Thanks to third-party cookies, advertisers have dined out on an endless buffet of rich audience data for years. Consumers could be targeted with virtually unrestricted pinpoint accuracy, providing marketers with a powerful way to grow their business.
However, as of late 2023, third-party cookies will no longer be supported by Google Chrome, which has left advertisers scrambling to find new ways to target their audiences.
Necessity is the mother of invention of course, so advertisers need not panic with the advent of the data clean room — a new way to target consumers that does not rely on cookies or breach user privacy concerns.
Let's take a look at what the whole "cookieless" thing is about, why it matters, and how the data clean room is the answer digital marketers are looking for.
What Are Third-Party Cookies and Why Are They Being Phased Out?
A third-party cookie is a piece of data placed on a user's device by a website or domain other than the one they are currently visiting. These cookies have been used extensively for online advertising purposes, as they allow advertisers to track users across the web and serve them targeted ads.
For example, let's say you're browsing the internet and you come across an ad for a new pair of shoes. You don't purchase them right away, but the next day when you're scrolling through your Facebook feed, you see another ad for the same exact shoes. That's because the advertiser has placed a third-party cookie on your device that allows them to track your internet activity and serve you targeted ads.
While this might not seem like a big deal to advertisers, some major privacy concerns are associated with third-party cookies. Because they allow advertisers to track users across the web, many people feel like their internet activity is being monitored constantly.
In fact, 86 percent of people have concerns about their online privacy, and Google being the forward-thinking company that it is, aims to address this issue. To be fair, Google's ambitions are not entirely altruistic — they are also likely trying to get ahead of legal issues like The Irish Data Protection Commission's (DPC) investigation into Google's online advertising tactics.
So, with the disappearance of third-party cookies, how can advertisers continue to target their audiences effectively? The data clean room is the answer.
What Is a Data Clean Room?
A data clean room is a technology that allows advertisers to target their audiences without cookies or other tracking methods. It is privacy-centric and neutral in its approach and architecture.
In a data clean room, data from multiple sources is collected, and then personally identifiable information (PII) is removed. This data is then cross-referenced to create audience segments that can be targeted with ads. Crucially (beyond the anonymization of user data) the data never leaves the publisher/advertiser’s network.
For example, data clean rooms could take data from a customer's loyalty card, website activity, and purchase history to create an anonymous profile. This profile would then be matched with other profiles with similar characteristics. The data clean room would make an audience segment of people who are likely to be interested in the same types of products or services.
This data is then used to target ads, without cookies or other tracking methods. As a result, user privacy is maintained and therefore complies with laws like the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR).
How do Data Clean Rooms Work?
Here is a quick and basic breakdown of how a data clean room works on a technical level:
Ultimately, the clean room environment provides advantageous data insights that allow for improved ad targeting without sacrificing user privacy.
What Are the Benefits of a Data Clean Room?
Data clean rooms are a win-win for both advertisers and consumers, with a range of benefits:
Data Clean Room Use Cases
The uses for data clean rooms will no doubt evolve over time, but they already have a few clear use cases:
Retail and Consumer Packaged Goods
Due to their very nature, consumer packaged goods (CPG) companies don't really get a lot of data from their customers. Customers regularly need or want that product, and they buy it without much forethought or research, which means a lack of online behavior data related to actual purchases.
A data clean room would allow CPG companies to match audience data related to their marketing and advertising spends (e.g. promotions, sweepstakes, coupons, etc.) with the actual transactional data from the retailers. This data can then be used to create a more complete picture of the customer, and ultimately target them more effectively.
Advertisers and Publishers
Similar to the above scenario, a data clean room would create a neutral, secure zone between an advertiser and a publisher to match user/customer data to measure the effectiveness of the advertiser's spending in each area (promotions, advertising, etc.).
The advertiser can then use this data to make more informed decisions about where to allocate their advertising budget. Conversely, the publisher can then package and price their services more effectively.
Onselling Proprietary Data
In an ideal world, the customer journey starts with the customer reacting to a brand's advertisement, where the brand can then control the narrative from the start. These days, it's more of an omnichannel customer journey, where the consumer controls their path to purchase.
More often than not, a consumer will start their journey by looking at customer reviews of the product or service they are looking for. These online review sites would collect top-of-funnel data that could provide the brand with customer insights. The data clean room could allow the review site to offer compliant third-party data services for the brands they feature.
This data could include, but is not limited to:
This data would be extremely valuable to a brand and allow them to better understand how their customers perceive them. It would ultimately enable the brand to manage the customer journey, and guide them towards a purchase.
Data Clean Rooms for You — What’s Next?
As we move away from cookies and other tracking methods, data clean rooms are the inevitable future of data-driven marketing and advertising.
Put simply, if you're looking for a way to target your audience more effectively, without sacrificing user privacy (or falling short of growing compliance requirements), a data clean room is the answer.
In the interests of reaching the widest executive audience, we've endeavored to keep this article as approachable as possible, but we assure you — we have only scratched the surface of data clean rooms in terms of their technical and real-world benefits.
You deserve to be fully informed of this inevitable paradigm shift, so if you have any questions or would like to know more about data clean rooms, please do not hesitate to contact us — we would be more than happy to help. For more information on our data sharing services, please check this out.