Data clean room: What it is and how to use it for business growth

Third-party cookies, long a bastion of online advertising and tracking, are soon going to be on their way out. Due to an increase in privacy laws and consumer-driven demand for more control over where information is shared and stored, brands will need to start looking for new tools to develop a fully robust picture of their consumers, their habits, and their lifetime value.

Data clean rooms (DCRs) are the answer. 

While not yet widely adopted, data clean rooms are on their way to providing the type of aggregate environment where companies can review and analyze collected advertising data without risking exposure of personally identifiable information (PII). 

How do data clean rooms work?

Data clean rooms are a secure environment where businesses can review and analyze data related to their ads, gathered by an ad platform. The primary job of data clean room technology is to ensure that any PII is removed or encrypted. It also has strict parameters on what types of information can be shared or exported from the room. 

Clean rooms are also aligned with privacy laws such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). Data clean room technology offers brands an anonymized way to view gathered advertising data from an ad platform while remaining compliant. To learn more about data clean rooms, read about the top five data clean room use cases for marketers. 

Why the time is now for data clean rooms

The decision by major web browsers to put an end to third-party cookies is a definite blow to brands. Third-party cookies have allowed for an easy way to track ad impressions to conversions, giving measurable results that tell a complete story of a brand’s advertising mix and its effectiveness.

As a result of the dissolution of cookies, the ability to accurately match digital ads with actions will become nearly impossible and has left many businesses wondering how they can continue to justify the cost of major online advertising spending if the ability to track its effectiveness is taken away.

Conversely, online advertising platforms wonder how they can continue to prove their platform’s reach and effectiveness without the input of cookies as well. This is where data clean rooms come in.

As a central location with anonymized data, brands will still be able to measure ad strength and use analytics to build more targeted and personalized campaigns.

Data clean room examples

Currently, Google Ads Data Hub is the only data clean room available to a wide variety of advertisers. Google’s clean room gathers and stores results from Google Ads and provides a clean room environment where businesses can review their own ads’ performance and analyze the results.

This analysis can include things like:

• Building a custom audience profile
• Reviewing client lifetime value
• Understanding data attribution
• Analyzing audience segmentation

Each of these insights is extremely important to a business to better track and determine their online advertising ROI. 

To effectively use Google Ads Data Hub, a brand will need to link their marketing information (often from a source like Google Analytics, CRM, etc.) to the Data Hub. This first-party data from the brand side is then married to the available Google Ads data. This data comes from a variety of sources including search, display advertising, YouTube, and more. 

With both sets of data in the clean room, the personally identifiable information is stripped away and the real work of analysis can begin. 

Data clean rooms and business growth

There are a few primary reasons that using data clean rooms can lead to business growth.

1. Data clean rooms offer more insight

Often, the data available in a data clean room is more robust than just general reporting or third-party cookie data. While more data requires more analysis, it can also lead to a better-targeted understanding of what’s happening with a brand’s advertising spend. This added insight can lead to better decisions on advertising budgeting and effectiveness.

2. Data clean rooms make it easier to build and use custom audiences

By using first-party data (from the brand) in conjunction with data directly from the ad platform, building custom audiences is easier than ever. It also makes it much easier to communicate these custom audiences back to the ad platform and conform to their specific parameters for better results.

3. Data clean rooms allow for better and more fruitful partnerships

With a secure environment for storing customer data, retailers can offer their partners (such as consumer packaged goods brands) anonymized insight into their customers and transactions. This gives the retailer and the brand the chance to better understand the customer and can lead to more successful partnerships, cross-promotions, and personalization resulting in higher yield in the future.

Data clean rooms are the future

It may be hard to envision an online world without cookies, but the day is coming—fast. To better understand how data clean rooms can help brands meet and possibly beat this new challenge, reach out to Lytics today. Our team is ready to help your brand move into the brave new world of cookieless advertising. Sign up for a free trial or contact us for a custom solution.