Data clean rooms: Empowering businesses with secure and transparent data exchanges

For a long time, we have been the advocates of data being the new superpower in the digital economy. Gartner also confirms that leading organizations in every industry are wielding data and analytics as competitive weapons. However, accessing data and harnessing its true potential is not an easy task. 

One of the major challenges businesses face while dealing with personal and/or sensitive data is data security and compliance regulations. The laws surrounding data privacy and compliance make it increasingly difficult for organizations, especially marketers and publishers, to share and analyze data in a collaborative manner. That’s where data clean rooms come into the picture.

What is a data clean room?

Here is how data clean rooms work. Suppose you bring home a super expensive collectible, a first issue of the Superman comic book. It’s worth thousands of dollars. So, you may not like to place it in your living room for many reasons, primarily fearing somebody might steal it or the collectible might attract dust. 

You can reserve a dedicated room in your house to keep this valuable and allow only a few chosen ones to go and see this comic book. You must also equip the room with state-of-the-art security measures to ensure the comic book isn’t stolen. Data clean rooms operate on a similar principle. Brands and publishers create a new storage space to store, combine, and leverage their sensitive data with their partners while ensuring the usage or handling of data does not violate any data privacy regulations. 

Data clean rooms can be created and deployed in minutes and help data leaders collect, store, share, and analyze data without sharing the underlying data. In a cookieless world, data clean rooms allow publishers and advertisers to collaborate closely and leverage data while preserving data integrity and confidentiality. 

                                                                    ^{Data clean room offering by Google}

Are data clean rooms a new thing?

A data clean room sounds like a new innovation; however, it is not. These rooms or controlled environments have been around for quite some time. Facebook, for example, has offered similar services to its biggest advertisers in the past. 

As the sensitive data is loaded into the clean rooms, it is anonymized, aggregated, and leveraged so that privacy concerns around personally identifiable information (PII) can be addressed, and data does not leave the room unless required/allowed.

What makes data clean rooms essential for ‘walled gardens’ and advertisers?

Walled gardens represent enclosed environments or platforms built for marketers and advertisers where they can access a multitude of products and services. Additionally, the publishers such as Facebook, Google, and Amazon exert a certain degree of control over their platforms and dictate how their ecosystems can be used. 

Walled gardens build data clean rooms to allow marketers access to more data sets (aggregated data and not user-level data). These data sets can then be blended with the data loaded by the advertisers to generate insights about ad effectiveness, customer behavior, and ways to fine-tune campaigns further. 

Without a data clean room, walled gardens will not be able to share their data since it can be sensitive in nature, and releasing or sharing them might not be permitted under the data protection law. The limited or no access to this critical data will then impact brands’ abilities to have more data at their disposal and query it to generate critical insights about their customer base and find the best ways to increase sales activities. 

Sharing data externally generates more value

In fact, data and analytics leaders who share data externally generate three times more measurable economic benefits than those who do not. 

                                                                                      ^{Source: Gartner}

However, with data protection and privacy guidelines, such as the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA), publishers and advertisers just can not share and leverage data the way they once used to. In order to share sensitive or personally identifiable data, brands, media companies, and publishers, therefore, choose to build data clean rooms where they can commingle data sets shared by different parties and generate insights without revealing the underlying data. 

Brands and publishers (Google, Facebook, and Amazon being the big boys in the field) reap a multitude of benefits with the help of data clean rooms. Here are three of the most notable: 

1. Secure access to troves of data: A data clean room provides a safer space for both the platforms and the advertisers to combine data sets and generate granular insights that help them understand their customers at a deeper level and fine-tune their marketing campaigns and generate maximum ROI on their advertising investment. All of this is done while complying with the data privacy regulations. 
2. Improved customer experience: Increased understanding of customers, their needs, and how they interact with the brand helps marketers personalize their customer journeys and deliver memorable experiences. Crafting superior customer experiences then enables these marketers to improve the lifetime value of their customers and create new avenues for growth. 
3. Increased business revenue: When marketing teams are in a position to access data that they previously had no access to (due to data privacy and security concerns) and leverage those data sets to produce relevant insights in order to analyze their performance in the ad space and tweak or complete revamp their marketing/ad campaigns based on their findings, they are likely to generate more leads and unlock new opportunities to increase the customer lifetime value of their existing customers. 

The future of data clean rooms

A data clean room is an exciting pattern for brands and marketers. The top data clean room services providers, such as Snowflake, Google, and Amazon, are increasingly investing in building and improving their data clean rooms so they can share aggregated data without worrying about data privacy laws and regulations and can help advertisers achieve maximum ROI on their advertising investments. The future, as we at Kellton see it, belongs to data clean rooms and brands that can adapt to this new extension of data storage and collaboration. 

The next generation of data clean rooms is going to be a lot more sophisticated in terms of how data is loaded, encrypted, shared, and leveraged. The increasing awareness around data protection and confidentiality across industries and the resultant laws and regulations will also cause a significant surge in demand for data clean rooms. The industry-leading data clean service providers, such as Snowflake, Google, and Amazon, are increasingly investing in more sophisticated offerings of enhanced privacy-preserving techniques such as differential privacy and federated learning. These advancements will enable organizations to collaborate and extract valuable insights from shared data without compromising individual privacy.