With a looming regulatory-driven shift away from third-party cookies data, businesses are looking to data clean rooms to obtain trustworthy second-party data to hone their marketing and advertising efforts.
In the U.S., 86% of marketing decision-makers rely on third-party cookies. However, they’ll soon face a “cookieless future” and a legal sea change in data privacy protection. Given this profound shift, marketers are looking for new ways to access valuable data. As a result, many are using data clean rooms (DCR) to obtain trustworthy second-party data to hone their marketing and advertising efforts.
A DCR is a secure and compliant data-sharing solution. Similar to Google and Facebook, it fosters collaboration among brands, enabling them to gain insights, form “lookalike” audiences, and advertise directly to their user base. To do this, it uses second-party data.
Second-party data is created when brands share their first-party data, information they’ve collected directly from customers. There are times when brands lack actionable first-party data or third-party data—customer information collected by companies without a direct relationship with consumers. These brands might turn to another brand that has the customer information they need to make strategic marketing decisions. This brand-to-brand collaboration produces second-party data.
Collecting second-party data
Brands will often turn to each other when their first- and third-party data aren’t robust enough to execute effective marketing and advertising strategies. The resulting second-party data is created within a DCR.
For example, let’s say Brand A is a hotel booking site and Brand B is an airline. Together, they may decide to create a DCR. Brand A could then use Brand B’s first-party data to target users with advertisements for hotel packages and other deals. Meanwhile, Brand B can use Brand A’s first-party data to understand consumers’ buying habits and the times they will likely go on vacation and book flights.
Of course, it’s important to note that data privacy concerns are growing among consumers. However, data security is one of a DCR’s main benefits. DCRs follow privacy laws and ensure that a brand’s data is protected. When brands enter a DCR deal, they agree on access, availability, and usage for all data. The DCR provider enforces those agreements. These protocols ensure brands are not sharing customer data without consent.
DCRs and CDPs: A match made in heaven
A DCR is an excellent way to gather second-party data. However, it’s only as good as the quality of the first-party data being shared. Brands won’t get their desired results if the data coming in a DCR is unreliable or outdated.
So how can brands ensure their data is accurate, trustworthy, and accessible while avoiding the common pitfalls that keep companies from optimizing data? With DCRs and customer data platforms (CDP), brands can accurately analyze data for marketing and advertising efforts.
A CDP is a SaaS technology platform that creates an accurate, unified customer view.
It does this by pulling data from various sources, then clearing, combining, and applying that data to create a single customer profile. This unified customer profile can be analyzed for metrics like loyalty and engagement.
See also: How Good Data Management Enables Effective Business Strategies
CDPs: Enabling second-party data collection
DCRs and CDPs complement each other and enable brands to run targeted campaigns while protecting customer data privacy. Together, they make a powerful platform. CDPs unify data, offering updated customer profiles that maximize the value a brand can bring to data collection. As a result, brands can share in-depth information with one another, creating robust second-party data that is both trustworthy and reliable.
A CDP prepares first-party data for use in a DCR, making sure that brands are collaborating with accurate second-party data. One of the fundamental parts of a CDP is the controlled tracking of first-party data to any internal or external destination. Due to this, brands don’t have to worry about data errors or data disappearances inside a DCR.
CDPs also add an element of flexibility to DCRs. CDPs can manage different views of customer data, which is needed to work efficiently with other brands. In addition, CDPs are built to send and receive data inside and outside an organization, leading to fast data orchestration.
For example, let’s say a retailer has customer data stored in three different places, such as their online e-commerce system, their loyalty system, and in-store point of sale (POS) system. If these systems can’t communicate with each other, the retailer won’t have a unified view of customer behavior, preferences, and purchase history.
As a result, this incomplete data will greatly impact the outcome a DCR can offer, as it can lead to ineffective matching, targeting, irrelevant messaging, and a loss of potential sales and customer loyalty.
Since organizations will likely need multiple DCR solutions across different partners and use cases in the future, it’s important to have a CDP that can align and coordinate data across disparate systems. With a CDP, companies can synthesize all of the disparate data across the organization, creating the most reliable data that can be effectively used in DCRs to better collaborate with partners across multiple DCRs and discover valuable insights.
See also: What Are Data Contracts? And Should You Use Them?
The sign of the times: Making the most of data clean rooms
DCRs will play a key analytic role as we move toward a third-party cookieless world. As accessing third-party data becomes more challenging, brands must find new solutions to sharpen their marketing and advertising efforts.
By pairing a CDP with a DCR, brands can create a solid data foundation that is full of accessible, trustworthy second-party data. With a CDP, brands can obtain unified, reliable first-party data that creates in-depth customer data profiles. With a DCR, brands can use other brands’ data to gain a holistic view of consumers, helping them make strategic business decisions.
A CDP and DCR are an unbeatable combination of reliable data, enabling brands to transform their advertising and marketing efforts without the third-party data they once relied on.
