What is a Data Clean Room, And How Do They Work?

The death of third-party cookies is getting closer. As a result, you may be looking for new ways to make sense of customer behaviour.

Many retailers and brands are investigating data clean rooms – but what are they, and are they right for you?

Well, let us explain.

What is a Data Clean Room?

A data clean room is a secure way to link anonymous marketing and advertising data from lots of companies. Sharing data in this way enables you to increase the value of the information you already own.

You can also use clean room providers to host a data collaboration. The software will match and combine the data held by companies to enrich existing insights. Data clean rooms have strict privacy controls meaning businesses cannot view customer-level data.

Building a data clean room involves strategic collaboration between complementary organisations.

For example, a tourist board, hotel chain, and airline may decide it is in their mutual interests to share customer data. These companies all target the same customer but are not competitors, so they might benefit from sharing anonymised data.

Data clean rooms are not new, but they are in focus right now.

For one, they are becoming increasingly interesting as data privacy rules tighten and become more complex. And they enable you to do more with the information you already have. Every brand should find that an attractive proposition.

More Reasons to Use a Data Clean Room

Marketers are fearful about the death of third-party cookies and other digital identifiers. There are concerns the decision by big tech to tighten up privacy will leave brands in the dark when it comes to targeted marketing.

These fears may be overblown because third-party cookies have never been the perfect solution for connecting brands to customers. Even so, change often brings concern.

The shift has put the importance of data in marketing for targeting and attribution in the spotlight. It has started more conversations about how to get the right message to the right consumer.

With a data clean room, targeting and attribution can be improved. And in a challenging commercial environment, it pays to know as much as possible about your consumers.

The more your marketing is fuelled by data, the more tailored it will be. According to research, digital targeting improves the response to advertisements. But studies show ad performance declines when marketers’ access to consumer data is reduced.

Online identifier depreciation has highlighted retailers’ and brands’ need for first-party data. And first-party data is also the fuel for data clean rooms. Such data is largely gleaned from customer loyalty schemes and subscription programmes. You can also source it through competitions, online games, and newsletter sign-ups.

Data clean rooms are not for every company. If you have a large-scale and successful loyalty scheme, you might not need one. The same is true if you have an active niche community. But for brands that don’t have this, augmenting the customer information they already own is a great idea.

What is more, unlike other data-sharing methods, they include detailed advertising impression data. They also protect customer identity.

Gartner's research into data clean rooms suggests this marketing trend is growing. It said by 2023, 80% of advertisers with media budgets of $1 billion or more will use data clean rooms. There is momentum behind data clean rooms as a marketing tool.

2 Types of Data Clean Rooms

Data clean rooms usually come in two different formats:

1. Walled Gardens

Platforms such as Facebook, Amazon, and Google use data clean rooms to safely provide brands with data about their ads on these platforms. This data is used to build better campaigns within a specific platform.

For example, Google’s Ads Data Hub allows brands to analyse paid media performance and upload their first-party data to Google. This allows brands to segment their audiences and understand reach. They can also test different attribution models.

However, most brands advertise across multiple platforms. Because of this, you may find walled garden versions of data clean rooms such as Google’s limiting. This is because you can’t automatically join all data and build a full view of customer journeys.

2. Agency Data Solutions

Have no fear because there is an alternative option. Channel-agnostic data clean rooms exist, and they are offered by companies such as Epsilon. They can also be used as a supplementary marketing tool to walled garden data clean rooms. It does not have to be a case of either/or.

In channel-agnostic data clean rooms, you still get access to highly unique ad data. But you won’t don’t suffer from self-serving platform restrictions.

There is a strong payoff if you work with Epsilon. Unlike traditional software developers, Epsilon is a data expert. We can pump CoreID data into a data clean room, adding value above and beyond what any other partner can bring.

Epsilon’s PeopleCloud combines different data piles into one. From demographic info and offline purchases to website visits and email opens. Whatever data you have on a consumer is connected. Each person gets a privacy-protected CoreID. Epsilon keeps this ID updated as people change their behaviour over time.

BP’s loyalty scheme benefited from CoreID’s capabilities. It helped structure BP’s CRM to better understand transaction patterns and segmentation. The result was an email programme that allowed BP to stay in constant contact with consumers. BP continued to connect with customers throughout their lifecycle based on activity level.

Epsilon conducted a marketing opportunity assessment to analyse BP’s data and identify insights. Using its proprietary tools it gathered data to fuel creative and drive strategy. The results show what can be achieved by utilising Epsilon’s data expertise.

BP experienced a 2.4% higher open rate for welcome emails and a 5% higher click rate compared to benchmarks.

BP also reported a 48% increase in visits from new loyalty scheme members within the first month. That is an effective use of data.

Using Epsilon’s data clean rooms enables you to combine data with a body of accurate consumer information, built over time. It enables you to better understand your target audience. You can then tailor campaigns accordingly.

Companies are experiencing the benefits of adopting a solution-based approach to technology. Epsilon’s white-label solution can also give you the framework to create your own data clean room. Epsilon promises smarter marketing opportunities to those using its solutions.

Using Partnerships to Improve Data Clean Rooms

More than ever, brands are seeking partnerships to help them do what they cannot.

For example, Farfetch is working with Clipper Logistics to manage its delivery and returns operations. The partnership route was deemed more appropriate than Farfetch ramping up its own logistics.

Gap and Reiss in the UK decided they did not have sufficient expertise to build and run their e-commerce infrastructure. They are now powered by Next’s Total Platform, viewing this outsourced approach as a way to grow online.

Epsilon has fostered strong partnerships with companies such as Dunkin’, Walgreens, and BP. These companies have realised the growth they can achieve by accessing Epsilon’s data expertise.

The same partner approach to data clean rooms can be successful too. Outsourcing helps brands overcome the skills shortage. It is also more cost-effective, accelerates the speed to value, and frees up your resources to allow you to focus on what you do best.

Key Takeaways About Data Clean Rooms

Below is a quickfire list of key points about data clean rooms. If you are still scratching your head about what they are or what approach to take, this should help.

• Data clean rooms give you the ability to gain insights beyond your immediate data ecosystem. In an increasingly competitive commercial landscape, that extra information is crucial.
• White-label data clean rooms provide an infrastructure for you to share data safely and securely with other companies. This approach allows you to build up a clearer picture of customer behaviour.
• Building a data clean room is a mid to long-term strategy, so it needs to be given the appropriate consideration. Work out which partner is best for you. Do not just opt for the first solution you hear from.
• Data clean rooms anonymise all data so it is GDPR compliant, removing regulatory and compliance risks. As the data privacy landscape tightens, brands must ensure they are making secure choices.

Ready for Epsilon to Assist You With Your Data Clean Room?

So, data clean rooms support stronger brand marketing. They are an ideal way for you to use good, accurate data in a landscape where privacy rules can cause nervousness. They also help speed up marketing prowess.

You will be more than aware we are reaching a digital marketing crossroads. New channels to target consumers continue to emerge while old ways of doing things come to an end. One constant in this evolution is the need for data to drive marketing.

Data clean rooms are one way to optimise how you deliver that approach. At Epsilon, we have a large team of analysts, statisticians, and consultants ready to enhance your data with ours. We can find insights that move your business forward by creating profiles, strategies, and other support you need.

Talk to us today to find out how we can help.

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