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Data clean rooms offer the only viable alternative for a cookieless future

By Cory Munchbach, President & COO, BlueConic

Moves by Google’s Chrome and Apple’s Safari to eradicate third-party cookies are a necessary step to ensure consumer privacy is protected, but recent reports provide a sobering outlook on the impact the move could have on brands and publishers. Research suggests that 83% of brands anticipate moderate to significant impact on their digital advertising efforts, while publishers stand to lose $10 billion in revenue due to reduced personalisation and audience targeting capabilities.

But like most waves of disruption, the demise of third-party cookies creates valuable new opportunities for both brands and publishers alike. The industry broadly acknowledges that ethical data management and privacy practices are requisite going forward, with Forrester calling it the next consumer-driven, value-based source of differentiation. And with Google’s decision to delay the deprecation of third-party cookies until mid-2023, companies now have the extra air cover they need to rethink and improve the ways they collect and use data to reach and engage customers in a privacy-first world.

Adopting a privacy-first mindset

Perhaps the biggest by-product of the push for privacy is the requisite move away from reliance on third-party data and specifically towards first-party data. It’s also forcing some fundamental shifts in how companies utilise consumer data for marketing and advertising purposes:

  • Less is more: Studies have shown that GDPR and subsequent privacy legislation designed to give individuals more control over their personal information has reduced the amount of data available to companies, with a 10.7% rate of consumers opting out of sharing their data. This decline is problematic for marketers whose approach has largely been based on targeting campaigns to the biggest audience possible (while also keeping their data collection as broad as possible). But this ‘spray-and-pray’ approach has proven time and again to be expensive, wasteful, and low return. Moving from third- to first-party data means reprioritising quality over quantity. While that may mean smaller audiences, it also creates opportunities to target higher quality segments that also perform better.
  • No more data for data’s sake: There’s been a long-held belief among marketers that you can never have enough data. That was always misguided, but now more than ever, companies need to think about what they actually need that data for. Uncertainty about how data will be used not only makes it more difficult to effectively apply that data to improve customer engagement strategies and business outcomes, but also poses significant security and compliance risks to the business. To avoid costly fines from privacy violations, never mind the hits to brand reputation, companies need to balance how much data they need to be effective with the liability that comes with collecting and storing large amounts of data.
  • Data is a matter of trust: Many companies have embraced a minimal-compliance mentality, whereby they adopt basic consent models and do just enough to comply with privacy laws in order to avoid fines. Yet tactics like intrusive cookie banners not only interrupt activity; they do absolutely nothing to increase consumer trust. To build consumer confidence, companies need to be transparent about the ways they are using a person’s data to create a continuous value exchange between brand and consumer. The more data consumers provide, the more value-filled those experiences should become.
  • Attribution (as we’ve known it) will end: Many companies today rely on multi-touch, algorithmic attribution to understand the impact of their advertising and marketing spend on key metrics such as conversions, sales, bookings, and more. Since attribution relies on cookies to connect marketing tactics with results, it will become increasingly difficult to measure performance as third-party cookies are phased out. Advertisers must find alternative methods for measuring the impact of their spend, while publishers will need to embrace new ways to prove the value of their audiences and ad products to advertisers.

Moving forward: How data clean rooms can help

So, how can brands and publishers play by these ‘new rules’ of engagement? Success in this new paradigm depends on having the right strategies, tactics, and tools in a data deprecation playbook. That’s why more and more companies are embracing a first-party data strategy that incorporates solutions like a data clean room to better understand their audiences and measure the impact of their marketing and advertising.

Data clean rooms provide a neutral, privacy-safe environment where brands and publishers can combine their first-party data with a trusted partner’s second-party data without exposing either party’s personally identifiable customer data to each other. While data clean rooms aren’t a 1:1 replacement for the attribution tools of today, they provide a powerful alternative for analysing performance by matching the necessary audience data for modelling and measurement in a privacy-compliant environment.

In this way, brands and publishers can understand what’s influencing conversions, purchases, and more, and use that insight to fine-tune audience targeting and optimise advertising and marketing spend – all without ever exposing individual customer data.

Beyond the buzz

The potential of data clean rooms as an answer for privacy-safe marketing and advertising has led to what some have dubbed a “clean room boom.” Following Google’s lead, Amazon recently announced a new clean room offering, which would enable brands to connect their insights to their advertising activity across the Amazon platforms. Meanwhile, on the other side of the market, media giant Disney announced that it can support multiple data clean rooms.

When considering a clean room solution for your business, it’s important to understand the ways in which it can be used. For instance, data clean rooms offered by Google and Amazon typically only enable companies to measure ad performance within those company’s own closed ecosystems. Moreover, they use black-box attribution models that raise questions about validity of that measurement – particularly when it benefits their own advertising revenue.

Companies need to take matters into their own hands by looking for solutions that foster a neutral and open ecosystem with any partner of their choosing, and provide full transparency into how the attribution methodology works. The data clean room should also make it easy to add trusted partners over time without requiring additional IT resources, while insulating companies from the risk of inadvertently sharing personally identifiable information with second parties. Finally, the clean room solution should be able to connect to the same unified first-party dataset used for segmentation, marketing orchestration, and analytics.

With the demise of third-party cookies, the digital marketing and advertising industry is about to see one of the biggest shake ups in history. But it’s not all bad news. By embracing a first-party data strategy that incorporates solutions like a data clean room, brands and publishers can set themselves up for success by unlocking new opportunities to personalise at scale—without compromising privacy. 

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