Data Clean Rooms Aren’t a Loophole... They’re the Future of Digital Advertising

By Nader Bitar
Posted on Communicateonline.me

I don’t know about you, but with the end of 2021 fast approaching, I feel like there are even more buzzwords floating around than usual. Maybe it’s because we skipped a year of predictions on the back of COVID, or maybe our industry just really enjoys coining a new buzzword. I’ll admit, in the case of data clean rooms, however, the hype is justified.

Data clean rooms are ‘spaces’ (aka a piece of software) where the walled gardens share their aggregated data with advertisers in a way that respects the more stringent user privacy requirements and data laws that have come into play over the past few years.

It works on multiple fronts; businesses aren’t able to view or extract any customer-specific data and, for advertisers, they can see how the data sets match up, making it easier to spot inconsistencies and, crucially, monitor the ad performance within each platform. This is particularly relevant when you consider how we will be expected to operate in a cookieless world in the future. Essentially, we’re facing a huge attribution challenge without a simple solution. So, could data clean rooms provide some context here?

In my view, yes. They are going to be essential to measuring advertising effectiveness. Certainly, Disney and Amazon think so, both unveiling their own clean rooms in BETA this year. For the wider ecosystem, we need to think about underscoring the value beyond what we have offered up in the past. Vanity metrics are no longer relevant. Experience and engagement will go hand in hand as the end-user wises up and ultimately decides whether to admit or refuse advertisers into their world.

As Apple and Google continue with their cookie crackdown crusade, it’s clear that there will be limitations, accuracy issues (just look at what’s happening with Facebook ad tracking since iOS 14 came into effect) in how and what is reported. However, we can’t look like we don’t have at least some of the answers.

For me, that’s exploring the functionality of data clean rooms, not as a loophole or workaround for cookies, but as the driving force of digital advertising 2.0: the privacy era. Behind the scenes, data clean rooms are already providing more advanced analysis around attribution and measurement, largely because those capabilities don’t require high match rates.

I’ll admit there are potential stumbling blocks as well, at least initially and if you haven’t been particularly proactive in moving away from cookies despite the clampdown. The obvious hurdle here is having enough first-party data to power these data clean rooms. It does give a distinct advantage to the walled gardens of Facebook, Google, and Amazon that have enough of this consumer data to offer enhanced measurement solutions to advertisers.

However, it’s not only the big guys who stand to benefit from this shift to privacy and greater adoption of solutions like data clean rooms. Publishers and DTC brands should already be leveraging their 1-1 relationships with users, shaping content around their preferences without overstepping the line.

Demand for data clean rooms has steadily been growing and that’s down to a few different reasons. Firstly, the increase in privacy regulations has had a huge effect; GDPR was only the tip of the iceberg with more policies now rolling out across different markets. Secondly, advertisers are finding they want to educate themselves more about other parts of the ad ecosystem. In other words, they don’t want to be in the dark anymore about what they are buying.

As such, data clean rooms offer a pragmatic approach for advertisers to begin to address these concerns. They can use these safe spaces to understand the data they are working with, which platforms may have an edge over the other, and also help to identify new opportunities to outpace their rivals and grab a bigger slice of the pie.

Where it gets trickier is there is no ‘one-size-fits-all’ data clean room solution. As with anything today, we need to develop a custom approach to ensure value on all sides. Digital marketers should start considering how they could fit clean rooms into their vendor ecosystem and move their audience strategies forward.

Consumer expectations are higher than ever and privacy restrictions are limiting data opportunities that were once free-flowing. New technologies are the only viable solution to move the digital advertising agenda forward. As the clock runs down on cookies, it’s up to all of us to explore every available alternative.