Facebook's upcoming initial public offering has generated massive buzz, with the social networking company expected to raise billions of dollars in its Wall Street debut. The real value of Facebook does not lie in its intellectual property or technology infrastructure or brand - impressive as those are - but in the reams of rich data it has collected about users over the past few years.
At its core, Facebook is a service that makes money by gathering data about what its users do. Each one of its features, from link-sharing, fan page 'likes' and social games through to photo albums and friend networks, helps it to build a picture of who each user is. It is the ability to leverage this data that Facebook sells to its advertisers.
The cleaner, more complete and more comprehensive its data is, the bigger the premium Facebook can charge advertisers who want to target users with laser precision. An advertiser may want to talk to 25 to 30-year old Coldplay fans in South Africa and no one else. Facebook could connect the company to that demographic directly and with no wastage. Data today, as Facebook shows, is an asset with a value attached to it.
Arguably, data is something that companies should (and probably will soon) even put on their balance sheets alongside the rest of their tangible and intangible assets. Certainly, it's a commodity that companies are increasingly willing to trade for cold hard cash.
This means that marketers and information technology departments really need to be thinking about how they will manage their customer databases as an asset. They should be asking themselves how they will grow the value of this asset and use it to drive the bottom-line growth of their businesses.
Suddenly, it's not enough to simply believe that you have a customer. You also need to understand what you know about the particular customer to determine how valuable he or she is to your business. Do you understand the value that this person already brings to your business?
Do you have a view of his or her potential lifetime value? Can you target and engage the client for new and repeat business on a deep and personalised level across campaigns and a range of channels? These are sort of questions that you need to be able to answer in a meaningful manner.
Marketing today, more than ever before, is all about using data to meet your business objectives, whether they are customer retention, acquisition or conversion. It is about using information to maximise results, minimise wastage and get the most value for your spend.
Marketers today need to show that they are delivering bottom-line value to the business and its shareholders. The only way that you can get this right is by turning your database into a source of value and a real asset to your organisation.