Find Your ‘Why’ Behind Data Clean Rooms

At every industry event, and across my many friends in the advertising business, I am most often asked, “Why should I buy a data clean room?” My response is always the same: “What are you trying to build? What compelling products can you offer the market today that you could not offer yesterday?” 

The data clean room (DCR) is currently one of the most discussed solutions within the ad-tech and mar-tech ecosystems. There is, however, some confusion around this new acronym, with many organizations knowing they need a DCR but unsure of what they should be investing in.

Data clean rooms are about building anew, not ticking a box on a mar-tech shopping list. DCRs can and do replace antiquated and obsolete technology of the past. But the most exciting part of my job is helping customers build the next generation of advertising products—performant products that enable planning, targeting and measurement while respecting user privacy and maintaining control over sensitive data.

Not all data clean rooms are created equal 

At this stage, let’s deal with definitions. There’s a strong argument to be made that these technologies are better described as data collaboration platforms (DCPs), and I would agree. A DCP is the underlying technology that can enable DCR use cases and do so much more. However, as “data clean room” has been common parlance in ad tech, I’ll stick to that term for the sake of clarity. 

It’s important to understand that not all DCRs are created equal, and some aren’t or shouldn’t be called data clean rooms because they lack even the most basic privacy principles and protocols. Various technologies have been positioned in the market under this title, leading to the IAB Tech Lab publishing its Data Clean Room Guidance & Recommended Practices to help the industry reach a common understanding of what defines a DCR. 

Some solutions described as DCRs don’t even provide basic functionality like enhanced privacy protection and decentralization of data. Broadly speaking, there are two different types: Firstly, there is a centralized multiparty clean room, such as a data warehouse. These do allow for collaboration on analytics and data science processes between multiple organizations, with first-, second- and third-party data sets stored together in one place. However, they are generally very complex to use and may not provide adequate control or ownership of data, which could compromise the privacy of customers.

Secondly, there are decentralized multiparty clean rooms, which are the truest version of a data clean room. As they are decentralized, all data processing takes place where the data is located, so there is no need for the data itself to move. Instead, a mathematical model of the individuals in each data set is generated, which is anonymized so no personally identifiable information is compromised. These solutions, while providing greater control and protection, are actually built for ease of use and speed to accelerate adoption rather than slowing it.

Only the second of these options offers the full feature set and functionality to cover all the desired use cases of a DCR. There are six key considerations that businesses should be looking for when evaluating the solution they want to invest in: privacy, scale, speed, transparency, simplicity and control. But even with the right technology, successfully implementing a DCR requires a clear strategic vision. 

Building new products with data clean rooms 

The businesses that have been most successful in implementing this new technology, and so have enjoyed the maximum value from their investment, have built and launched innovative new advertising solutions with a DCR at their core.

Take, for example, U.K. broadcaster Channel 4, which set up its Brandm4tch platform to partner with brands including supermarkets, banks, utility providers, retailers and fast food delivery companies. Aware of the challenges surrounding TV advertising—in particular, the lack of transparency and availability of data—Brandm4tch enables advertisers to match their own first-party data with the 24 million registered viewers on Channel 4’s streaming service and create custom audiences, leading to campaigns that have measurably increased awareness and consideration. Each brand retains full control of their data, and customer privacy is fully respected.

While Channel 4 was an early adopter of the DCR, it’s the strategic path it has taken that has driven its success—not the technology itself. And it has only just begun to tap into the potential of DCRs, enabling rewarding new partnerships and creating valuable new revenue streams. 

The way forward in 2023 

If your business is looking to implement a DCR solution in 2023, then there are some key principles you should follow. As mentioned above, you should have a clear business objective at the center of your strategy. But beyond that, you should be thinking about the future—will your DCR be fit for purpose in five, 10 years’ time?

It’s an important question to ask yourself. While in the short term you may have partnerships already in place, think about the kind of collaborations you want to enable in the future. As the number of data sets available grows, your DCR needs to be able to scale up while still providing speedy, actionable insights.

The most important thing, though, is to prioritize privacy. Compliance with regional privacy laws and legislation is obviously essential, but it’s the bond of trust you have with your customers that really matters. Consumer awareness of how their data is stored, used and shared has never been greater, and organizations that fail to protect customer privacy risk substantial reputational damage. Businesses have to be sure there’s no way the personal data of an individual can be compromised, whether accidentally through misconfiguration or intentionally.

If you want to clearly demonstrate to your customers that you respect their privacy, the right DCR strategy is key. But it’s also fundamental that the DCR delivers valuable use cases and facilitates the kind of collaborations that will drive real business results now and in the future. So when it comes to implementing a DCR, ensure your purpose is crystal clear; only then will you be able to work toward tangible objectives and select the technology that is truly fit for purpose.