Expected Increase in Alternative Data Budgets for 2025
A recent report from Neudata highlights rapid changes in the alternative data landscape, with notable increases anticipated in budgets for data purchases in 2025. This analysis draws from current trends within the alternative data sector, especially regarding the use of artificial intelligence, spending habits, and new datasets that organizations are increasingly relying on as we look ahead.
Key Trends Influencing the Data Landscape in 2025
According to Neudata’s 2024 trends report on alternative data, an impressive 95% of data buyers plan to either maintain or boost their budgets as we enter 2025. This optimism is further supported by the fact that over 70% of data providers saw a significant rise in subscriptions throughout 2024, creating a positive atmosphere in the industry.
Diversity in Data Portfolios
In today’s economically driven world, data buyers are purchasing an average of 20 different datasets annually, which translates to about $1.6 million spent each year on data. Notably, there’s a marked difference between large and small companies: larger firms subscribe to roughly 43 datasets, while their smaller counterparts tend to use only about eight. This significant gap emphasizes the trend of data portfolio expansion among industry leaders.
Pricing Challenges
Although the outlook on data trends is favorable, a significant challenge persists when it comes to pricing. Around 62% of data buyers point to high costs as the main hurdle to adopting new data sources. However, once they do commit, buyer loyalty shines through, with over 90% continuing their subscriptions, indicating that the perceived value of alternative data justifies the initial investment.
Shifting Demands for Data
Looking forward, the demand for alternative data is expected to broaden further. Buyers are likely to concentrate on B2B data sources, investigate datasets from emerging markets, and explore transactional data that was previously overlooked. This eagerness for novel insights suggests a bright future for the alternative data market.
The Impact of Artificial Intelligence
Artificial intelligence has evolved from a buzzword to a crucial element in the alternative data sector. Almost half of all data vendors now provide datasets that are tailored to enhance and streamline AI functionalities. Meanwhile, only 15.5% of buyer organizations are not using AI, showing that integrating AI into data strategies is becoming increasingly standard and necessary.
Industry Insights
Rado Lipuš, CEO and founder of Neudata, underscores the growing awareness of the value of alternative data. He observes, "It’s exciting to see the rising interest across various sectors, especially as private equity and venture capital firms explore alternative data applications previously linked mainly to hedge funds. The enthusiasm from both data buyers and sellers signals a promising growth path, and Neudata is dedicated to meeting their evolving needs as we move into 2025."
About the Survey and Neudata
Neudata's survey involved insights from 157 participants, including 60 data buyers and 97 data providers, with data collected in mid-2024. Among the respondents, many were engaged in quantitative investing, complemented by other strategies like discretionary investment, credit, and macro funds, along with private equity. The collective responses suggest an annual data budget of about $100 million, while data providers estimate their annual revenue at approximately $660 million.
Neudata is at the forefront of the market, providing essential insights that empower both buyers and sellers of market and alternative data. By combining deep human insights with advanced technology, Neudata offers valuable resources that help clients navigate the ever-changing data landscape efficiently.
Frequently Asked Questions
What is the main finding of Neudata's 2024 report?
The report shows that budgets for alternative data are expected to rise significantly in 2025, fueled by increasing demand and the integration of AI.
How do data budgets compare between large and small firms?
Large firms typically subscribe to around 43 datasets each year, while smaller firms generally acquire approximately 8, highlighting a significant difference in data expenditure.
What challenges do data buyers face?
The primary challenge identified is the high cost associated with new data, which 62% of buyers listed as a key barrier to adoption.
What is the significance of artificial intelligence in alternative data?
AI plays a crucial role in the alternative data ecosystem, with nearly half of vendors providing datasets that support AI applications, indicating its standard use in data strategies.
What trends are anticipated in the alternative data market?
The market is expected to see a growing demand for B2B data, insights from emerging markets, and previously overlooked transactional datasets, reflecting heightened interest in innovative data sources.
