Alternative Data: Why You Need It and How to Manage It Effectively

All of us, day in and day out, are walking, talking data points. Each detail of our habits reveals our processes and preferences — from what we buy at the grocery store to how much of it, what roads we take to get there, how long we’re out, how much money we spend, and so much more. ‌

As consumers, we don’t tend to think much about all of the minuscule details that power our days. Financial companies, on the other hand, are becoming ever more dependent on such details. Technology continues to evolve and improve our understanding of markets, and businesses are wandering deep into alternative data for actionable insights that can yield competitive advantages. Web scraping using proxies is helping them gather as much of it as they can. ‌

What Is Alternative Data?

alternative financial data

Traditionally, businesses have relied on a standard set of data for making forecasts and decisions — from financial statements and industry filings to sales records. Alternative data, on the other hand, is exactly what it sounds like — an alternative to those traditional methods of understanding the competitive landscape.  ‌

Alternative data brings multiple off-the-beaten-path sources together to create a richer, deeper understanding of company performance. For players in the financial sector using alternative data, insights gathered about how companies and competitors are behaving could potentially include: ‌‌

  • News
  • ‌Product pricing fluctuations
  • ‌Public relations efforts
  • ‌Social media activity
  • ‌Site performance metrics
  • ‌Survey metrics
  • ‌Point-of-sale purchasing patterns
  • ‌Debit and credit card transaction details
  • ‌Receipts sent to customers
  • ‌Information about app rewards and usage
  • ‌Online browsing patterns
  • ‌Product reviews
  • ‌Shipping data, including tracking information
  • ‌Satellite/geo-location signals

Alternative data sets fall under an umbrella that you may hear referred to as “big data.” Due to the number of sources involved and the depth of available information, an alternative data set can’t be managed in an Excel spreadsheet. These are large, layered files and are often unstructured. ‌

The complexity of an alternative data set requires that the person or team analyzing it has expertise in using big data sets. Often, it’s a cross-functional job — one team (such as engineering or operations) ingests the data, another (such as compliance) ensures its quality, and an expert in deep, unstructured data sets (such as a data scientist) draws the conclusions. Extracting the data might involve the use of an SQL database. ‌

Picture It: Alternative Data in Motion

alternative industry data

There are over four billion pages on the internet today, each one a possible source of information for savvy investors and financial firms. When a company posts a job opening on a site, it’s a data point that could be an indicator of growth. If user ratings for a company’s listing on Glassdoor start to plummet, that company may be in trouble. Even social media buzz can offer valuable insight into how well a company is doing.

As technology improves, it’s becoming easier for investors to understand the companies they’re looking at investing in as well as those companies’ customers. In an ideal world, that translates into smarter decisions, improved services, and a better return on investment.

Who Stands to Benefit from Using Alternative Data?

collect alt data

Companies that can make the most of alternative data collection are those that need a holistic look at consumer behavior and business trends. In the financial services and housing sectors, for example, product and service providers need deep insight. ‌

Would you feel comfortable putting your money into an index fund that had been created by a financial services professional with little to no insight about which stocks and bonds were likely to perform well? Would you be willing to take out a mortgage from a bank that was unfamiliar with the local housing market, didn’t understand current housing trends, or was unaware of what customers look for in a lender?‌

As a consumer, you’d likely feel better knowing that the person selling you the products and services that power your financial life is as well-informed as possible. In turn, companies that feel comfortable relying on and using such data stand to improve their offerings and their performance in the industry. ‌

Other sectors that benefit from this complex understanding of trends include economics, politics, and retail. ‌

Web Scraping: A Tried and True Method of Data Collection

web scraping for alternative data

Scraping the web is a simple and fuss-free way to collect alternative data. Companies can buy or license data as well, but web scraping offers a fast, efficient, and reliable way to collect a vast quantity of valuable information. Without this method, companies are left paying for data or having to traverse the internet, collecting data one piece at a time — something very few businesses have the time or resources to do. ‌

Web scraping isn’t just for businesses — technically, it’s available to everyone. Some savvy individuals use web scraping tools like bots to scan the internet for favorable pricing on items they’d like to buy. For example, a clothing reseller specializing in a competitive category like luxury handbags or shoes might set up a bot to scan for the best pricing on sought-after items, allowing for maximum resale value. Financial firms can use web scraping to more easily analyze companies’ revenue trends and reputations with consumers. ‌

Proxies: Well-Informed Intermediaries

alternative data scraping tools

When most people need to destress by taking a nice vacation, they ‌don’t simply head to the airport. They tell a travel agency or booking website where they want to go, and it helps them find plane tickets, reserve hotel rooms, and maybe get some tips on things to do in the area. The travel agent, acting as an intermediary, creates a bridge between their request and the end result, giving them the information they need to help them choose when to leave, where they’ll stay, and what they’ll do.

The same process applies to the activities of hedge funds and investors. For each of their online starting points, such as a search for a specific piece of information (“Which sectors experienced the most growth last quarter?”), there is an intermediary taking in that request and coordinating the result (the data needed to find the answer). That intermediary is called a proxy server

Proxy Servers: Functions and Flavors

Proxies, these intermediaries of the internet, know your story. They know where you started (craving a getaway) and where you’re trying to go (a beach chair on a tropical island). ‌

In technical terms, proxy servers know your online starting point, or Internet Protocol (IP). They give you a virtual address of sorts, like a marker. No matter what your goal is from that address — whether you seek privacy or aim to drive eyeballs to your site, there’s a proxy server for that.  

Proxies come in several forms, including but not limited to:  ‌‌

  • Static: A single IP (Internet Protocol) address gets assigned to you, and that address provides an “anchor” for you online.
  • Rotating: Your computer is linked to a new IP address every time you send a request online. Among other things, this approach is ideal for driving a maximum number of new IP addresses to a website. 
  • Dedicated: Also called private proxies, these are only used by one person. This option allows for maximum speed since you’re not sharing bandwidth with anyone, and it lets you set exclusive IP addresses. That comes with a stronger chance of total anonymity, which is part of the appeal.
  • Semi-dedicated: Great for when you need to protect identifying information or bypass geographical restrictions but at a lower cost, which would allow you to use multiple proxies according to your needs.
  • Residential: This is an IP address assigned to you by your internet service provider. It’s connected to your physical location. These offer a good level of security and reliability. Rotating versions of residential proxies are ideal for web scraping purposes.  

Alternative Data: Your Untapped Goldmine

alternative investment data

If you’re looking for a competitive edge, alternative data is a worthwhile investment. There’s a lot to be learned from companies across a multitude of industries, and going deep with data is one of the most powerful business practices for learning at your disposal. ‌

How Blazing SEO Can Help

If you’re a professional looking to collect alternative data, Blazing SEO’s solutions can help. Lean on us for reliable proxy solutions that support a range of needs, from privacy to traffic. Put our services to use for web scraping and collect alternative data in bulk quickly, efficiently, and securely — setting the stage for insights that will make your business more competitive. 

Blazing SEO has a range of proxies that can meet any specification for any task. Our residential proxies are ethically sourced and designed to be top notch accompaniment for big web scraping projects. Our data center proxies offer a gigantic range of locations across the globe, no bandwidth limits, and free replacements so your web scraping projects are always up and running smoothly.

We are the reliable partner you need to build the bridge that will open your business up to significantly more market opportunity. Visit us to learn more about how we can help you.

Final Thoughts

web scraping alternative data

Big alternative data is available for big data insights–and it doesn’t have to be challenging to collect. Web scraping with reliable proxies is an investment that’ll make your efforts pay off. Financial institutions maintain giant pools of usable data that can be harnessed for smart moves, so you should be smart about how you can collect it with efficient processes. Consider Blazing SEO proxies a business partner that can help you accomplish your financial data projects.

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