Blog December 02, 2022 |

Will Privacy Regulators Crack Down on Activation from Clean Rooms?

The hype around data clean rooms over the last year is just one more example of how marketers, advertisers, and publishers are being forced to change up their playbooks as they grapple with the consequences of third-party cookie deprecation and tightening consumer privacy regulations worldwide.

At its core, a data clean room should provide a neutral, secure, and privacy-compliant environment to facilitate customer data sharing between two or more parties without revealing PII data across parties.

When two parties share their first-party data directly with each other, it’s called second-party data sharing. This type of data sharing is especially valuable when the two parties have a direct relationship with one another, such as a:

  • Consumer goods manufacturer and a retailer that sells its products

  • Publisher and an advertiser that buys ads to target its audience

  • Financial institution that offers a rewards credit card in partnership with an airline, hotel chain, or retail company.

Given the current consumer privacy landscape, the benefits of using a clean room environment to conduct second-party data sharing are compelling. Analyst firms like Forrester have been highlighting data clean room use cases and benefits for marketers and advertisers in particular.

Even in a world without third-party cookies (coming soon to a browser near you), data clean rooms enable marketers and advertisers to collaborate with strategic business partners to:

  • Uncover actionable new insights about their shared customers and audiences

  • Measure the impact of marketing and advertising campaigns on a shared audience

  • Activate valuable new audiences that would have otherwise been undiscoverable

But it’s the ‘how’ in that last point about activation that may have privacy regulators raising their eyebrows and re-opening the books on GDPR, CCPA, and the like. Brands and publishers should especially take notice because privacy-related fines have been ramping up in the US and Europe over the last year. A crack down on direct audience activation from data clean rooms may be next.

Why is Activation from a Data Clean Room Being Called into Question?

To be clear, ‘audience activation’ itself is not in question as it relates to the use cases and benefits of a data clean room. In fact, it’s quite the opposite. Marketers, advertisers, and publishers should expect their data clean room solution to provide actionable insights that ultimately improve their business teams’ ability to interact with customers and audiences in smarter ways that drive growth for the company.

However, questions start to arise when shared audiences are built inside a clean room by combining customer data sets from two different parties for the purpose of directly targeting those audiences, but in the absence of individual consent to do so across both parties.

Such practices raise questions like:

  • Is audience activation directly from a data clean room just a DMP by another name?

  • Does it violate the intent of consumer privacy laws such as GDPR, CCPA, and others that require explicit consent to target an individual on the basis of their personal information?

  • If you have consent to directly target the individuals that make up the shared audience, then why not just enrich the customer records in your first-party data set and bypass the need for a data clean room altogether?

Data Clean Room Buyers Beware of the ID-Based Approach to Activation

Not all data clean room solutions on the market today are created equal. So it’s important for technology buyers to understand what they are signing up for before they decide whether or not they need a data clean room and if so, which solution best supports their use cases while mitigating data privacy risk.

As previously mentioned, data clean rooms enable customer and audience insight discovery, as well as marketing and advertising measurement in the absence of third-party cookies. But if your ultimate intention for using a data clean room is to act on the combined audience output (as it should be!), then it’s important to take a closer look at how the solution enables you to activate new audiences.

Direct activation of a shared audience from a data clean room is questionable at best, because a common identifier is the underlying mechanism for combining the two audiences in the first place. That common identifier could either be a piece of PII data (e.g. name, physical address, email address, phone number) or an ID directly associated with a unique individual.

This is what is commonly referred to as an ID-based approach to audience activation from a data clean room. Although PII data is never revealed or exchanged between parties inside the clean room, direct activation is still a form of using someone’s personal data to specifically target them with a marketing or advertising message. And unless you have explicit consent to do so, this could be considered a violation of their privacy rights.

Privacy-Compliant Activation with a Data Clean Room

Fortunately, there is a privacy-compliant alternative to the ID-based approach to audience activation from a data clean room.

Instead, consider a solution that offers value beyond what you can do inside the clean room by also enabling activation of lookalike audiences within your consented, first-party data set. So rather than directly targeting the individuals in the clean room, you’re building highly confident lookalike models based on shared audiences in the clean room and then applying those models to consented audience data. This is commonly referred to as a model-based approach.

The model-based approach enables your business teams to activate valuable new audiences based on the insights gained and models developed inside the clean room, but in a way that does not put them at risk of directly targeting individuals based on data for which they do not have consent to use.

As you reach more individuals using the lookalike audiences, bring those audiences back into your clean room for further analysis and model refinement, creating a virtuous cycle of insight and action.

Want to learn more about the use cases and benefits of second-party data sharing in the current privacy landscape?

Contact us to discuss your specific business needs and which of our solutions might be right for you.

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