According to a survey recently published by alt data advisor and sourcing firm Neudata, more than half of all data consumers surveyed say they plan to spend more on alternative data in 2024 than they did in 2023, whereas two-thirds of data vendors expect to have a stronger performance in the coming twelve months when compared to the past twelve-month period.
Neudata’s Recent Alt Data Survey – Key Findings
According to Neudata, the results of their recently published 2024 Industry Trends Survey reveal a varied, optimistic alt data industry with wide bands of participants across different spending categories and investment strategies. Both data buyers and data providers are predicting increased interest in alternative data, with buyers expected to spend more, and providers expecting to earn more. This survey asked respondents about broad industry themes, such as spending, popular data categories and barriers to success. Click on the link below to request the full Neudata survey results.
https://info.neudata.co/the-future-of-alternative-data-industry-report
In total, 157 alternative data industry professionals — 97 data providers and 60 buyers — participated in Neudata’s recently published survey, conducted between June and August 2024. A few of the key findings of this year’s survey include:
Alt Data Spending / Growth Is Robust: According to Neudata’s survey, very few survey participants reported decreased budgets from 2022 to 2023, with most (86.9%) reporting that alt data spending remained about the same in 2023 or it increased.
Of those survey participants that chose to respond to the following question, there was a fairly even split between alt data budgets of <$250k, <$250k-$1 mln, and $1 mln-$5 mln per year, with the $250k-$1 mln bucket accounting for just a bit more of the reported market at nearly 28%. Only a small minority of around 5% of buyers reported spending $5 mln-$10 mln dollars on alternative data last year. No buyers reported spending more than that.
On average, data buyers reported subscribing to 20 datasets annually. This figure varied widely, with answers ranging from 1 to over 100 datasets. This variation was present even among stated strategy types, with a wide range of subscription numbers reported within each strategy category. When accounting for annual spend, clearer data patterns appear. Funds belonging to the higher bracket budgets reported in the survey, spending $5m-10m a year, subscribed to an average of 43 datasets annually while funds spending less than $250k per year only subscribed to an average of 8 datasets.
Alt Data Spending Should Increase in 2024: Most funds seemed optimistic about their alternative data budget for 2024, with a majority, about 55%, saying that they expect their spending on alt data will increase, whereas 39% expect their spending to remain unchanged in 2024. This result seems to indicate that alternative data continues to provide significant value to clients, despite the various issues discussed later in the survey.
As is often the case with suppliers, alternative data vendors are even more optimistic about the future than their clients. As you can see from the chart below, two-thirds of all data vendors surveyed expect their coming twelve months to be even better than the past twelve months.
Price and Data Quality are Main Stumbling Blocks for Buy-Side: 63% of data buyers said that the high price of alt datasets is the main barrier for onboarding and trialling a new dataset. Other common barriers included a lack of sufficient trial time and compliance concerns.
When using the onboarded dataset, buyers’ top challenge was differences in data quality than when initially trialled or not finding a signal, with almost 47% identifying this as a current challenge. Just behind that, at 43%, was a lack of internal resources to manage the data effectively. The least common challenge reported was navigating regulatory and compliance concerns, with only 22% of respondents identifying this as a current challenge.
The above article presented a few of the key findings from Neudata’s recently published report. Click on the link below to request a copy of the complete results of Neudata’s 2024 Alt Data Industry Trends report.
https://info.neudata.co/the-future-of-alternative-data-industry-report
Our Take
The results from Neudata’s 2024 Industry Trends Survey were interesting to this industry watcher, not because they revealed anything particularly new or startling, but because they confirmed that the alternative data industry is continuing to grow at a robust pace, and that buy-side clients are continuing to derive considerable value from many of these sources.
Clearly the high cost of many datasets, and questionable data quality remain significant issues for data users. In fact, we suspect that many of the more successful data vendors will work diligently to improve data quality, produce ready-made signals from their data, and engage AI and data science teams to add other value to their data to make them easier to use.
While we expect data consumers to continue to negotiate aggressively on the price of alt datasets, we suspect that pricing for the industry as a whole will not decline significantly – at least as long as demand from the buy-side remains strong for these inputs. Of course, this could change in specific data verticals if the supply of data rises substantially, or once market demand starts to wane.
For more news about alternative data, investment research, and investment related FinTech, click here to sign up for our free ResearchWatch Weekly newsletter, or click here to subscribe to our proprietary ResearchWatch news and commentary service.