Demystifying Data Clean Rooms: a Guide for Brands

The data privacy landscape is undergoing a massive upheaval. AI is taking hold, and legislative efforts and privacy regulations continue to grow in scale and scope. In response, enterprises across the world are beginning to recognise that to stay compliant, competitive and maintain consumer loyalty, they have to pay attention to data privacy requirements and expectations.

In this space, new technologies and tools are emerging to support business efforts to clean up data practices and, crucially, keep effective data-driven marketing and branding campaigns afloat. Data clean rooms are emerging as a solution here to collaboratively process and analyse data for targeting, segmentation, and other business needs – all in a way that upholds consumer privacy, if used correctly.

Third-party cookies are on the way out, and privacy-centric changes by companies like Apple are making it ever more difficult for brands to access and use data in the opaque and often dodgy ways of the past.

Apple AppTrackingTransparency, for example, which requires a user’s permission to track their online behaviours, is impacting marketers’ bottom lines. These marketers are coming to realise that manipulating, exchanging, storing, sharing, and altering data with no regard for the consumer is simply not something they can do anymore without reproach.

Privacy-aware consumers are driving these changes alongside legislative efforts. These consumers are waking up to the reality of having their every move tracked online and their data shared nefariously. It no longer takes a high-profile data leak to get consumers asking: “who can I really trust with my personal information?”

It’s right that consumers are taking ownership of their data in this way. But this movement has opened up a huge chasm between what consumers expect and want out of a brand’s data practices, and what marketers and brands are used to getting away with.

Enter clean rooms, which are rising in popularity as a potential solution to close this data availability gap between consumers, brands, and advertisers.

Data clean rooms are spaces where customer level data can be shared between approved parties. These spaces are like a framework for collaborative data analysis and management.

Crucially, these spaces are controlled environments, where strict data controls can be exerted. Data clean rooms also make available a variety of tools to support data protection and privacy – though, it must be noted, the tools offered within these clean rooms don’t come with the full package. The big piece that is missing is that data must come with the right permissions in order that you know how to use it.

Essentially, a data clean room combined with privacy management solutions like the right  “Consent Management Platforms” open up the opportunity for data collaboration in a way that ensures the privacy and security of first-party data.

One of the driving motivators for data clean rooms is, of course, regulatory compliance, but using clean rooms also has several distinct marketing and branding benefits. With effective data aggregation, brands and advertisers can better understand user behaviour and activity. In fact, these brands potentially have access to a whole new realm of data points to analyse. By using real, actual data, clean rooms provide a previously unattainable clarity on user and behavioural analytics, in a way that can prioritise consumer privacy and user experience.

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This represents a huge business opportunity for enterprises, while helping them manage business risk. If, by using clean rooms, businesses can manage and enforce privacy and security controls of their first-party data when collaborating with partners, they can begin to build out data-aware, useful campaigns and strategies with the consumer at the centre. This is the future of branding, business and marketing that those of us who care about data privacy want.

At present, however, data clean rooms are widely misunderstood because these environments are not a privacy law free zone. Brands should not view them as such. The legal requirements for the use of data clean rooms vary based on the use-cases and data processing involved, and many of these use-cases are still evolving. Rather, the brands who are serious about using data clean rooms must know that they need to come with their data privacy practices in order.

There’s also currently a lack of standardisation across the use of clean rooms. With millions of data points brought together in different formats and from different sources, there’s a lot of heavy lifting required from businesses to ensure that the format and methods used to analyse and access data are consistent across the parties involved.

This consistency in data also applies to data quality. How will data collaboration partners without access to first-party user data ensure that the data is reliable and high-quality? Will this need to be independently verified? How can this be achieved while still maintaining high levels of data protection and respect?

While we’re waiting for industry practices to emerge around the way that clean rooms operate, there are several key considerations for brands

Last year, Gartner predicted that by 2023, 80% of advertisers with media budgets in excess of $1 billion annually will use data clean rooms. The question of data ownership and responsibility is a big one – with similarly big financial and reputational implications if it goes wrong.

For brands and clean room providers, they should have the capability to prohibit the sale or share of any personal information (when requested by consumers) based on outputs from clean rooms. Brands should ensure that all data collaboration and analysis is permitted in line with necessary regulations and industry requirements.

Brands will also need to introduce their own frameworks at the organisational level to understand and manage clean room use. Assess what you want to get out of the clean room. i.e. measurement, attribution, targeting, and then have the privacy permissions set up front so that privacy safe data enters the clean room, and you can activate on the output with the confidence that you have properly permissioned data. For example, who within the business is managing the clean room account and its usage? Brands will also need to monitor industry standards as they develop – data-processing standards, use-cases, and regulatory inputs are developing in real-time. Brands will need to adhere to these from the get-go.

Perhaps most importantly, brands should be urged to maintain data privacy when using clean rooms. This is potentially the biggest competitive advantage businesses will have going forward, as consumers are wising up to their data rights, data privacy regulations are evolving, and more and more businesses will need to enact Data Privacy Impact Assessments.

Data clean rooms offer an opportunity here for privacy-savvy brands to enjoy the marketing and business benefits of data sharing and analysis, while minimising business risk and even establishing consumer trust. But getting it right is a challenge. Business leaders, privacy managers, and even marketers will need to pay close attention to how the industry receives and develops data clean rooms, building privacy strategies and frameworks that can evolve and adapt as regulations, use cases, and standards allow.

If they get this right, we could be entering a new age of consumer data sharing and trust which benefits consumers, advertisers, marketers, and brand owners alike.

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