Data Clean Rooms and Their Impact on Cookie Deprecation

ADvendio
5 min readMar 25, 2024

In 2020, Google announced its plans to phase out third-party cookies amid growing concerns about online data privacy. Per the platform’s timeline, this should come into full effect in 2024. However, many other browsers are introducing similar changes.

While this shift is likely to be welcomed by web users, given that “65% of web users believe that the excessive use of cookies is a privacy concern,” it will bring forth many challenges for advertisers.

After all, for many years, cookies played a crucial role in programmatic advertising, allowing advertisers to track user behavior, target customers, and create effective ad campaigns. For this reason, it’s hardly surprising that “16% of marketers believe that cookie deprecation will devastate their business.”

However, the digital advertising ecosystem is continually evolving, which means there are many other strategies that advertisers can rely on moving forward. For example, this could include using “data clean rooms.”

Understanding Cookie Deprecation

Cookie deprecation refers to the phasing out of cookies on Google and other search engines.

There are many reasons this change came into effect, the most obvious being privacy concerns among web users. For example, a Statista study found that 57% of users found it “impossible” to completely protect their privacy online, with many viewing cookies as a source of vulnerability.

Regulatory changes, such as the Data Protection Act 2018, implemented to further protect web user’s privacy, have also played a key role in cookie deprecation.

The Impact of Cookie Deprecation on Tracking User Behavior

Right now, approximately 83% of marketers/organizations rely on third-party cookies, especially when it comes to launching effective marketing campaigns. After all, this data provides invaluable insight into their consumers based on search history, previous purchases, and brand preferences. Cookies, therefore, allow them to launch campaigns that are directly tailored to their consumers, resulting in a better ROI.

Moving forward, it is clear that cookie deprecation will have a profound impact on tracking user behavior, targeting, and personalized advertising. This has left many organizations scrambling to identify the best alternatives to third-party cookies, such as relying on first or second-party data instead.

However, those looking to thrive in Cookieless 2024 should consider using Data Clean Rooms.

What are Data Clean Rooms?

Data clean rooms are secure online environments that allow organizations to collaboratively analyze and process data without exposing (or exchanging) web users’ private data.

The etymology of their name stems from the concept of a data-clean room being a “sterile” or “clean” environment. It is an isolated space where data can be analyzed without risk of exploitation among parties.

When using a data clean room, organizations can access a wealth of information to enhance their marketing efforts and strengthen their relationship with their customers accordingly. It will also allow them to comply with all government regulations or conduct market analysis.

Advantages of Data Clean Rooms

There are many benefits associated with implementing data clean rooms. For example, they:

  • Address privacy concerns. Data Clean Rooms are highly secure environments that allow consumer habits/behaviors to be studied without exposing sensitive raw data to organizations. Not only does this address privacy concerns among web users, but it also ensures compliance with all government regulations.
  • Enhanced data security. Data Clean Rooms employ various strategies to enhance data security. For example, before data “enters” the clean room, it is aggregated and anonymized. This removes any identifiable information from the data set so that the anonymity of individual users is protected.
  • Promote Responsible Data Sharing. The privacy-protecting processes associated with data clean rooms mean that all parties involved participate in responsible data sharing. Organizations can work collaboratively to share insights into consumer behaviors without the risk of exposing sensitive information.

Some reports have even gone so far as to claim that data clean rooms “offer the only viable alternative to a cookieless future.” As such, it is hardly surprising that many companies, including web giants such as Amazon, are beginning to provide users with access to data clean rooms.

Data Clean Rooms vs. Traditional Data Sharing

It is important to note that data clean rooms are not a direct replacement for third-party cookies or other traditional data-sharing methods. However, there is a distinct overlap within the coverage and support they offer, which is why many industry experts consider them the most viable alternative.

Data Clean Rooms vs. Traditional Data Sharing: Key Differences

Privacy Protection

Data Clean Rooms: Data Clean Rooms aggregate and anonymize user data before it “enters’ ‘ the room. This means they provide more comprehensive privacy protection for all parties, ensuring organization compliance.

Traditional Data Sharing: Traditional data sharing methods, such as third-party cookies, do not protect user data to the same extent. For this reason, many web users distrust sites that utilize them, with 70% of consumers now blocking cookies online.

Collaboration

Data Clean Rooms: Data Clean Rooms are collaborative spaces, allowing organizations to share valuable industry/business insights in a secure environment.

Traditional Data Sharing: Changing regulations and legislation make it difficult for organizations to share data gathered through more traditional methods without breaching security protocols or relying on unethical practices.

As evidenced above, data clean rooms offer a “middle ground” for marketers and organizations to improve their marketing efforts or online performance without relying on third-party cookies. In a recent article, Will Kunkel, senior vice president of marketing at Stirista, stated that data clean rooms are “not a panacea, but it’s a step in the right direction for moving toward a world less reliant on cookies.”

After all, they allow for effective collaboration among companies without exposing raw, sensitive user data. This ensures that businesses remain compliant and can strengthen their relationship with consumers accordingly.

Future Trends and Considerations

As Google (and other search engines) begin to roll out cookie deprecation in full force, data clean rooms will undoubtedly become more widespread.

Right now, the Internet Advertising Bureau reports that 64% of companies attempting to leverage privacy-preserving tech are using data clean rooms. This figure is set to increase quite considerably in the current digital landscape. They also claim that, as these platforms become more sophisticated, their functionality will improve. This means they could offer “companies across the ecosystem more flexible, sophisticated, interoperable and scalable opportunities.”

In short, data clean rooms are going to play a critical role in the post-cookie landscape, especially when it comes to advertising.

Originally posted on ADvendio.com on 25th March 2024.

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ADvendio

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