Should You Collect Data or Purchase a Large Database?

by | Feb 4, 2021 | Technology Featured

Data has quickly become the most critical resource in the modern world. According to a 2017 article published by The Economist, it has surpassed oil as the most valuable commodity

Collecting data allows us to learn more information, which leads to more opportunities to benefit our cause and have a better impact on people’s lives. Recent technological progress has emphasized the importance of data even further, with modern AI and machine learning processes requiring vast libraries to fuel development and algorithms.

In 2020, we saw an enormous increase in data use, generation, and collection due to the COVID pandemic. Domo’s infographic, “Data Never Sleeps 8.0,” has postulated that 59% of the world’s population had internet access in April 2020. That number is only going to rise as more communities gain better opportunities for improvement.

It’s currently estimated that all the data in the world in 2020 amounts to 44 zettabytes (a zettabyte is 10 to the power of 21 bytes). While knowing these numbers might be unnecessary, it’s crucial to develop a strategy to access and utilize this potential information.

Let’s take a look at the current state of data collection and how you can benefit from it.

Four Types of Consumer Data

Most modern businesses need to gather a large amount of data on current and potential customers. Customer data is a driving factor behind making personalized campaigns, conducting predictive and sentiment analysis, and accessing a wider customer pool.

As an example, Facebook acquired WhatsApp for an astounding $19 billion, mainly due to WhatsApp’s data records. Purchasing a different messaging app allows Facebook to access the information of users they didn’t have before and leverage it to further increase their market share and produce new content accordingly.

We can divide consumer data into four main categories: personal data, engagement data, behavioral data, and attitudinal data.

1. Personal Data

Personal data relates to basic private information about the users, consisting of their names, genders, birthdays, and security information. However, personal data goes beyond the material world, collecting data about users’ IP addresses, browser choice and cookies, and even device information and analytics.

2. Engagement Data

Simply put, engagement data relates to how users respond to external messages, such as emails or marketing campaigns. It’s vital in predicting how a user base will react to a product or performing A/B testing.

3. Behavioral Data

Data about a user’s experience in shopping and other transactions are bundled together under behavioral data. These include purchase history, brand allegiance, repeat transactions, and browsing patterns.

4. Attitudinal Data

Attitudinal data relates to the likelihood of users purchasing a specific product, including buying criteria, customer satisfaction, reviews, and more.

Current Data Collection Trends

While there are several ways to obtain data from customers, there are three main methods companies utilize: direct, indirect, and location-based. Data can be collected both from current and future customers.

1. Direct Data Collection

Asking users to share data is the simplest way to obtain more information on them. Businesses accomplish this in a variety of ways, usually through forms or surveys. Customers are expected to be truthful in their responses.

2. Indirect Collection

While asking users to provide their data can be beneficial, more information can be gleaned by tracking their online behavior. Indirect data collection includes transaction and browsing tracking, and even social account overviews. Most of these activities are relatively easy to perform, and most customers can be monitored in some way indirectly.

3. Location-Based Tracking

Partway between direct and indirect methods, location-based IP tracking can provide valuable information on the audience’s broader interests and common likes and dislikes. Marketers can use location information to personalize landing pages and produce more effective campaigns that better cater to existing or potential customers.

Sources of Data

Now that we’ve provided a brief overview of how data can be collected, let’s look at all the sources to compile this vault of information from:


When a customer visits a website, they’ll inadvertently leave some of their personal details on that website. Subscription or survey forms are a source of direct data, while cookies and browser information will provide indirect and location data for companies to leverage for their success. Many companies need an optimized website to collect meaningful information more efficiently.

Social Media

Since most internet users have some social media accounts, collecting data comes naturally due to global social media presence. As users are required to leave details to make these accounts and post more of their information as they continue to use the platform, data collection is an efficient, and more importantly, ongoing process. Marketers can develop strategies that evolve with their consumers.

IP Addresses

When users visit a webpage, they leave a trace of their IP, which points to their location. Tracking a user’s movement and location can be used to make effective localized campaigns and offers.

Transaction Data

When users purchase items online, they’ll leave transactional and engagement data. With e-commerce gaining popularity over traditional purchase methods, it’s become easier than ever before to collect swaths of transaction information and engagement about a product.

Third-Party Companies

Although some users frown upon it, selling information has become an industry staple in recent years. Companies with large databases can sell data to the highest bidder. Data has become a commodity in every sense of the word since marketplaces popped up to trade solely in data.

Data Usage by Companies

Since companies spend a lot of their time and resources collecting all this data, it must provide a high return-of-investment to be profitable. To that end, data can be used in several ways.

Improving User Experience (UX)

Analyzing customer feedback through attitudinal and behavioral data allows companies to enhance their user experience and interface to match the required metrics. Removing undesirable outcomes and preventing refunds and recalls leads to better profits.

Refining the Marketing Strategy

Marketing campaigns can no longer afford to be general or vague. With so many competitors and widespread digitization of e-commerce and marketing, users will react only to what speaks to them in a more meaningful way.

Personalizing the marketing to cater to specific users can only be done if there’s sufficient data on their prior activities and transactions. Social media plays the most crucial role since users tend to leave the most direct responses and show their interests on these platforms.

Selling Product

Data is a means to an end, and all companies want to sell their product repeatedly. Generating a larger audience and more revenue can be accomplished when you have access to more data to leverage different marketing strategies and conduct more internal tests to gauge potential responses.

Trend Prediction

Data is not only an overview of the present state of marketing. AI and machine learning have begun to leverage current methods and data to predict customer trends and likes. Data-driven marketing has leaped with technological advancements, but needs a stable foundation of reliable information to start with.

Keeping Data Secure

However, there’s one crucial thing to keep in mind when talking about collecting data. Users will only leave their information with companies deemed trustworthy. Once that trust has been broken, they rarely return and provide more information for you to use. Don’t overstep the boundaries or collect more data than you can manage. Losing data will ultimately mean losing more customers.

Collecting Data Independently

You need the information to feed machine-learning algorithms and learn more about your customers’ user experience to better your marketing efforts. It can be tempting to internally collect all the data and rely on currently available sources to satisfy your current data needs.

However, data collection can be a monumental undertaking for companies that might not have the resources to handle such an investment. Collecting data itself is simple, but cleaning and refining it into useful information can be challenging if you’re not an expert.

On the other hand, collecting this data can be vital in securing a higher return-of-investment on future products and efforts, so it can definitely be worth your while.


  • When you collect data, you know who the userbase is and can trust the information you’re receiving.
  • Collecting data ensures you’re the first to use this subset and get a head start developing a strategy unique to it.
  • If you handle the entire data collection process, you can always have up-to-date data available to process into valuable input.


  • Data collection is a time-consuming process that requires expertise to accomplish efficiently and provide meaningful information as the end product.
  • Data analysts and scientists are some of the most expensive experts on the market and may not be available in your current budget.

Purchasing Large Databases

Buying a database can be an attractive alternative. Since you don’t need to optimize your website and platform and collect data, you can spend more resources on extrapolating useful information from already-processed databases.

Large databases are also efficient aggregates that take into account location and requirements. Companies that need many leads as soon as possible might be better off purchasing a database that has all the details they require. Setting up a data collection interface for potential customers will take time that can be better used elsewhere.


  • Purchasing an extensive database gives you immediate access to pre-processed data and ample data points to work off.
  • Purchasing data saves time and money, as you don’t need specialized platforms to collect it.
  • Obtaining a database on foreign locations can provide you with more input and growth opportunities into other markets.


  • Data regulations can interfere with what kind of data you can purchase and hinder your progress.
  • Large databases are not necessarily filled with high-quality information.
  • Purchasing data can be more expensive than collecting it if you don’t have the infrastructure to support it.

Which Option to Choose?

If you have time, money, and expertise on hand, data collection is a surefire way to secure more growth opportunities and better marketing strategies. Personalizing the user experience will lead to more sales and a higher return-of-investment. You should also be sure to abide by the law and thus keep your userbase’s trust.

Companies that need a lot of data to start with might be better off purchasing a database for their marketing efforts. While trusted sources are more challenging to find, they can be more plentiful than trained data analysts.

In the modern world, both methods are utilized by companies with great success. Ultimately, your company’s needs and abilities will determine which option is the best for you.

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