What is a Data Clean Room and what impact does it have on business?

According to the study “The 2023 Industry Pulse Report”, the difficulty in accessing primary audience data is the main concern for 50% of companies that buy media, and 40% of companies that sell media.

In this context, the concept of the Data Clean Room (DCR) has been gaining prominence in recent years.

Data Clean Room technology provides a secure environment for accessing and using data. In these times of strong regulation, it has become one of the main options on the market, as it allows two or more companies to share and use personal data in an anonymized and aggregated way, while meeting all privacy requirements. In other words, companies can get their 1st party data to interact with other companies’ 1st party data without compromising people’s privacy!

This shared use of data is what defines a DCR. Measuring and optimizing campaigns, which is one of the main day-to-day activities of online sales, has been greatly impacted by the new limits on data sharing. In 2021, for example, Facebook announced that it would not send user-level campaign data to advertisers. From that point onwards, it would only send it to MMPs (Mobile Measurement Partners), such as Appsflyer and Adjust.

MMPs, like the big tech companies, have their own DCRs and make commercial use of them. In 2017, Google launched its Ads Data Hub, and in the same year, Facebook announced its own version. However, this only gained traction once GDPR went into effect, and in 2019 we saw Amazon and even Disney roll out their DCRs. And it didn’t stop there. On the list we also have AppsFlyer Privacy Cloud, Habu CleanML, LiveRamp Safe Haven, InfoSum’s Secure Data Clean Room, and Snowflake Data Cloud, among others.

The functioning of a DCR starts with data ingestion, where you can send primary data from different sources (CRM, Analytics, CDP), as well as secondary data obtained from other brands or data providers. All at user level!

After this, you need to combine the bases. Using a direct key, such as email, CPF, a unique ID, or even machine learning techniques for identifying people, the tool can create highly enriched databases with great potential for application.

Application cases can impact every stage of the funnel, helping to reduce acquisition costs and increase conversion rates by:

• Creating richer audiences, delivering content with the personalization people expect.
• Making attribution models with touchpoints outside the brand context.
• Increasing data variables for Marketing Mix Modeling.
• Allowing more visibility in relation to the frequency and scope of campaigns.
• Giving new perspectives on the audience and developing new products.
• Creating new communication rules based on audience perspectives.
• Create stronger propensity models.

In addition, DCR gives brands new opportunities for revenue streams. They can create their own walled gardens and monetize data enrichment and activation.

Market movement has shown that DCRs will become more and more prominent. The IAB State of Data 2023 report shows that 61% of the technology’s adoption took place in the last two years.

Although it is full of possibilities, this future comes at a cost. It is estimated that 62% of companies using DCR in the United States invest at least US$200k.

This is not the total cost, however. The use of DCR also involves CDPs (84%), DMPs (81%), identity solutions (55%), and CMPs (45%), not to mention the fact that 80% of companies have 3 or more people dedicated to the process associated with the technology.

As the market matures, new players will emerge and make it more competitive and accessible. Here are some important tips for those who want to prepare for the future and be more successful in using it:

Ability to identify people. If you don’t have a single view of your audience and can’t identify people when they interact with your channels, DCR will be of no use to you.

Data quality and coverage. We all know that data needs to be reliable, but it is also important to pay attention to coverage, i.e. the journeys and channels on which you have visibility. Make sure the missing pieces don’t lead you to the wrong conclusion.

Security is non-negotiable. Ensure that what you are developing ‘in-house’, or what the partner you hire uses, meets all your requirements.

Only knowledge can bring consistent and long-term results. Implementing, maintaining and getting the most out of a DCR requires qualified people. Finding and retaining these people is critical.

Monitor costs. Implementing and maintaining this type of technology requires a lot of time, effort and money. You should establish clear goals and milestones for the process and constantly monitor them to measure the impact on your business. The IAB State of Data 2023 report highlights 5 important points that can impact the cost of the project:

• Volume of data in the database.
• Number of data sources.
• Complexity of the datasets.
• Desired security level.
• Infrastructure and resources to support the structure.

Data Clean Rooms loom on the horizon as an alternative that will provide a balance between marketing and privacy. We still have a lot to learn and a lot to improve, but it seems to be the most likely way our industry will evolve.

Profile of the Author: Lucas Ribeiro | As a Manager Consultant at DP6, Lucas Ribeiro is responsible for developing digital marketing plans and strategies for clients in a diverse range of segments, such as Finance, Insurance, Pharmaceuticals, Automotive and Beverages, helping them to achieve their business goals.

He has more than a decade of experience in data collection and integration projects, attribution models, Marketing Mix Modeling, and the implementation and operation of Performance Rooms. He has a bachelor’s degree in Communication and Marketing, and an MBA in Strategic Business Management at FIAP.