Clean room and CDP: What's the difference and why might you need both?

Marketers know that in the constantly changing world of consumer expectations, having the right tech stack is key. As first-party data becomes synonymous with marketing success, many are turning to tech designed to capture, organize, understand and activate customer insights to enable audience development, customized experiences and better performance.

You may have heard of (or might even currently use) a data clean room or customer data platform (CDP) solution already. Both are integral tools when executing your first-party data strategy, but understanding which tool to use comes down to understanding their main functions. Do you know the differences between them?

The differences

Data clean rooms and CDPs are sometimes coupled together because they're both martech products that provide customer insights, but there are some significant differences between them. At their most basic, both tools take data and organize it for brands to use. Different vendors will offer different levels of support for marketers. For example, most data clean rooms and CDPs don't come pre-equipped with identity and data, which affects the efficacy and scope of both techs' capabilities.

Fundamentally, though, the two perform two different jobs.

Customer data platform

• Data repository for owned customer information
• Unifies, cleanses and completes first-party data in PII state
• Uses insights to develop and activate campaigns on both paid and owned channels
• Measures customer engagement
• Enables marketers to create audiences without relying on data scientists

Clean room

• Privacy-safe environment with data in a pseudonymous state for data collaboration
• Identifies current and prospective customers in the wild
• Provides a space to analyze anonymized data
• Allows data scientists to work with data and discover new insights/analytics about current and potential customers
• Uses insights to develop and activate campaigns on primarily paid channels

Put simply: CDPs collect and analyze known customer data. Clean rooms are a safe, pseudonymized space for known and prospective customers.

A brand's known first-party data includes basic customer information (such as name, email, address). It also includes behavioral and transaction data (such as what a customer buys, their browsing behavior on owned sites, communication preferences). If a brand uses identity resolution in their tech solutions, these data points can be unified, cleansed, completed and expanded, providing a more complete view of a customer outside of what the brand knows about them.

To find prospective customers, brands need to rely on ID-based data, or unknown data. Clean rooms give brands access to that type of data. They provide a safe, pseudonymized data science environment for audience insights and analytics. This allows brands to drive prospect engagement based on consumer behaviors in the wild and use first-party and third-party data to build audiences, activate media and provide measurement.

The similarities and synergies

Ultimately, both are trying to solve for the same thing: creating seamless customer experiences rooted in first-party data. CDPs do this for customers with name-based recognition, driving lifetime value because a brand knows its current customers more deeply. Clean rooms do it in an ID-based environment, giving brands access and insights to known and prospective customers in a data-science environment.

Both support secure data collection. Both also allow for deeper insights into consumer behavior as it relates to a brand’s marketing strategy.

The synergies between a clean room and a CDP boil down to three things:

1. The ability to unlock data and technology for the entirety of the marketing organization
2. The ability to develop personalized marketing campaigns across owned and paid channels
3. The opportunity to holistically measure the impact of a marketing program

Brands that opt to use both often do so because their CDP enhances known customer data and plugs it into a clean room for machine learning analysis. A solid data foundation inside a data clean room bolsters audience modeling and activation, and coupled with AI, allows personalization for known and prospective customers at scale.

Equip your martech with identity and data

Another similarity: Most CDPs and data clean rooms do not come pre-loaded with data and identity--they're just empty boxes to fill with your first, second or third-party data--and many marketers find they have to purchase an identity resolution layer separately to sit on top of either technology.

That said, you can buy CDPs and clean rooms with identity resolution built into the platform, which makes streamlines operations (not to mention procurements) and is critical to support a variety of use cases:

• Identifying the right in-market shoppers: Both CDPs and clean rooms glean insights about in-market customers. As illustrated above, CDPs built insights about known customers. But brands only have a small window into who their customers are. CDPs with identity and pre-loaded data can fill in those data gaps. Similarly, clean rooms using identity and pre-loaded data power better prospecting data and stronger lookalike audiences.
• Modeling and measurement: Having better data leads to better measurement. Much like with acquisition, with a stronger cache of first-party data in a CDP, clean rooms do better clustering, segmentation and personalization. And, with a CDP partner using reliable and long-lasting identity, brands get a persistent, unified view of individual people across devices and channels. Together, that creates closed-loop measurement with multi-touch attribution.
• Connect owned and paid channels: Ultimately, the biggest win when using a CDP and clean room together is the visibility into the customer experience and path to purchase. Consumers are constantly evolving, and having the ability to launch campaigns across owned and paid channels means you're reaching your customers wherever they are with personalized, relevant content.
• Personalization and activation: When brands have a more complete view of their customers (both known and unknown) they can develop campaigns based directly on what consumers actually want. That is vitally important: consumers want (and expect) personalization and they expect those experiences across channels.

Which is right for me?

The decision to use a clean room over a CDP, or vice versa, comes down to data. While both solutions can maximize customer data, the questions marketers need to ask themselves are, “How much data do I have?” and "who am I trying to reach?"

To get the most value out of a CDP, brands need access to first-party data. This could be existing data a brand already has or data a brand could potentially capture. For brands that don't have a lot of data—or for brands focused on data collaboration—a clean room is a better option.

A brand also needs to consider who they're trying to talk to. CDPs are designed for known customers, and when equipped with identity and data, drive deeper, more meaningful connections. Clean rooms can reach current customers, but because they're more effective for brands looking to expand their data, they're great for finding prospective in-market customers.

Based on the scope of data a brand is working with, their use cases might change. Marketers need to understand their unique challenges and their desired outcomes, especially if they have a limited budget.

The Epsilon difference

Epsilon Customer, a CDP solution, and Epsilon Clean Room are more than empty boxes. They come pre-loaded with identity and proprietary data, giving marketers access to a universe of in-market buyers. Our solutions are also designed to work together, giving marketers confidence in their data quality.

With Epsilon, you’ll be able to build, enrich and extend your first-party data through our CDP solution, and target custom audiences with other first-party and third-party data insights using clean room.

Learn more about Epsilon Customer and Epsilon Clean Room.