2023-01-12 | Article | Insights
A recent study found that 71% of B2C customers and 86% of B2B customers expect customer service to be well-informed about their needs. Meanwhile, customers are becoming increasingly concerned about how their personal data is used. As a result of these concerns, many regulatory changes have already been adopted. The world's population is expected to have its personal information covered by modern privacy regulations by 2025. In light of these results, it can be assumed that providing relevant service while balancing privacy and personalized experiences will become more challenging going forward.¹
Data Clean Rooms have become an important part of the conversation about balancing personalization with privacy in the marketing and advertising industry, especially when it comes to meeting the requirements of the last two principles in the above list.
Medical technology coined the term "Clean Room". The idea of a clean room is to provide a closed space so the entry of environmental contaminants is prevented as these may compromise the work being performed in the clean room.³ A Data Clean Room is a data-centered equivalent to the physical clean rooms in medical technology. In contrast to physical contamination, a Data Clean Room is focused on keeping user data isolated from advertising partners when interacting with them. It (usually) is a cloud-based infrastructure intended to match user-level data with other parties by not violating privacy rules. As in its origin, it describes a safe space, but in the advertising industry, it refers to the availability of aggregated and anonymized personally identifiable information (PII) that can be cross-referenced for measurement, analytics, and targeting use cases. Safe space in the definition refers to the process of establishing a privacy-first closed environment with the strict requirement to keep all data anonymized. All individual 1st party user information is hashed and grouped by clusters whereas no cluster can be limited to e.g. less than 50 users which makes the data aggregated and anonymized. Being able to cross-reference suggests the level of similarity and the relevance of two distinct clusters (audiences).
Data Clean Rooms make use of shared technology infrastructures where partners can review and update their large data sets for overlap. The approach used may be single, bi-directional, or built to establish even many-to-many relationships - either way, the own, original data sets of the involved parties always remain separated from those of the other party/ parties.
A neutral partner in the sense of a host is an intermediate aimed to manage the Data Clean Room.
With these benefits in mind, Data Clean Rooms are a great solution to the issue of third-party cookies being lost.
Depending on the industry, there are a variety of use cases. Consumer goods and retailers for example have historically been suffering under “data purity” due to the lack of their own transactional data. The few proxies that could be established were then deprecated with the loss of 3rd-party cookies in recent years. A Data Clean Room can provide these companies with an environment to match their 1st-party audience data and their advertising efforts with the transactional audience of their retail partners. They can also measure campaign performance and optimize their targeting whereas retailers can prove their impact on campaign goals - especially with a loyalty program in place.
Media publishers and advertisers are another example with their own use cases for Data Clean Rooms. Historically, publishers used to rely on 3rd-parties to monetize their audiences with advertisers and create a revenue stream out of their audience data. The continued deprecation of 3rd-party cookies forced publishers to prove their added value to advertisers. With the help of a Data Clean Room, publishers can create microdata co-operations for advertisers to take advantage of richer, higher-quality audiences without sacrificing much scale. Therefore, with Data Clean Rooms media publishers and advertisers can be given a viable alternative to measuring the impact of advertising in a world where attribution becomes increasingly difficult.
Today, the martech and ad tech industry are in a state of heavily investing in durable alternatives to 3rd-party cookies - ones that are privacy-compliant while adding insights to businesses’ own data, enabling personalized advertising, and streamlining audience data into the right channels. Data Clean Rooms are one such solution. While Data Clean Rooms certainly are in an early stage in the industry today, current developments suggest their increasing importance and the expected offering expanding and complementing individual partnerships.
Resources:
¹ The Future of Customer Service, Gartner Inc., 2022
² The Future of Customer Service, Gartner Inc., 2022
³ What are Cleanrooms?, news-medical.net/life-sciences, 2019