Facebook is just starting to tap the immense wealth of data generated by its 300mm audience, as reported in their blog and in the New York Times (free registration required) yesterday. This particular study on the “Happiness Index” is more of a teaser, a taste of what is to come. We don’t pretend to know how much the data being generated in properties such as Facebook, Twitter and others is worth to these companies and to consumer goods companies/ advertisers/ etc… But paraphrasing Warren Buffett: “We don’t know whether the cow weighs 400 or 500 pounds, but we know it’s a cow.”
It’s not just Facebook, of course. We agree with the NY Times reporter when he compares the already impressive multitude of available data “embedded” in Google searches to the much-richer interactions available on Facebook. Expanding a bit, we’re talking about Google searches, live Twitter monitoring, Delicious tagging, hyper-local mobile search… the fact is that there’s an ever-increasing amount of data produced “for free” by a large community of users (read: consumers). As we’ve seen with Amazon.com, Netflix, Harrah’s Entertainment and many other examples, the creative use of data is a source of value/ competitive advantage.
Another point: people tend to focus on the “capex” side of it. How much do companies such as Amazon or Google have to invest to gather, store, clean up and effectively analyze data? While the amount is certainly relevant, it seems to us that culture is even more so. We’ve seen e-tailers with more scale make less use of this resource than smaller companies with a relentless “data-crazy” culture.
By the way, this NYT article deals with the data analysis part in this world of ever-increasing data generation. Much more technical but no less interesting. The amount of money and brainpower involved – and the tools previously unavailable such as crowdsourcing – should insure that we will see very exciting stuff in the near future.