional media properties in terms of CPM rates they can generate. Could it be that these companies really don’t know how to process this data and once they figure out the right ways to process the data, they will be rich?

I suspect the monetization woes of Facebook et al are not really related to inadequate processing of the data but rather motivation of the users. Its almost like the users of most social media platforms are equipped with a Tivo that ignores all ads no matter how relevant. As such I suspect that even though the ads on social media platforms are more relevant because of all the data, but they get far less traction because of the motivation issues.

So while this huge amount of  data will help us better understand our behaviors, it is unlikely to help resolve the monetization issues plaguing so many social applications.

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