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The opportunity for data clean rooms – by MMP’s Walid Ramadan

Data clean rooms are the way forward for targeted advertising campaigns, writes MMP’s Walid Ramadan

By Walid Ramadan, GM, MMP Experiences

You would be hard pushed to find a new angle on data right now. It feels as though we have reached a saturation point on how to gather and utilise data in the most efficient way. However, I think there is one area that is worth expanding on, especially from a more privacy-focused lens, and that is data clean rooms (DCRs)

2022 was a big year for this category, which is why the sense is this technology has matured past the ‘testing’ phase and we are now focused on how to leverage it on a larger scale. Early adopters of DCRs tended to be the smaller, more independent players. However that is likely to shift this year with more investment and greater buy-in to its potential.

Before we go deeper into that, let’s take it back to basics for a moment. DCRs essentially allow brands and advertisers to run targeted advertising campaigns in a secure, privacy-focused way through the aggregation of various first-party data. Unlike other data partnerships, DCRs ensure that user-level information is kept private, whilst still providing relevant targeting capabilities for campaigns.

So far, so simple, but the practical application is always less straightforward. Any ‘new’ technology is likely to be met with skepticism or mistrust, which is where we must take the lead to educate and inform on why DCRs are so important to the evolving digital advertising ecosystem.

According to a new report from The IAB, DCRs are now essential for audience insights, measurement and data activation, however most companies are only scratching the surface of what is possible, using this technology largely for privacy controls.

In fact, DCRs are usually paired with other privacy-preserving tech, such as CDPs (customer data platforms) and DMPs (data management platforms), which altogether send annual costs soaring. As such, there is an opportunity here to expand the functionality of clean rooms to help with greater measurement capabilities, such as attribution, return on investment (ROI) / return on ad spend (ROAS) measurement, propensity modeling and predictive analysis.

Businesses are expected to invest 29 per cent more this year to make the most of their DCRs as growing demand and finding a secure way to share non-sensitive data become the focus. I think this is indicative of where we are as an industry; we understand the possibilities and what’s required to operate DCRs at scale, however there are significant challenges to overcome first.

Investments in infrastructure (initial and ongoing) as well as finding the right talent to continually optimise this technology may prove a stumbling block for the smaller agencies, brands and publishers. There is no sugar coating it; setting up DCRs takes time, resources and money with no quick route to success.

Regionally, we are finding that clients are asking the right questions when it comes to how best to use their data and are open to more solutions, particularly as we (finally) head towards this cookieless landscape. Our role is to show the importance of clean rooms for targeting effectively and to ease any misgivings about how their data is used.

Ultimately, it is a broader question for the industry to answer, ensuring all data providers make their data compatible and allow advertisers to measure full campaign effectiveness and ROI. It is in everyone’s best interests for industry collaboration to ensure DCR innovation is encouraged and clarify the process for greater adoption.

To that end, DCR specification is coming from the IAB Tech Lab later this quarter to advise on how to define and support interoperable clean room interactions. It cannot come soon enough. In the meantime, industry analysts are keeping an eye on where the walled gardens will go in this space.

Initially, Google’s Ads Data Hub, Amazon Marketing Cloud and Meta’s Advanced Analytics all built their DCRs
to serve their own advertising needs. However, small concessions have been made at the back end of last year with both Google and Amazon announcing standalone clean room solutions, but without them their own tech or audience data behind them.

It may seem like a ‘big guys vs little guys’ situation with the heavyweights dictating the terms, but I think the days of closed solutions and limited collaboration are numbered. For the ecosystem to progress and thrive, interconnectivity and accessibility for all is the only option.

As advertisers demand more clarity in the measurement arena, DCRs are going to come up in every discussion, particularly in the battle to adhere to multiple privacy laws and deal with finding the specialist talent (data scientists, in particular) needed to make DCRs a success. Investment in the right tech stack and infrastructure will be crucial. 

If the last few years have taught us anything, it is that we cannot predict where technology will take us or where we will end up once external factors finally start to level up. Where I am confident is that clean rooms will be the one constant. I believe that whoever isn’t working on clean rooms will miss the train.
All aboard everyone.