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Data clean room vs. data warehouse: What's the difference and why you need both
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As we approach 2021, it’s inevitable that third-party cookie deprecation and IDFA will fundamentally change the marketing ecosystem—for better or worse.
But what do marketers think of these changes? And, more importantly, how are they preparing?
Epsilon’s new research study—“Preparing for a world without third-party cookies”—finds significant apprehension among marketers as many search for marketing solutions built for the new world. Brands seem to be saying their customer acquisition strategies won’t be as efficient, so they need to do what they can to minimize drop-off, while also maximizing the value of the customers they do have.
It’s an important problem to solve for. But not all solutions are created equal. What marketers choose now could make or break their campaigns in the years to come.
Marketers are wisely focusing on anchoring their new strategies on their first-party data and investing in ways to enhance the value of those data assets. But some solutions will have near-term benefits that fizzle out over time. Others are well-intentioned but may be the wrong direction for the long term. Decisions and investments made now are critical to get right.
Based on the research findings, here are five ways marketers are dealing with cookie deprecation and the outlooks associated with these actions.
Outlook: Right direction, but the CDP needs to be enterprise-ready
CDPs are appealing because they promise to help marketers see a single view of their customers that can power omnichannel personalization. Unfortunately, few CDPs were designed for enterprise marketers, who need to manage and access data and intelligence at a massive scale, relative to their mid-market peers. And this has been an ongoing issue—Forrester wrote in a 2018 report and again in a 2020 report that CDPs weren’t built to solve enterprise problems.
Early on, many CDP vendors collectively chose not to develop robust identity strategies, data management services and rich intelligence layers for their platforms. Each of these areas is critical for CDPs at enterprise-level businesses, but they’re just not widely available in the CDP market today.
Outlook: The clearest near-term path for long-term growth
If a brand has strong first-party data, it can activate that data much more effectively with partners and publishers. It is also the foundation of acquisition strategies—understanding your best customers is the starting point for finding more like them.
One form of first-party data online is first-party cookies, which will remain even after third-party cookies go away. First-party cookies are a key part of the ecosystem that marketers need to master if they want to be successful.
With third-party data harder both to acquire and to utilize effectively, brands need to maximize their first-party interactions and the first-party data they collect from customers. Though as always, data privacy should be at the forefront of that conversation, and any exchange should be rooted in creating value for the consumer. Be clear about what data is collected, how it will be used and only collect what’s necessary.
Outlook: Good intentions, but very few brands are in a position to do this right
There are virtually no brands that have the online scale and reach to build a private ID graph by themselves, so this is necessarily a partner strategy. With that in mind, it’s more than a little troubling that almost two-thirds of marketers said they were pursuing this kind of initiative. Large- to mid-sized brands should focus on CDPs and first-party data strategies (No. 1 and No. 2 here), and on selecting the right partner to combine that with a cookie-proofed ID graph (like Epsilon’s) or to leverage their data to create a scalable media network without needing to be Amazon or Walmart.
Outlook: Easy near-term solve, but highly inefficient
Contextual ensures your content is at least somewhat relevant to the site’s audience, but it’s highly inefficient from a customer journey and ad waste perspective. It amounts to taking a step backward in advertising, moving away from optimizing for the individual and largely giving up on effective performance measurement.
So how do you keep the capabilities of people-based advertising without third-party cookies?
Work with the publishers. In this scenario, the publisher becomes the gateway to the consumer, and marketers should rely more heavily on them. First-party data with publishers needs to be scaled and linked to the brand’s own data on that individual. Brands and publishers are actively working on this in partnership as publisher relationships become even more central to the future of digital media. In order to generate useful scale through this approach, brands will (once again) need to work with partners who have built the necessary linkages at the publisher level.
Outlook: Not enough marketers are moving in this direction
It’s surprising that only 25% of marketers are looking at data clean rooms as an option here. Third-party cookie deprecation will fundamentally change how brands reach individuals and, at least initially, reduce their understanding of consumer behavior. The brands that figure out how to overcome this in a privacy-safe way will be better poised for success in the new world of advertising, which is where clean rooms come in.
Offering second-party data partnerships that help facilitate better journeys and measurement, clean rooms from Facebook, Google—even Spotify—have been a new, exciting option for marketers. But it’s the cross-vendor clean room solutions that offer a vendor-agnostic alternative, where all advertising data from first-party environments can come together in a clean, friendly way.
Brands still get access to highly unique ad data, but they don’t suffer from self-serving vendor restrictions that impact activation and measurement. Clean rooms are a recent, but very promising, bright spot amidst third-party cookie deprecation.
**This article was originally published on Adweek, December 2020.
Loch Rose is currently the Chief Analytics Officer at Epsilon. He is responsible for overseeing the Analytics team at Epsilon, where he fosters and leads innovation in identification, personalization, artificial intelligence, optimization, measurement and data visualization. The Analytics team’s scope of work spans from building key components of Epsilon’s PeopleCloud platform such as identification and optimization, to applying our platform’s powerful machine learning and analytical...
