Third-party data or alternative data, when leveraged and combined with a company’s proprietary data, can reveal useful information and new insights about consumers. However, free data can be difficult to find, a hassle to sort through and requires validation to ensure the data is clean.

Zack Pike, head of data at Callahan, discusses where to find alternative or free data, what, exactly, an analyst may have to do to organize the data into a usable form and how it can be applied to your marketing strategy.

Listen here:

(Subscribe on iTunes, Stitcher, Google Play, Google Podcasts, Pocket Casts or your favorite podcast service. You can also ask Alexa or Siri to “play the Uncovering Aha! podcast.”)

Welcome to Callahan’s Uncovering Aha! podcast. We talk about a range of topics for marketing decision-makers, with a special focus on how to uncover insights in data to drive brand strategy and inspire creativity. Featuring Jan-Eric Anderson and Zack Pike.

Jan-Eric:

I’m Jan-Eric Anderson, chief strategy officer at Callahan.

Zack Pike:

And I’m Zack Pike, vice president of data at Callahan.

Jan-Eric:

Zack, it’s good to see you. Thanks for joining me on the podcast. I wanted to connect with you today to talk about something that we’ve talked about on some past podcasts, but it’s something I want to dive a little bit deeper on and explore, it’s this idea that we’ve talked about, about free data. We’ve talked a lot about useful data, the right type of information to bring in, and data that can be leveraged.

Jan-Eric:

An obvious thing for marketers is to use their own data, their own sales data information that they have around their product sales or mix or distribution or whatever the data is about, but we’ve talked also about how a lot of times unlocking insight can come from combining proprietary data that you have about your own company with other information.

Jan-Eric:

What I want to talk a little bit more about is free data, just try to understand it, and then understand what I think is your point of view, that it’s generally a good thing to be able to acquire free data. Where does free data come from? What is free data?

Zack Pike:

Yeah. It’s actually, in the marketing space and even in the business intelligence circles, it is kind of a new topic, but it’s been happening for years, maybe decades in some form or fashion in the hedge fund industry. Hedge funds, obviously, when they’re investing a large amount of money, they have a lot of data on the companies that they’re investing in, all the sales data and performance information around the company itself to make sure that they’re putting their money in the best interest of their investors.

Zack Pike:

When they can augment that data with data that’s not part of the company, and I’m talking about things that are influencing factors on the performance of that business, so it could be something as simple as growth in population, in different areas of the country, aligned with growth of the company in those areas of the country. When you can start to understand how external factors are impacting the business, your decisions on investment get better, you start making more money on every dollar you put somewhere.

Zack Pike:

Well, the same idea is true in marketing, right? We are investing dollars in different marketing channels, different areas of the country against different products to try and drive sales. If we can understand the other influencing factors, and usually, there’s data around some of those factors, we want to use that.

Zack Pike:

That’s the whole idea behind this third-party free data. In the hedge fund industry, they call it “alternative data.” The thing that a lot of people don’t realize is that, to your point, a lot of it is actually free. It’s just sitting out there in a database with the government. A place like the NOAA offers weather data freely available. It’s just sitting out there for the taking.

Jan-Eric:

Gotcha. Can you give me some examples of alternative data?

Zack Pike:

Yeah.

Jan-Eric:

I’ll call it “free data” or “alternative data,” “third-party data.” What are some examples of that? What are we talking about here?

Zack Pike:

Yeah, so a couple that we use a lot and that I think people would probably be able to grasp really quickly is Census Bureau. The Census Bureau, of course, does the census, right, but they collect a lot of other data. There are surveys that happen every year through the Census Bureau figuring out what’s going on in different communities, who those people are, what their interests are, how the population is changing. They’re collecting all of that data and making it available on the Census Bureau website. If you start digging deeper and deeper in there, you could find these tables. That’s one example. That’s demographic info, population, stuff like that, changes in population, which tends to be pretty valuable.

Zack Pike:

Bureau of Labor statistics takes a lot of good data in. They have a consumer expenditure survey that is loaded with how consumers are spending money year to year and how that’s changing over time and it gets very specific and it’s all geographically aligned, so you’re not just looking at this for the country.

Zack Pike:

If you do business in a certain area or you’re trying to grow in a certain area of the country where you’re having trouble in a certain area of the country, you can dig through this data just for that portion of the country. Even things like the consumer price index, which is our measure to typical measure of inflation for the country, but that’s not just one number. They collect data on hundreds of products every year so then you can start to look at your pricing in relation to other products and stuff like that. All this data is 100% free. It’s sitting out there for anybody to use.

Zack Pike:

Another one that we use a lot, we use a couple of different suppliers for this data, but the NOAA makes all their weather data available, so all of the NOAA weather stations around the country, and in fact, around the world, are recording data and they make this data available to you. If you have stores in certain areas of the country and you want to look and see how your foot traffic is impacted by weather, you can go mine their data, put it up against your sales or foot traffic data and start to draw insights.

Jan-Eric:

Just in the examples that you’ve just given, basically, you can capture population counts, quantifying populations, all sorts of characteristics around that population, demographic information, household income, debt information, ethnicity, size of household. You’re talking about really being able to dimensionalize, and customize it any way you want as a nice alternative to maybe broader measurement pieces of things like a MRI, for example, which don’t really allow you to get down into very specific geographies. You’re also talking about spending behaviors down to the geography and then things like weather.

Jan-Eric:

These pieces, it gives you a lot of variables, I guess, is what you’re saying. You’ve got a lot of variables that you’re working with, then you start to overlay that with your proprietary information or your own data about your own company. You can start to look for insight and understanding around what drives what or what correlates with what and things like that. Fair?

Zack Pike:

Yes. Of course, we use it mostly for opportunity identification, right? It’s: Where’s my next marketing dollar can be spent smartest? Even things as simple as population. This is a metric that’s really easy to get and it’s rarely used, but when I’m looking at sales data geographically, I am always normalizing for population, right? Because if we just grow anybody, sales, data, any national company sales data on a map, the biggest states are going to be California, Texas, and New York. That’s where most of the sales is going to be. It doesn’t matter the company. It’s always going to be like that.

Zack Pike:

But if I normalize for population, you will see very wide differences, right? You might find that you’re more heavily penetrated in the South than you are the East or West Coast. You may find that you’re better in the West Coast than you are the East Coast. Then that starts to draw questions like, “Okay, well, do I have more room to grow there? Or am I never going to win on one area of the country?” That is something that literally would take an analyst an hour to do. For some reason, a lot of people just don’t think about it.

Jan-E