Alternative data, including consumer transaction data, geolocation data, app usage, and web traffic has seen an increase in investor demand over the last few years as firms seek to glean unique insights and generate alpha in new ways. Alternative data helps paint a higher resolution picture of the impact major events may have on a company’s sales, while tracking trends in customer engagement in near-real-time.  

According to a report from research firm Coalition Greenwich, 44 percent of investment firms already use alt data to support portfolio construction or trading, and a further 19 percent of respondents plan to start using it over the next 12 months. Grand View Research estimates that hedge funds spent billions of dollars on this type of data in 2022. 

Currently, the alternative data market depends on high-cost data that only the biggest, most technical players are able to employ. Those players have dedicated data science teams to expertly clean the data for investment use cases. 

Lowering the barrier to entry through transparency 

Bloomberg’s goal is to lower those barriers to entry by creating transparency and democratizing alternative data to make it accessible alongside more traditional financial datasets. Better data lets companies make more agile decisions in the near term and better-informed plans for the long term. 

With that objective in mind, this year, Bloomberg launched ALTD <GO>, an alternative data tool integrated into the Bloomberg Terminal that provides an unprecedented look into the operating performance of companies on a mere seven-day lag. This new feature allows all Bloomberg Terminal clients to see alternative data analytics alongside traditional market data, broker research, estimates, and news for the first time, providing Bloomberg clients with a more comprehensive understanding of how companies are performing across multiple sources of information. 

Alternative data is all about bringing in richer data-driven insights that help analysts and portfolio managers at our clients answer questions about companies and about what’s going on in the world with more speed and depth than ever before. Our strategy is about getting the highest-value datasets and bringing them directly to the Terminal alongside existing research workflows. Acquiring Bloomberg Second Measure in late 2020 was the beginning of this strategy – that acquisition gave us access to consumer transaction data, which is the most in-demand type of alternative data among our clients. 

When Bloomberg acquired Second Measure, it was a web application that deployed analytics based on billions of credit card and debit card transactions to help subscribers answer questions about consumer trends in near-real-time. By merging Second Measure’s team of data scientists with Bloomberg veterans, Second Measure’s startup mentality found extensive institutional support within Bloomberg. The team became something of a startup-within-a-business, moving quickly to bring ALTD <GO> to life. 

ALTD <GO> also includes data from location analytics leader, Placer.ai, which analyzes foot traffic data. Placer.ai utilizes a privacy by design approach to incorporate data from a panel of tens of millions of mobile devices, applying machine learning and AI algorithms to make estimations on visits to retail locations across the U.S. Bloomberg plans to strategically add additional alternative data sources based on customer demand. 

The growth of ALTD <GO> and the future of alternative data 

ALTD <GO> currently provides consumer transaction data analytics on more than over 360 public tickers, primarily those with meaningful U.S. direct-to-consumer sales, and the function is already seeing real-world results. There have been strong levels of adoption from clients who traditionally have not had access to alternative data, like long-only asset managers and sell-side research firms. Adoption has also increased with customers in regions outside of the U.S.  

The number of companies tracked in ALTD <GO> will grow rapidly in the coming months, and the team has already built infrastructure to significantly expand the tool’s functionality — a crucial part of the initial design process, given the number and types of different alternative data sources Bloomberg plans to make available on the Terminal. For example, clients can now use Bloomberg Query Language (BQL) to retrieve alternative datasets found in ALTD <GO>, such as Bloomberg Second Measure and Placer.ai, for further analysis in their own models, in Microsoft Excel spreadsheets, or in BQuant. 

And this is just the beginning of a long roadmap to bring even more transparency to this space. Over the coming months, Bloomberg will also provide alternative data via different distribution mechanisms and delivery options. For example, alternative data will soon be available as part of Bloomberg’s Data License service.  

By launching this product, we are empowering our clients with the ability to gain faster and deeper insights into the performance of companies and economies. The future of investment research will be driven by data and Bloomberg will continue to invest in innovative products and technologies that enable our clients to make better data-driven investment decisions.