Data clean room technology is at a strange inflection point.
Clean rooms are all the rage – everybody’s talking about them.
Over the past couple years the category has grown to bursting with startup entrants, like InfoSum or Habu, and identity data incumbents, such as LiveRamp and Neustar.
But even the most sophisticated brands are still early in the test-and-learn phase, and it’s unclear how big of an opportunity there is for independent players going up against mega-platforms with their own data clean rooms, including Google, Amazon and Meta.
The indie show
The first data clean rooms were propagated by the biggies: Google with its Ads Data Hub, Meta’s Advanced Analytics and the Amazon Marketing Cloud (which is a data clean room service operated by Amazon Ads that’s separate from the AWS cloud business).
But all three are walled garden-based clean rooms built to advertise across their own media.
The independent opportunity is to comingle advertiser and publisher data sets outside of walled gardens. The idea is that by creating an external clean room with major direct ad sellers, a brand could get the benefit of privacy-based ID matching while still growing its own CRM or identity data.
The challenge for indie players is that the big platforms smell this opportunity, too.
In November, Google quietly announced that Ads Data Hub would split into a walled garden ad service and a separate clean room that can plug into other providers (think LiveRamp, Habu or InfoSum), but without the Google data behind it. AWS likewise launched a standalone clean room solution in December that could be used by non-Amazon ad tech but doesn’t include Amazon purchase or audience data.
But even with the launch of so-called “open” clean room products by Amazon and Google, independent clean room providers can still earn their place by serving as a layer of interoperability, said InfoSum COO Lauren Wetzel.
A brand, for example, might have a first-party data set built on first-party cookies and home addresses, whereas a media company the brand advertises with has a strong email data set. In that situation, an independent clean room solution could bring in outside identity data providers or third-party data sets to augment the advertiser and publisher data sets, Wetzel said.
The prospects of independent clean rooms are closely tied to programmatic media, she said.
In order to both satisfy privacy laws and also achieve addressability – twin pillars for programmatic – advertisers need data clean room-like technology, she said.
Although LiveRamp has been an active partner for Google’s Ads Data Hub and Amazon’s clean room, LiveRamp’s own clean room use case is strongest for advertisers or campaigns that go deep on the open web, said Alex Bloore, senior director of product and data at programmatic agency Goodway Group.
But another key aspect of the indie pitch is that third-party clean rooms can help marketers grow their first-party data set. The clean rooms on offer from Google, Amazon, Meta and even Roku don’t contribute any user-level data to advertisers after a campaign.
Welcome to maturity
Still, despite enjoying a buzzy couple of years, data clean room adoption has yet to reach a tipping point in terms of scale.
For instance, because almost any major omnichannel campaign invariably includes media from across big walled gardens, a third-party data clean room isn’t a viable solution, Bloore said. “You’re not going to get Meta, Google, Amazon, et al. data into that clean room in a way that’s measurable or in the way that you hoped.”
It’s not surprising that data clean rooms are struggling to gain adoption. Customer data platforms went through a similar phase when all of the large marketing clouds (and a few Big Tech companies) saw the category’s growth and released CDPs of their own.
If the CDP analogy holds, some data clean rooms – a pox, by the way, on anyone who abbreviates “data clean rooms” to DCR – might soon be acquired by the likes of Google or Salesforce.
But before the dealmakers come calling, data clean rooms first must win over marketers and get them to start spending money – which is difficult despite brands being open to the clean room pitch.
The Pepsi customer marketing team, for example, is still “fighting for the resources for data scientists and analysts to come with us on this journey of figuring out [clean room tech],” said Alison Dempsey, Pepsi’s head of ecommerce customer marketing, during a session about clean room measurement at Amazon Advertising’s unBoxed conference in October.
And that’s Pepsi talking – one of the largest, most sophisticated advertisers in the world.
Adoption might be stalled in part due to confusion about the wide field of different clean rooms, each of which offers a slightly different version of privacy tech and interoperability.
The IAB Tech Lab is expected to release its first data clean room standards soon. (The original plan was by the end of 2022.)
But as advertisers push for more clarity in the measurement space over the next year or two, the clean room category will also likely collapse through M&A, Bloore said. Smaller clean rooms will find it hard to achieve liftoff when the advantage so clearly lies in offering a scaled network play.
Regardless of what happens, though, one thing is sure: You’re not going to stop hearing people talk about data clean rooms.
“Clean rooms are the next hot topic,” Dempsey said. “This the big thing the next few years.”
