The rise of the privacy-first web is forcing marketers to find new ways to engage and attract customers. With data privacy requirements increasing and third-party tracking cookies going away, brands can no longer rely on traditional digital marketing methods.
As companies face mounting restrictions and growing consumer concern about their personal data, they also need to deliver the personalized, relevant engagement that gets results.
In order to balance these competing demands, some brands are turning to a data clean room, a software environment designed for secure data sharing. DCRs are getting a lot of attention as marketers transition to a new era.
A data clean room is a secure digital environment where multiple parties can share user data and collaborate while maintaining strict privacy safeguards.
It allows different parties such as brands, media publishers, and advertisers to share first-party and other customer data in a protected, controlled way. They can compare data and analyze it for aggregated results, but can’t see raw data. Personally identifiable data is stripped out or hidden.
A data clean room allows brands to collaborate and gather deeper insight into customers from the collective data sets. Anonymized data is matched and enriched, providing companies with information they can use to launch marketing campaigns for targeted audiences and measure their performance.
These environments help companies comply with data privacy regulations such as GDPR and CCPA. They also help marketers overcome Apple’s heightened IOS privacy and the loss of third-party cookies. Google expects to complete its phase-out of third-party cookies in the second half of this year.
According to a Deloitte Digital survey of 500 global executives across 11 industries, one out of three use data clean rooms extensively. Nine out of ten expected to ramp up their use of the technology.
The end result is a richer set of data for DCR participants, which enables them to conduct deeper audience research to create targeted marketing and advertising. They can optimize their strategies, evaluate their marketing performance, and run more efficiently and effectively.
Throughout the DCR operation, contractual agreements enforce controls on how data is loaded, used, and applied, with data privacy the top priority.
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DCR technology is gaining traction as companies look for ways to modernize their marketing for a privacy-first digital world.
The IAB survey found that data privacy protection is the top use case for companies using DCR technology, especially when they’re sharing data with external parties.
Data clean room contain detailed advertising impression data, but don’t store personally identifiable information, enabling marketers to build custom audiences without the risk of privacy violations, according to a Gartner report.
While data clean rooms offer a lot of benefits, they also pose plenty of challenges. Namely, they aren’t turnkey; they require a big investment of money, time, and talent, which puts smaller companies without extensive resources at a disadvantage, according to the IAB report.
The survey found that nearly two-thirds of respondents spent at least $250,000 on their DCR initiatives in 2022; a quarter spent up to a half million. Nearly half of DCR users count six or more workers assigned to the technology and 30% have at least 11 dedicated to it.
Set-up is complex, involving governance settings, data onboarding procedures, and establishing connections with multiple partners. Companies reported that it took months to get the tech running with some saying it took a couple years, IAB said.
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As data clean room technology continues to evolve, more players are entering the space, from digital giants and media companies to identity and data platform providers and pure-play specialists. Many vendors in this space team up with partners to extend their solutions.
Just as there are many different types of DCRs, there are a lot of ways enterprises can use them to improve their marketing while protecting consumer privacy.
The way brands approach customer identity and marketing has changed dramatically as privacy rules take hold, making CDP and CIAM strategic priorities.
These technologies can be used together to build a comprehensive database for painting a better picture of customers and prospects in a privacy-safe manner.
In the IAB survey 84% of DCR users also use CDPs, 81% use DMPs, and half use identity solutions.
DCRs are becoming an integral part of marketing and advertising strategies for major brands and are creating opportunities for new business models, Deloitte Digital analysts said in their report.
Gartner recommends that companies that spend more than $1 billion in advertising per year should invest in DCR technology now. Those that spend less than $100 million on ads should look for ways to use data clean rooms as self-service point, the firm advises.
Despite the cost and other challenges, the market for data clean rooms will grow and evolve– along with other privacy technologies — as marketers find ways to address constantly changing privacy regulations, market trends, and customer needs.
