During your search, you may encounter free demographic data. If data is data, then free is better, right? Not necessarily! Census data and commercial data do vary, at times so significantly that you may come to the wrong conclusion by using the latter. Lets take a look at each so that you can make the best decision when purchasing data or reports.

The best place to start is with the nature of the Census itself. Mandated by law, its original purpose was to count the population of the United States so that each state would have a proportional number of representatives in the House of Representatives. Over time, it has evolved into a more comprehensive data collection effort covering race, income, housing characteristics, and more. 80% of the population is asked basic questions (the short form") and the other 20% is asked for more detailed information (the long form"). Recently, the Census Bureau has made significant changes to its methodology in order to provide more updated estimates between the decennial Censuses.

When most people refer to Census data, especially concerning population, they mean one of the decennial Census databases. When Census data was first made available to businesses in the early 70s, it wasnt in a readily usable form. With the advent of computers, several enterprising companies jumpstarted the data business by repacking Census data and reselling it in a more convenient format.

Over time, these companies developed models to update data for the current year and created projections for five to ten years forward, giving birth to the first commercial demographic databases. Businesses and even government agencies were willing to pay a premium for this data, because it was available in an easy-to-use format and it could be used for planning purposes. Imagine the difficulty of designing city infrastructure without knowing demographic and economic trends! Demographic data and the tools to manipulate it quickly became essential for planning new school systems, business locations, and other projects.

The fundamental difference between Census data and commercial data is that while the Census data is free, it does not reflect current conditions in the market. In fact, the further you are from a decennial baseline, the less accurate that data becomes. If you're looking for large area estimates -- such as the total population for a state -- then the Census data will serve your needs. However, if you require low-level estimates and projections -- for everyone within the ten ZIP codes you serve, for example -- then purchasing the updated data may be in your best interest.

Why is this so? The underlying reason is that large area estimates do not vary significantly over small time spans; in terms of percentages, the population of large cities changes little year-to-year. However, population in smaller areas has the potential to change radically over the span of a few years. 500 new residents is a drop in the bucket for New York City, but may be explosive growth for a particular avenue in that city.

All in all, your choice depends upon what your business needs to best serve its customers. Census data or updated commercial data can both be useful tools; keep in mind the nature of both before making a purchasing decision.