Data Clean Rooms: revolutionising marketing collaboration?

Data clean rooms have become a buzzword in today’s data-driven market, yet their widespread adoption remains limited. While they offer exciting potential for privacy-compliant data collaboration between companies, the question remains: are they truly revolutionary, and will they reshape the industry? In this blog, Sophie Bakker (Data & Analytics Director at dentsu Benelux ) breaks down what data clean rooms are, explores their capabilities and limitations, and shares our perspective on data clean rooms. To understand why data clean rooms have become more relevant, let's first explore why privacy has become a more critical topic in recent times.

Privacy within marketing data

In recent years, the topics of privacy and regulation regarding user data have become increasingly apparent. GDPR was the first big measure enforced in 2018, followed by multiple measures taken by big tech companies such as Apple, Microsoft and Google. Third-party cookies have become less relevant over the years and will likely become even less relevant in the future. Therefore, the collection of first-party data is essential to stay competitive. Next to collecting first-party data, exchanging your first-party data with other parties can be beneficial to gain even more insights.? This is also referred to as second-party data. Publishers specifically have been early adopters of this idea and now there is a new hot topic in town: data clean rooms.

What is a Data Clean Room?

A data clean room is a secure, privacy-compliant environment that enables multiple parties to collaborate on data analysis without exposing raw or personally identifiable information. The results of the shared analysis can, for example, be used to analyse audiences, create audience exclusion or improve measurement attribution. In itself, the process of sharing data between parties is easy. However, coming to an agreement about what data is shared, where it is shared, who can access the data and who will own the data can be complex.

When is a Data Clean Room relevant?

If you've maximized the use of your first-party data, collaborating with other companies can provide even deeper insights into your existing and potential customers. For instance, an online retailer and a publisher could share data to uncover valuable information (see image below). Which customers saw an ad multiple times? How does repeated ad exposure impact conversion rates? Both parties gain actionable insights that can improve their business strategies.

Other potential use cases include:

·?????? Two retailers: Analyzing aggregated customer purchasing trends to optimize product assortments and forecast demand.

·?????? Tech platform and retailer: Using search and shopping behaviour data to measure the effectiveness of ad campaigns in driving both online and in-store purchases.

When Data Clean Rooms might not be the best solution

To start with the use of a data clean room, you need to be highly mature in terms of data collection. High-quality first-party data is necessary to match data with another party (and they also need to have high-quality data). At dentsu, we can help you audit your data to assess your data maturity. In most cases, other projects than a data clean room are more relevant to your situation.

Additionally, IAB's State of Data 2023 states that many resources —both financial and human— are required to implement a successful data clean room. The set-up is costly, but you also need to maintain the data clean room.

Furthermore, when you decide to start with a data clean room, it is crucial to have a good use case for it. However, as also mentioned in the IAB report, calculating the ROI for a data clean room use case is difficult. Therefore, it is hard to decide what a good use case is in advance.

If you only want to centralize and analyze your first-party data, alternative solutions like CDPs would be more suitable. CDPs are created to centralize, organize and activate first-party data. CDPs help businesses unify customer data for personalized marketing without needing to collaborate with external partners.?

Our take on Data Clean Rooms

In conclusion, a data clean room is a means to a business end. It is not a goal in itself. While it has the potential to be useful for marketers working with other companies, it's not there yet. Right now, data clean rooms are mainly relevant for big multinational companies and very specific use cases. They're also tricky to set up legally and expensive to maintain.

Our advice is to first focus on building a solid first-party data strategy that ties into your business goals. Make sure you know why you're collecting data by identifying specific use cases, like creating audiences in your CDP. After that, work on improving your data collection and enrichment, and get the necessary processes in place.

Building a strong first-party data strategy can be challenging, but we’ve got the expertise to help you navigate the process. If you would like to explore how you can get more out of your data, feel free to reach out to Sophie Bakker .