Why Data Clean Rooms Can Save Your Marketing Strategy In The Looming Recession

Fears of a recession has led to an increasing focus on efficiency for brands and retailers. One solution is the use of data clean rooms. but what are they and how do they work? In this opinion piece, LiveRamp COO Melanie Hoptman gives us the rundown on all things clean room.

What are data clean rooms?

Data clean rooms are safe and neutral spaces for data collaboration and partnerships to exist without either party having access to the other’s personally identifiable customer information (PII). A data clean room should also provide advanced privacy controls, including encryption, so data can’t be used inappropriately, while providing data scientists with the ability to leverage data to better plan, activate and measure across the ecosystem.

The major clouds and walled gardens have had data clean rooms for several years, demonstrating how effective these environments are at improving advertising performance. Today, many platforms are offering their own data clean rooms, enticing retailers seeking technology partners for their media networks, as well as giving brands and suppliers more choice in evaluating partner solutions. For example, at LiveRamp we have Safe Haven which is an enhanced clean room that is neutral, interoperable and permission-based. It provides the foundation for data collaboration between brands, retailers and media companies to create audiences for targeting and personalisation in a privacy-first way. Beyond this, Safe Haven also allows marketers to activate data, find new audiences, optimize and measure campaigns.

How can clean rooms help marketers survive the two biggest challenges in the advertising space, namely the looming recession and the end of Google cookies?

The sticky economic climate we’ve found ourselves in is already having a huge effect on consumers’ shopping habits. People are being more reserved when making decisions on where and how to spend their money. This means that brands need to be highly strategic in their advertising and CX efforts to deliver interactions that feel personal to each and every individual.

Data collaboration is advantageous in meeting these needs for several reasons. One, it can make first-party data accessible to CPGs or suppliers who lack the necessary 1:1 relationship with customers — something the pandemic affirmed as table stakes. Two, it can forge new partnerships between companies who may not have obvious audience overlap. Partnering for data collaboration will offer a chance to unlock new insights and reach new individuals throughout the customer journey. Third, it can also bring together conversion and exposure data so companies can measure the business outcomes that matter most to their bottom line. By delivering incrementality, closed loop measurement, journey analytics, revenue impact and more, marketing teams can prove ROI as budgets tighten.

The increased emphasis on personalisation comes at a time when marketers are preparing to lose one of the key tools traditionally used to achieve this: third-party cookies. Clean rooms enable the ecosystem to recreate what third-party cookies were traditionally used for in a much more accurate, controlled and transparent way. As privacy regulation expands and consumers continue to demand more transparency, clean rooms will enable companies to build trusted and long-term relationships with their customers. Rather than being an alternative, data clean rooms are becoming a necessity.

Why are clean rooms great in terms of both customer privacy and personalisation?

Security and privacy are fundamental to data clean rooms. Since data never leaves the data owner’s control, these environments create a balance between privacy and utility. A premier data clean room will also provide advanced privacy controls to each party, including encryption, so the data can’t be misused.

Data is the key to great customer experiences. A data clean room delivers on the ability to create exceptional customer experiences by helping activate audience insights across marketing applications, ensuring that brands can recognize these preferences and deepen relationships with existing customers for increased brand loyalty and awareness. It really is a win-win solution.

What should marketers look for when picking a clean room?

If you make the decision to invest in a data clean room, it’s important to choose one that delivers the strongest outcomes for your unique needs. There are key three questions to ask when evaluating a solution:

Is it secure?

A data clean room must be rooted in privacy protection. It will remove PII and utilize privacy-enhancing technologies (PETs) that meet the different levels of privacy thresholds needed to collaborate with multiple partners. Data clean rooms should also have configurable privacy controls around which data is shared with each partner, be compliant with regional privacy regulation, and leverage consented, people-based identity.

Is it interoperable, neutral and scalable?

Neutral and interoperable data clean rooms will allow companies to utilize a custom build designed for their unique needs. This also ensures the solution can be leveraged within a client’s existing partner network and drive personalisation across multiple activation points.

Without scale, the value proposition of a data clean room can quickly fall apart. Seek a technology partner that can handle the complexity of managing multiple tenants with varying relationships within the environment.

Does it do more than just collaboration?

It’s important a data clean room has built-in analytics and measurement applications to automatically and continuously measure the effectiveness of campaigns. This makes a deterministic approach to identity and matching key to accurate results. Data clean rooms can deliver measurement that matters to the bottom line, with packaged insights and analytics that result in better modeling and reporting.

No matter which type of data clean room you choose for your data collaboration needs, it’s fundamental to ensure it will help you deliver the best business outcomes without sacrificing the deep customer relationships you seek to grow and solidify as you develop a better understanding of your customers.