The market for alternative data
The investment industry spent an estimated $2-3 billion on data services in 2018, and this number is expected to grow at a double-digit rate per year in line with other industries. This expenditure includes the acquisition of alternative data, investments in related technology, and the hiring of qualified talent.
A survey by Ernst & Young shows significant adoption of alternative data in 2017; 43 percent of funds were using scraped web data, for instance, and almost 30 percent were experimenting with satellite data (see Figure 3.1). Based on the experience so far, fund managers considered scraped web data and credit card data to be most insightful, in contrast to geolocation and satellite data, which around 25 percent considered to be less informative:
Figure 3.1: Usefulness and usage of alternative data (Source: Ernst & Young, 2017)
Reflecting the rapid growth of this new industry, the market for alternative data providers...
