The way companies handle consumer data is changing. Here’s why clean rooms are a promising solution to new privacy challenges

February 14, 2023, 11:29 AM UTC
Portrait of smiling young woman using smartphone against colourful background
New privacy rules are changing the way companies collect our data.
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The burden of constraints on any business team trying to leverage data to drive business impact has never been greater. While the ongoing threat of cookie deprecation has sent the advertising industry reeling, they’re far from the only sector impacted. From finance to e-commerce, increasing demands for transparency from digitally savvy consumers have evolved legislation from HIPPA to GDPR to set a high bar for customer protection, which has led to limitations.

Few fields have had to evolve as publicly as martech, where high-volume conversion and data-driven personalization have become table stakes, and data-wise millennial and Gen Z consumers have made demands for transparency central to the conversation about ad-supported media, from addressable TV to Instagram.

The marketing ecosystem, never short on ideas, is abuzz with proposed solutions and workarounds. Platforms across the ecosystem are creating their own alternate identifiers to replace cookies, though time will tell if these may follow the same fate. Others are relying solely on the targeting abilities of their programmatic networks, then struggling to tie third-party reporting to their first party-data. None of these solutions, however, show as much promise for collaboration–or as much cross-functional business opportunity–as clean rooms.

Choose your privacy-safe, data-driven adventure

As companies navigate today’s tough economic and regulatory business environment, unlocking customer intelligence in a privacy-safe manner may be the key to survival. With access to data, businesses can really get to know their customer, reach them, and impact outcomes–including the ever more aggressive business goals for revenue, customer acquisition, and retention that any chief revenue officer faces.

Companies often sit on a good deal of proprietary, first-party data, but they need to fill in gaps to make it actionable. Today, figuring out a safe way to do that can take months of meetings with a dozen experts across legal, data, and compliance teams every time you need to share data. But once it’s in a clean room in the cloud, that red tape can go away, allowing teams to enrich, segment, and deploy their data knowing their customers’ personal identifiable information is safe.

Even at companies with access to clean room technology, it is only widely used by data scientists, who query it via SQL. Any other business teams must lean on data teams for any insights they need, creating bottlenecks and preventing scientists from doing higher-leverage work. However, with the new interoperability of large platforms, using clean rooms requires less heavy lifting on the back end. The goal? Data self-service on the user end as well.

With clean rooms, marketers can stop relying on walled gardens to make privacy-safe data actionable. Instead of drowning in spreadsheets trying to align siloed insights to other customer data, or proposing new data partners only to be rejected for fear of legal hassle, marketers can focus on what matters most to them: creating meaningful connections with their customers. Creative brainstorms will be unencumbered by data and legal constraints, and marketing strategies that were once a dream can now be free to drive revenue.

Unlocking the power of data is a critical element in a successful business strategy, and the regulation will only become more complicated with time. Investors will want to know how you plan to overcome the challenge. What are you doing now to test and learn? By doing nothing, businesses risk losing the data they will need to drive customer conversions, effectively expand their prospect funnels, and create efficient systems that drive business results.

Pros and cons of clean rooms

A data clean room is a specialized digital space designed to provide a secure and controlled environment for handling sensitive data and data collaboration. Inside the clean room, all data is carefully screened and any personally identifiable information is removed or anonymized, making the data safe to share and use in a way that is ethical, transparent, and compliant with relevant laws and regulations.

This is a game-changer for marketers, agencies, and media companies, whose diminishing access to and ability to monetize customer data has recently been seen as an existential threat to the advertising ecosystem as we know it.

However, the use of clean rooms is not limited to advertising. Every business function today is wary of using sensitive data incorrectly for fear that it could cost them their reputations and customers.

That may be why companies like Amazon, Google, and Microsoft have chosen to invest in building clean rooms. The most recent announcement has come from Amazon’s cloud computing platform subsidiary, AWS, which recently launched AWS Clean Rooms to make privacy-safe collaboration easily available to the 1.45 million businesses who use its service.  

“Companies need to collaborate,” Adam Solomon, AWS Global Head of Data Collaboration & Interoperability Solutions, said in a recent interview.

“Almost any company, no matter what business you’re in, only has a sliver of data and you need partners to help round that out,” Solomon said, “but you need to do that in a privacy-enhanced manner.”

The concept of clean rooms is by no means a new one. Companies like Snowflake and InfoSum have provided these spaces to those with data engineering skills for years.

What is new is the ability for other business teams–and smaller companies without strong data science arms–to access insights. With the help of plug-and-play customer intelligence solutions offered in popular cloud platforms, actionable privacy-safe data can be unlocked for all parts of an organization for companies of all sizes. For example, AdPredictive is one of the early third-party intelligence platforms available in the new AWS clean room–a no-code solution we hope will allow more employees within organizations to access data for decision-making. This new interoperability is an important distinction from historical clean room offerings, which have been mostly siloed to either publisher-specific offerings or are limited in reach, usability, and marketer-friendly tools.

While providers like AWS, Google, and Microsoft’s Azure give marketers the ability to understand and deploy customer intelligence in a wider arc within the industry, this ease is not without a cost. Moving data to a clean room with one of the leading cloud providers further consolidates the reliance on these “Big Three” for tech and data enablement. This easy win may prevent some companies from building their own, independent tools (and in-house skill sets) to facilitate privacy-safe data collaboration, making industries like advertising, which is already heavily reliant on these providers, even more so.

Businesses who look will find plenty of other clean room options, whether they choose to work directly with media providers or invest in their own in-house solutions. The list of companies with clean room solutions ranges from ad tech platforms like LiveRamp to household-name media companies like Disney, NBCUniversal, and Roku. As more and more solutions emerge, businesses can be confident that they can finally mobilize their data again.

A key challenge to the integration of new technologies–even those with considerable promise–is setting new standards for best business practice. The existing standard will degrade no matter what. Will businesses be slow to invest in innovation and new solutions in an economy where they’re already strapped for workers, time, and resources? And how will they navigate clean room solutions, choosing from the big three and platform-specific options?

Business-friendly solutions are trying to remove at least one barrier: data engineering or coding skills are no longer necessary to query clean rooms. But the question is whether that will be enough.

All sides of the organization can benefit from access to user-friendly insights, fast, without leaning on Ph.D. colleagues for their data.

As this technology grows ever more accessible, it’s up to every business function to determine how they will navigate a new era of data privacy.

Kristin Frank is the CEO of AdPredictive.

The opinions expressed in commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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