AI-Powered Alternative Data Driving Extreme Market Research Disruption

KISS PR Brand Story Press Release Service Podcast

May 25 2022 • 14 mins

Numerous indicators make clear that the next five years will usher in extreme transformation for a multitude of industries and sectors as well as the global economy at large. This begs the question: what is driving such significant and rapid change? This big question just might be answered in two words: alternative data.

Companies that are slow to incorporate alternative data into their R&D, marketing, investment, risk analysis and other key processes expose themselves to extreme opportunity loss at best and operational peril at worst.

As one prime example, active investment management firms—including hedge funds and even private equity funds—incur the strategic risk of being outmaneuvered by competitors leveraging alternative data in their securities valuation and trading signal process. This as alternative data has emerged as an essential tool for investment management firms seeking market outperformance, known as “alpha.”

As an ever-evolving methodology, the last decade has ushered in a myriad of new types and sources of alternative data. Unlike traditional data made available by financial exchanges and indexes, SEC filings, financial statements, corporate filings, analyst predictions, press releases, management presentations and other well-entrenched mainstream sources, today’s breed of alternative data sets are being compiled from wide ranging and disparate sources. Everything from financial transactions, satellites, sensors and IoT-enabled devices, to e-commerce portals, public records, mobile devices, social media, web traffic and more. However, web scraping and financial transactions are, by far, the most common methods of alternative data procurement.

So lucrative is the economic upside of alternative data assets, the category is experiencing a veritable gold rush mentality that is driving extreme growth worldwide across practically every industry sector. This, as the global alternative data market size is expected to reach USD $143.31 billion by 2030—a staggering increase from $2.7 billion in 2021—with the category forecasted to expand at a compound annual growth rate (CAGR) of 54.4% from 2022 to 2030, according to Grand View Research.

As one industry case in point, investment firms are actively expanding their informational advantage by incorporating alternative data into their investment and risk processes. An EY Global Alternative Fund survey found that the vast majority (a full 70%) of hedge fund managers and over half (56%) of private equity funds currently use, or plan on using, alternative data to support their investment process.

Beyond banking and financial services and insurance (BFSI), reported to have collectively led the alternative data market in 2021 with a revenue share of more than 15.0% during the period, there are other alternative data early adopters. A few notables making great strides in the space include online retailers, SaaS purveyors and hospitality. These and other such industries are tapping the power of this alt intel for an array of projection activities, with predictive and algorithmic modeling, demand and trend forecasting, lead generation and competitive intelligence among them.

“There are numerous categories of alternative data, and the businesses who fare best are t