“Leveraging web data collection for informational advantage is the secret sauce for future success”

Tamir Roter, APAC & EMEA VP at Bright Data, discusses the many ways web data enables businesses to achieve competitive superiority through informational advantage while also upholding key environmental objectives.

Just as human capital and tangible assets are key components of production, data is also intertwined across virtually every industry and sector of the global economy. In fact, it’s the fuel that lights the fire of today’s real-time economic activity and without it, things would come crashing down. It’s why businesses today no longer look at digitally transforming their operations and processes as a stretch goal. Instead, they’re using data to create more engaging customer experiences, develop superior operational processes, differentiate future business models, and make key business decisions against the competition.

From hedge funds using public social sentiment data for more strategic investment decisions to cosmetics brands identifying and capitalising on organic traffic gaps utilising search engine data, companies are leveraging public web data collection to gain significant informational advantage. In this context, informational advantage is about tapping into data-intelligent technologies and innovative ways of collecting web data to transform the vast amounts of unstructured data into insights and trends that will enable future business decisions. By doing so, data becomes the enabler, the fuel for everything that a business does and the decisions it makes.

Let’s take a closer look at how web data collection strategies can affect competitive superiority and assess how businesses can tap into their full potential.

Staying one step ahead of the competition

From uncovering trends to conducting market research, there are countless reasons why businesses collect publicly available web data that looks at their market landscape as well as their industry. Although you may have guessed it, the predominant factor is gaining informational advantage to drive more accurate future business decisions.

The biggest challenge, however, lies with the current nature of the web. Public sites are often being blocked for competitive reasons, which prevents public data from being accessed, even though the information targeted is on public display and can be openly accessed by typical users. This is where data-driven solutions come into play, granting access to thousands of public data access points that would, otherwise, often stay buried deep within the sub-layers of the internet – the largest database in the world.

Even though web data gathering is only a decade old, it is already commonplace in industries such as e-commerce, travel, and fintech. We can expect it to become ubiquitous across a wider range of fields in the future, including healthcare, cybersecurity, legal, adtech, social media, non-profits, and traditional financial services organisations. Web data gathering will enable more organisations to stay better informed and, therefore, make more informed business decisions going forward.

Recognising that ESG data is no longer a niche criterion

The term ‘ESG’ is very popular today. Also covered by the umbrella phrase ‘ESG alt-data’, the acronym itself encapsulates all public information related to environmental, social and governance factors that might impact an organisation. It especially helps those within the financial sector make accurate predictions on the short/long-term risks and returns of a potential investment venture.

However, this isn’t the niche trend it was decades ago. According to AIMA and other sources, by 2024, there will be over 5,000 separate ESG alt-data sets available. Moreover, a recent survey conducted in partnership with Vanson Bourne has shown that achieving sustainable goals is important for businesses, no matter the industry they operate in.

In fact, almost two-thirds (60%) of businesses said environmental considerations are very important to the way their business operates. In addition, eight in 10 businesses revealed they are currently working with either public or private partners to use data to help tackle climate change – with over a third (36%) working with local public authorities.

With that in mind, it’s clear now that public web data collection strategies of the future will have to include ESG factors as a way of gaining an informational advantage over the competition.

Social sentiment data helps hedge funds increase returns – example

Now that we’ve unpacked what web data collection is, how it works, why it’s helpful in gaining informational advantage, and the breadth/length of the types of data/sectors it covers, it’s worth mentioning a small example that illustrates just how crucial it is to businesses today.

Let’s take a look at the folks over at Melvin Capital Management (MCM), an investment management firm that did not utilise public social sentiment data, leading to huge losses on the past GameStop (NYSE: GME) stock.

MCM took major ‘short positions’ based on ‘classic corporate financial datasets (e.g., debt-to-earnings ratio and projected annual sales). However, what they failed to take into account was the social sentiment on the stock.

While MCM was busy hedging against GME, WSB investors were publicly discussing their positive outlook on this position. In fact, for a moment in time, they were able to drive the price up almost 200 times above the stock’s historic average valuation.

This would be fine if it were not for the fact that MCM portfolio managers were so confident in themselves that they placed hedges on more than 40% of existing stock volume. What this means is that they were forced to sell at certain price points; otherwise, their fund would not physically have enough cash to cover their losses and would need to file for bankruptcy.

The bottom line here is that firms that collected public social media data were able to identify positive sentiment towards GME, enabling them to take preemptive (i.e., selling their shorts) and proactive measures (i.e., ‘buying long’). You could say these guys were the real winners and everyone else was caught with their pants down!

Winners & losers

It’s okay to accept that not every business is a winner, particularly those who haven’t yet realised the true power of public web data and the impact it may have on their overall business performance. The examples out there speak for themselves, and business folk should pay attention to and learn from them.

I encourage owners, CEOs and entrepreneurs to abandon the guesswork that currently underpins the majority of their decision-making and, instead, rely on more robust online data intelligence solutions that will enable them to tap into that secret sauce of leveraging web data collection for informational advantage.