The Data Clean Room: what should advertisers think about the hype?

Data clean rooms have burst onto the scene and quickly created a new industry focused on data protection and collaboration. What should advertisers think about when creating a data clean room?

There are two main concerns for brands in the digital advertising sector  – becoming the target of a customer data breach, and using the best available data to secure new business growth. 

Enter the data clean room, a safe house for advertisers to store and analyze multiple sources of data, including crucial first party data and sensitive customer information, and a potentially effective means to match data, and generate more effective digital advertising campaigns. 

It appears on the surface to be a nirvana for brands wanting to avoid court fines and public embarrassment, as well as cleansing and activating data, managing digital fragmentation, and hitting their customer acquisition targets. 

A data clean room, implemented with expertise, aims to deliver a single, or integrated view of customers that will be harder to achieve once Google deprecates third party cookies, and government’s around the world tighten rules around data processing and collection. 

For most brands, consolidating disparate sets of data is challenging, as customer information is fragmented and lives across multiple repositories. A recent Forrester Consulting study found that most companies (85%) have more than ten technologies within their advertising technology stack, yet more than 50% believe they are lacking the capability or processes to manage fragmented tools and problems that may arise from poor integration. However, the rewards are significant if a brand and their technolgy partner gets it right. 

As research firm Clearcode notes: “Data clean rooms offer a good balance between protecting user privacy and allowing companies to reach their target audience, measure the performance of their campaigns, and attribute impressions and clicks to conversions.” 

The Single Customer View

The big tech companies, and numerous smaller platform providers, have rushed into the data space to enable collaboration that aims to deliver true customer insight – and enable a single view of their target audiences. 

The holy grail of the single customer view is shaping the future model for data clean rooms, even before standardization guidelines come into effect in the marketing and advertising part of the industry. Collecting data responsibly, within specific country legislation, and activating that data effectively via digital platforms, and buy-side programmatic advertising exchanges is the key challenge. 

As the battle for securing the best customer data across a myriad of platforms accelerates, the data clean room will likely evolve at a rapid pace. If you look at the history of adtech and martech in the past decade, companies get absorbed and the big tech platforms acquire and absorb innovation.

The first-generation data management platforms such as Demdex and Krux who burst onto the scene no longer exist today. In its place comes the emergence of a myriad of next-generation data platforms for marketers, media owners, customers and the industry, focusing on core areas: customer data management, desktop and mobile browser, data connections, identity, analytics, and CTV. The obvious truth is that first-party data, merged with other customer data points, will remain at the center of integration and product development efforts. 

The key issue for any player in the chain is standardization and interoperability. The IAB US is aiming to release new standards guidelines by the end of the year. “With the loss of traditional identifiers, data clean rooms have emerged as a promising option for companies in search of alternate ways to enable advertising use cases for planning, audience activation and measurement,” said Shailley Singh, Executive Vice President, Product & Chief Operating Officer, IAB Tech Lab.“  The industry organization is collaborating with the industry to create technical standards guidance and more efficient interoperability, which will make it easier for advertisers to leverage emerging and exciting DCR technology.” 

Leading vendors such as InfoSum are also keen for clear industry standards, and mass adoption by brands. “As data clean rooms become more widely adopted for privacy-safe collaboration between organizations, there’s been a call from the industry to develop standards to maximize ease of use, speed of activation, and support of more complex applications,” said Devon DeBlasio, Global VP, Product Marketing, InfoSum.

“These standards will provide organizations currently using DCRs and those looking to invest with a clear understanding of how they work and what they provide, including common use cases, applied privacy technology, expected security and permissions controls, how data is prepared for ingestion, and the available outputs.”

Technology Innovation Will Be Crucial

The brand advertisers that deploy software expertly will stand out. Programmatic advertising platform Quantcast, recently released its APAC Advertising State of Play report, noting that technology integration would be crucial for agencies and advertisers in the year ahead. 

“In the coming months, we’re expecting to see advertisers continually asked to deliver more value, navigate more technological changes, and get on top of changing consumer behavior to maximize advertising outcomes. Additionally, continuing to prepare for a cookie-less future is critical – brands should adopt a test-and-lead approach today to help better reach and connect with their customers as the demise of third party identification is on the way.” 

The data clean room will be essential to making that happen, according to digital advertising analyst Tom Triscari, who said the demise of the cookie will revolutionize audience targeting and segmentation. He said that in the past audience segments were provided by hundreds of data providers, but a new data marketplace has emerged. 

This new marketplace is focused on the magic combination of quality first party data, other data sources, identifier data, and bidstream data. Those multiple sources of customer information will require a privacy fortress to navigate the new world of audience targeting. 

 “Everybody is figuring out how to be part of the next data play,” Triscari said on a recent podcast. “The data has moved to the edges in the form of the publisher and the advertiser first party data. In the middle you have the data clean room.” 

The challenge remains however with the quality of the data being created and ingested into a data clean room. 

Quality Data Remains a Key Challenge

As early DMP leader Lotame said a year ago, data that is ingested into a clean room needs to be of high quality: “Firstly, the data needs to be in a usable state. That means any parameters that are intended to be compared need to be established beforehand, along with any ID solutions that are going to be used to track individuals, customer journeys, or audience segments across data sets. The ‘clean’ in clean rooms refers to the scrubbing of personally identifiable information or any sensitive data that participants don’t want surfaced; they do not “clean” bad data. As always: garbage in, garbage out.”    

Finally, the data clean room promises to change the relationship between the advertiser and publisher, and claw back revenue from the Big Tech platforms, believes Juan Baron, Director of Business Development & Strategy of data clean room provider Decentriq. 

“We can now go to the level of an advertiser collaborating with a publisher, because the more you give in terms of raw data and insights, and granularity into the clean room, the better off you will be,” Baron told the AlikeAudience podcast recently. 

As regulatory efforts intensify, the digital advertising industry has no choice but to place consumer data protection at the center of its development efforts, and the data clean room could end up being the best long-term bet to achieve that.