Understanding data clean rooms

Advertisers were granted an extended reprieve over the summer when Google delayed the phase-out of third-party cookies into the second half of 2024. But the day is fast approaching when the industry will need to rely on alternative solutions for collecting, analyzing and leveraging audience insight.

First-party data is no doubt the key to this, but data clean rooms are fast becoming a popular solution when it comes to augmenting it with second-party data, allowing for better campaign analysis and optimization.

Newest to the space is Amazon with their AWS Clean Rooms, which have just entered the market in preview mode.

Through mutually beneficial data collaboration partnerships, companies can use a data clean room to combine and compare data sets in a secure and privacy-compliant environment without sharing any PII (personally identifiable information) – layering in event-level data and tracking cross-platform consumer journeys to unlock deeper insights.

Data clean rooms still fall into the realm of new technology, but are beginning to emerge in different formats. Let’s take a closer look at the different types established to date.

1. Walled garden clean rooms

The most recognized form of data clean rooms today is the walled garden clean room.

Built by the big tech publishers – such as Google, Amazon and Meta – walled gardens offer businesses a space where they can access event-level data held within the provider’s walled garden, and enrich it with their own first-party data to uncover hidden performance insights. This enables publishers and advertisers to make more informed campaign decisions while protecting consumer privacy.

With Google, Amazon, and Meta accounting for 74% of all digital ad spend, it’s tempting to leverage the data they collect. However, it’s prudent to remember that sharing your data sets with these media powerhouses will give them yet more control over the marketplace.

2. Independent clean rooms

Independent clean rooms are a service offered by companies entirely dedicated to data collaboration technology. Also referred to as pure players, they have built data clean room software solutions designed specifically for media companies and brands to use. The major operators in this space include Habu, Optable, InfoSum and LiveRamp.

Independent data clean rooms provide a service where any publisher or advertiser can enter into a data partnership to enrich their first-party data sets. They offer greater flexibility than walled gardens, are easier to configure, and can be tailored to meet the needs of the participants. However, some have limited downstream integrations and require additional tools for data ingestion.

Most importantly, they are more mutually beneficial, with all parties entering the data partnership on a level playing field as they gain insight through the combined data.

3. Clean rooms within other platforms

Some clean room solutions exist within the confines of another technology platform, for instance, organizations with a specialized marketing application or services in adjacent industries such as cloud data storage.

Leading providers include Snowflake, BlueConic, Epsilon and Merkle, all of which provide a data clean room within their existing CDP (customer data platform) or EDW (enterprise data warehouse).

READ MORE: Which tool is best for Snowflake?

Snowflake’s warehouse-level offering gives advertisers greater architectural flexibility and more robust governance when it comes to their data clean rooms. However, they require greater technical expertise to set up and implement.

Those embedded within marketing applications provide ease of use, but are often constrained by their limited access to partner data outside their ecosystem (or connection into the walled garden clean rooms that many publishers/advertisers seek).

Making the most of data clean rooms in 2023

By understanding the different types of data clean rooms available, early adopters can begin to choose the right option(s) for their business now – before ending their reliance on third-party cookies completely.

Now is also the time to begin exploring the opportunities presented by different data partnerships. These partnerships will take time to establish and directly influence the quality of data being accessed – as well as the insights that can be gleaned from ad campaign performance.

As with any emerging technology, data clean rooms remain in a constant state of flux. Those not keeping a close eye on the evolution in this space will fall behind. New innovations are a certainty, and new types of data clean rooms could appear as a result.