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What Are Data Brokers and How Can They Benefit Your Company?

By: SmallBizClub

 

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These days, companies have access to more data than ever. This is mainly due to the internet: experts project that by 2025, internet users will transmit 463 exabytes of data every day. The growing amount of data on the internet can be of immense value to companies.

However, the more data there is, the more difficult it is to collect specific data for insights. This is where data brokers can come in. In this article, you’ll learn what data brokers are, how businesses can benefit from them, and also some common concerns over data brokers.

What is a data broker?

A data broker is a person or company who collects, analyzes, and sells specific sets of data. By using special tech tools, data brokers can collect large amounts of data from across the web. They can then combine this information with offline data to create detailed reports. Data brokers generally focus on people’s personal data: their internet activity, legal records, education, finances, etc.

There are several types of data brokers depending on the data they collect and sell, and they offer different benefits to businesses. A common question regarding data brokers is: are they legal? Well, if they collect data from publicly accessible sources, they’re perfectly legal. Still, there is a lot of concern over how ethical they are, which will be covered later in the article.

How can data brokers benefit companies?

As already mentioned, data brokers can collect different types of data, which in turn offer different benefits to companies. For example, they can collect financial data, market data, and even personal health data. Here are the main ways in which data brokers can benefit companies:

Providing market insights

Marketing data brokers can help companies looking for market research. By putting together data like search history, purchasing habits, and any other relevant information, data brokers can help companies get a better picture of the potential market for their product. Informing companies about the main demographics of the potential market (or even IP addresses and names) allows them to create targeted ads for the people who would find their product or service most relevant.

Providing health data

By collecting a person’s search history and purchasing data, data brokers can get insights into the possible state of their health. Insurance companies might purchase this data and alter interest rates accordingly. However, this data can be very inaccurate: a person’s search history and purchasing history don’t necessarily represent their health, especially if they’re a caretaker for someone sick.

Providing financial data

Data brokers can put together information like purchasing history, loan history, and credit score to get a better picture of a person’s finances. This information can be valuable to banks, credit card companies, or landlords. They can use this information to determine whether they want to work with someone and what the best interest rates would be in response to the risks posed.

Helping to verify identity

Have you ever needed to look someone up or check if they are who they claim to be on the internet? This is where “people search” brokers come in, and they can be beneficial for businesses and individuals alike. These data brokers collect information on specific individuals from various public records. This information allows brokers to create a detailed profile on people: their full name, age, education, employment history, and even specific interests.

Concerns over data brokers

Although data brokers can offer invaluable insights to businesses, there has been rising concern over privacy issues posed by data brokers. People don’t want their data sold to third parties. Plus, many people have been taking privacy measures to stop data brokers from obtaining their information. For example, they might opt out of data collection or install a VPN.

These privacy concerns are valid, and it’s normal that many people don’t want their data to be sold. However, most people still don’t take measures to block data brokers from collecting their information, so this industry doesn’t seem to be going anywhere.

Conclusion

The data brokerage industry is huge, and the information available keeps growing every single day. As you learned, the information offered by data brokers can help businesses and individuals in various ways: it can help assess risk, analyze the market, create an advertising campaign, and even help verify a person’s identity.

However, it’s widely discussed that that industry is unethical and a violation of privacy, which may also be true. Another thing to keep in mind is that the data collected by brokers is not necessarily accurate. This poses the question of whether companies should rely on data brokers for information like an individual’s health. It will be interesting to see what the future holds for data brokers, but for now, their future seems more and more promising as demand for them keeps growing.

Published: November 3, 2021
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