Data Clean Rooms – A space for privacy-compliant marketing?

A clean solution instead of crumbling cookies? Third-party cookies have so far been important data sources for targeted marketing activities, but their future is uncertain. An alternative for marketers is data clean rooms. We’ll show you what lies behind them in this article.

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argeting is the be-all and end-all in the advertising business. Without knowing how your customers behave, your ads fall flat and you burn more money than you’d like. Marketing managers are looking ahead with anticipation because third-party cookies are slowly but surely dying out. The “cookieless future” is posing new challenges for the marketing industry—and that’s exactly where data clean rooms come into play.

The basics: cookies and first-party data

Before we take a closer look at data clean rooms and how they work, let’s briefly zoom out and quickly explain the most important terms. Third-party cookies are tiny text files that are stored on the device when users visit a website. Third parties then use this data to collect information about users and to design tailored advertising campaigns and serve relevant ads.

Then there is also first-party data. This is the information that you, as an advertiser, collect about your customers yourself. This includes, for example, behavioral data from website visitors. Ideally, this data is stored in a CRM.

So what is the core problem? Third-party data is set to disappear in the future in order to better protect consumers when it comes to their data. This was originally planned for 2023, but the project was postponed to 2024. The key question now is: What will the targeting of the future look like without this important data?

What are data clean rooms and how do they work?

This is where data clean rooms come into play. You can think of them as a repository where companies “store” information within large volumes of data. Other companies—the advertisers—then join in and bring their own data with them.

Advertisers now obtain insights into user behavior by comparing their data with that of the data clean room hosts. However, this comparison happens in a way that ensures no data is exchanged or becomes visible. This protects the collected data.

So far, so good. To better understand data clean rooms, they are often compared to Switzerland. A data clean room is a kind of “data Switzerland” that acts neutrally and serves as an intermediary between two parties. Identifiers are used to match the data—for example, an email address.

If there is a match for an identifier, advertisers receive valuable insights—without having actual access to the collected data. This safeguards users’ security, which has traditionally been highly valued in Germany. A survey shows that as many as 66 percent of respondents want the misuse of their data by companies to be curbed by the state (Source). All the more reason for marketers to take care of appropriate alternatives.

Data Clean Room

Why are data clean rooms important for marketers?

The importance of this new technology lies in the “cookieless future.” Even today, it’s noticeable that targeting reach is declining and data-driven analyses of customer journeys are significantly less accurate than they used to be. That’s because fewer and fewer data are being collected (or are allowed to be collected).

The tip of the iceberg is yet to come—and the marketing industry is heading toward it at full speed. Well-known providers are already preparing for this future with data clean rooms. But there are also more critical voices that are not favorably disposed toward the technology and are opting for other alternative solutions. Some of the criticism is also directed at the fact that data clean rooms, in their current form, simply aren’t mature enough yet to reliably protect the stored data.

No matter how we look at it: the trend is becoming increasingly clear. “Continuing as before” means being left behind in the “cookieless future.” All the more important, then, to engage with this topic now and draw the appropriate conclusions.

A time of change for advertisers

Important in connection with the criticism: it does not relate to the need for alternatives to third-party cookies. Quite the contrary: This message should have reached all marketing decision-makers. Rather, companies like Vodafone rely on alternative technologies such as a Customer Data Platform (CDP), as they have little confidence in data clean rooms.

What is crucial when using such clean rooms is that your data is secure. As a rule, cloud-based infrastructures are the starting point: this is how the data is fed into the data clean rooms. If you do not have sufficient control in your setup, this can become problematic. Before you use such digital rooms or tools for data protection, you should create the necessary prerequisites in advance.

No matter what you decide: whether “data clean room” or another solution: the familiar processes and workflows in marketing will change in light of the “cookieless future” – that is as certain as “amen” in church. Tracking will become more complex, consumer data will become even more important. So start preparing for the future now and look into alternative solutions to third-party cookies.

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About the author

Till Zier is CPO at Matchilla and, as a MarTech expert, reports in MatchZINE on news and trends in marketing, automation, analytics and data.

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