In this era of digital transformation, how can marketers take their game to the next level? While this question is understood to have received different answers, one which has seemingly stood out is the usage of data clean rooms. In layman’s terms, a data clean room is a secure environment that allows different companies to collaborate on data analysis without compromising privacy. With the phase-out of third-party cookies considered imminent, and personalisation and privacy growing in stature, data clean rooms have emerged as a ‘clean’ source of way for running marketing campaigns through first-party data’s utilisation. In 2023, the average value of data breaches affecting businesses, globally, reached $4.45 million, with a leaked data record costing roughly $165, as specified by Statista, a data and business intelligence platform. On that note, it was predicted that 80% of advertisers, having enough media budgets, would start using data clean rooms by 2023, based on insights from Gartner, a technological research and consulting firm.
Overall, the international cleanroom technology market magnitude was valued at around $4.1 billion in 2023, with projections for more than $7.2 billion by 2033, at an over 4.8% compound annual growth rate (CAGR) during 2024-2033, as per Market.us, a market research report platform. “I think brands need data clean rooms to address the challenges of privacy and data security in a landscape, where first-party data is gaining prominence and third-party cookies are being phased out. Data clean rooms can provide a secure environment where multiple data sets can be matched and analysed without compromising individual privacy. This is considered crucial, as brands start relying on their data to understand and engage with their audiences,” Ritesh Saraf, co-founder, Promilo, a network-based lead generation company, told BrandWagon Online.
From silos to synergy
With Mozilla’s Firefox and Apple’s Safari implementing the third-party cookie prevention option through Settings, along with Google’s call to completely deprecate third-party cookies on Chrome in 2025, experts believe that by leveraging data clean rooms, brands can enhance their targeting capabilities and optimise ad spend, all while maintaining the trust and privacy of their customers. 47% of marketers used data clean rooms for reasons such as user targeting, data protection, and regulatory adherence, according to the Interactive Advertising Bureau’s (IAB), an advertising business organisation, ‘State of Data 2023’ survey. The survey also mentioned data clean room use cases, comprising 41% for data normalising and cleaning and 40% for data transformation and enrichment. “I believe the interoperability of data clean rooms, within the advertising ecosystem, is what will make them central to martech efforts, going forward. Advertisers, especially in data-sensitive industries such as banking, financial services and insurance (BFSI) and health tech, should welcome this initiative, specifically. The current adoption is driven more from the publisher side rather than the advertiser but slowly, the adoption will go up since the data strength is expected to be more robust (advertiser’s own data + publisher data),” Gaurav Mehta, ex-CMO, Noise, a smartwatch brand, highlighted.
Typically, there are three types of data clean rooms, as has been specified by Clearcode, a software development company. The first one is provided by standalone businesses, which comprises two data owners communicating in a ‘neutral’ space, the second one by advertising technology (AdTech)-based walled gardens, which are run by multinational conglomerates such as Amazon, Facebook, and Google, and the third one by companies with enhanced access to content and user bases, which include Spotify, TikTok, and Disney. “Data clean rooms help brands develop better strategies by providing an understanding of which marketing channels and tactics are most effective. It enables brands to allocate their advertising budgets efficiently and reduce wastage. Data clean rooms allow brands to combine their first-party data with data from other sources without exposing the raw data. This can enhance the ability to gain deeper insights and create accurate customer profiles. Brands can collaborate with partners and other entities to enrich their datasets without compromising data privacy,” Ripal Chopda, chief marketing officer, The Sleep Company, a comfort-tech brand, said.
Beyond the ‘known’ vault
Market reports have highlighted the dynamic landscape of data clean rooms, showcasing how companies such as Snowflake, InfoSum, Aqiliz, Disney, Amazon, and Google each contribute their unique approaches to advancing the software’s applications. Reportedly, Snowflake’s data clean rooms permit handling of combined data collections among advertising firms, InfoSum’s data clean room enables decentralisation and cloud-neutral features, and Aqiliz’s data clean room supplies a middleware technology. Moreover, the ‘relatable’ names offering data clean rooms, such as Disney Advertising Sales’ cross-cloud application backed by Disney Advertising’s Audience Graph and Disney Select data, Amazon Marketing Cloud’s (AMC) solution based on Amazon Web Services (AWS), and Google Cloud’s Google Ads Data Hub, have upped the game for the data clean room landscape, going forward. “Depends on the brand completely. While certain brands, including Britannia and Mondelez, are at a mature level of their journey, they have begun to use this technology and also are heavily investing in it. However, there are some brands which have just started to scratch the surface. Truthfully, it is still at a nascent stage,” Gopa Menon, former digital head, Mindshare India, highlighted.
As far as brands are concerned, there seems to be a more business-centric approach to the creation of data clean rooms. In that context, brands include Hershey’s data clean room, which ensures the sharing of first-party resources between retailers and the company’s producer, in in-turn results in retailers keeping their loyalty-card data within the data clean room, and Unilever’s data clean room, to find the correlation between advertising material and a user’s ‘retail’ reciprocation to it. Certain Indian brands also involved in this data clean room space are Tata Digital, for integrating customer data to create personalised marketing campaigns and improve customer retention, ICICI Bank, for analysing customer data securely to offer better-targeted promotions and stay compliant with privacy laws, and Apollo Hospitals, for research and patient engagement, ensuring data security while improving patient experiences. Experts believe that this data-driven approach allows brands to allocate their marketing budgets more effectively, focusing on channels and tactics that deliver the highest return on investment (ROI). “By collaborating with trusted partners within a data clean room, a brand can enhance its understanding of their target audiences, optimise their marketing efforts, and foster transparency in their data practices. Ultimately, this approach should enable us them strengthen consumer relationships, drive business growth, and position themselves as industry platforms in responsible data usage and ethical marketing practices. As data privacy concerns continue to shape the industry landscape, more brands are expected to follow suit and harness the power of data clean rooms to future-proof their marketing efforts,” Vanda Ferrao, chief marketing officer, WOW Skin Science, a personal care brand, stated.
In essence, data clean rooms represent an innovation in the marketing sphere, offering a secure haven for the analysis of sensitive consumer data. On account of removal of third-party cookies, the adoption of data clean rooms emerges not just as a necessity but as a strategic imperative for brands seeking to navigate the evolving digital landscape. “As more brands use data clean rooms, marketing will become more data-driven. There will be a stronger focus on protecting customer privacy and understanding customer needs better. This will lead to more personalised and effective marketing, improved customer engagement and business success,” Upendran Nandakumar, founder, Ayatiworks Technologies, a digital marketing company, concluded.