CTOS are Demystifying Data Clean Rooms For A Cookieless Future!

By: Jonathan Brown, Marketing Technology Consultant, CvE.

Introduction

The cookie-less sunset is approaching sooner rather than later. As a business, you need to be ready for a world where you can get the most out of your 1^st party data.

2023 was supposed to be the year of the clean room, why? The death of cookies was presumed to enable many companies to pivot into this space. However, digital as we know it was given a lifeline by Google and they subsequently announced that by summer 2024 cookies have a high chance of being removed altogether. This presents an opportunity for clean rooms to take centre stage. If you’re a CTO thinking about how to get the most out of your data in a safe compliant way, clean rooms must be a talking point! Allow me to demystify clean rooms, to clarify the functions and use cases that can take your business to the next level.

What is a data clean room?

Data clean rooms allow businesses to easily collaborate on data in a secure environment, where multiple parties can safely combine sensitive data without compromising privacy or security. Why would companies do this? The main drivers are:

-> Control: Data Privacy, Compliance & Security.
-> Partnerships & Transparency: First Party Data Collaboration & Audience Building.
-> New Data: Insights and Analytics

Main functions of Data Clean Rooms

1. Data Privacy, Compliance & Security: Data clean rooms are built with data compliance in mind. Most clean room products will align with regulatory data management frameworks GDPR, HIPAA or CCPA to meet data handling legal requirements. Through the utilization of these, enterprises can alleviate the hazards linked to data security. These regulated environments, coupled with privacy-enhancing technologies, serve as safeguards against unauthorized access, data breaches, and cyber threats. The implementation of stringent security protocols not only protects the data but also diminishes the likelihood of reputational harm.

• First-Party Data Collaboration & Audience Building: Clean room environments ensure the security of sensitive data while upholding confidentiality and integrity, allowing organizations to confidently exchange information with trusted partners. This is one of the main reasons that clean rooms are becoming more and more enticing for businesses. If you have well-managed 1^st party data, the opportunity to create first-party data partnerships with brands is worth its weight in gold! Data insights, new datasets and segments bring new intelligence to marketing and advertising divisions which encourage informed decision making.

• Insights and Analytics: An essential characteristic of data clean rooms is their capability to examine aggregated data, providing a deeper understanding of user behavior and activity. The aggregate data makes spotting trends across user groups, demographics, and industries easier to find. Also, aggregated user data presents the opportunity to build customized audiences for new targeting opportunities.

Now we know the key functions of Data Clean rooms, what could possible use cases look like? I’ve leaned into the following areas as key takeaways:

1. Audience insights for Advertising
2. Profile Enrichment
3. Ad Measurement, attribution and targeting
4. Campaign Budget optimization
5. New Audience Discovery

1. Audience insights for advertising – The current data that you have may be capped to basic demographic data. Depending on who you partner with your business can benefit from Psychographic, behavioural, and even attitudinal data which can massively help you understand your current customer database from a different perspective.

2. Profile Enrichment – Profile enrichment will open the door to NBA (next best action) advertising, personalized product recommendations and tailored marketing campaigns to specific customer segments.

3. Ad Measurement, attribution and targeting – From an ad measurement perspective companies will be able to track first and last click attribution for new profiles that have been created via the clean room partnership.

4. Campaign Budget optimization – CBO in clean rooms ensures that user data remains protected and anonymized throughout the process. This complies with privacy regulations like GDPR and CCPA, allowing advertisers to operate ethically while maintaining effective campaign optimization.

5. New Audience discovery – This is the primary objective for most companies that have introduced Clean Rooms to their businesses. Enriching data is an important factor but sometimes an oversight for data teams. Having the ability to build and/or discover new segments/categories of customers can drive new sales and targeting opportunities.

Are CDPs and Clean Rooms the same?

A Data Clean Room represents an advancement in the functionalities of a Customer Data Platform (CDP) and elevates the standards of data management privacy rules. Distinctions or differences between CDP and Data Clean Room operations are the following:

1. While CDP concentrates on the ingestion, processing, and activation of first-party user-level data and IDs, the focus of a Data Clean Room is solely on anonymized first-party data.
   
   
2. CDP carries a basic security level, risking data leakage, whereas a Data Clean Room establishes a highly secure environment. Here, data is anonymized based on mutual agreement between the involved parties.
   
   
3. In contrast to CDP’s limitation in analyzing data from other companies, a Data Clean Room offers anonymized audience insights derived from aggregated data sourced from both brands and walled garden first-party data.
   
   

You might be interested in reading: Does my organisation need a CDP – Customer Data Platform?

They are similar but not the same and both serve different purposes. Depending on your circumstance and/or business use case, CDPs can be of great benefit to your business.

I conclude the cookie-less sunset is approaching sooner rather than later if Google sticks to their guns. This means that you as a business need to be ready for a world where you can get the most out of your 1^st party data!

Clean rooms must be a consideration if you want to remain competitive in this ever-changing world of data and advertising. Controlled environments and partnerships will provide a great opportunity for both publishers and clients. However, it’s essential that the foundations are laid for this to take place. Data anonymization, access control and encryption are key functions to ensure that clean rooms provide a balance of data use and privacy across both parties.

On the other hand, the industry does not seem completely ready for clean rooms as we still have additional details to consider. Standardization, integration, compliance, additional costs to an ever-changing landscape within your Adtech/Martech departments, lack of data interoperability across companies and data outputs which will need analysis from new or existing teams!
 
At this point, I feel the cookie-less sunset is a new opportunity for businesses to re-assess how to get the best out of their 1^st party data. The pros and cons are quite clear but if implemented correctly with the partner it’s clear the rewards can be great.
Do you feel that a data clean room would be a suitable investment for your business? Are you currently having conversations about ways to monetize the data that you have?

Download CvE’s CDP Playbook to learn more!

Jonathan Brown. Marketing Technology Consultant, CvE