To Grow This Year, Data Clean Rooms Shoot for Interoperability

Data clean room companies, which help publishers securely match their audience's first-party data with that of marketers, are aiming to capture more market share as the ad industry seeks more privacy-focused ways of targeting. Partly, this will come from offering more interoperability between players, as shown by the recent announcement from data clean room tech companies Optable and Snowflake. Now, a brand that has their data within Snowflake can match with the Optable customer without having their data leave Snowflake’s infrastructure, rather than only matching with audience data within Snowflake. In 2021, Snowflake partnered with data clean room firm Habu to address similar interoperability concerns and accelerate the adoption among marketers. Similar tech integrations are expected this year. But interoperability—a catch-all term within the tech industry—continues to befuddle marketers who are wrapping their heads around how data clean rooms work, according to sources. Almost half (47%) of 266 marketing professionals surveyed in Habu’s 2022 data clean room report said they had used clean rooms. That is set to grow as 70% of respondents see the level of data collaboration in their company increasing over the next 12 months. Almost 80% of companies plan to collaborate with other businesses to share their data. "There's a lot of confusion in the marketplace right now," said Matt Kilmartin, co-founder and CEO of Habu. "Brands are confused if they should just participate in all their partners’ clean rooms or they need to own their own clean room." A key place for brands to begin, according to Kilmartin, is deciding who they want to partner with and what data they wish to access. How Amazon's Clean Room Is Becoming a Formidable Cookie Challenger A use case today, said Kilmartin, are consumer packaged goods brands and quick service restaurant companies collaborating with media companies like Disney, to enrich customer profiles with additional attributes—to better understand food purchase behavior and content consumption—to deliver more relevant messages. Beyond interoperability One of the pain points for publishers working to match their audience data with that of brands is making sure they all belong to the same clean room. As a result, publishers end up working with a myriad of different clean-room vendors. “It doubles or even triples the amount of integration work that publishers have to do with each of these vendors to enable data matching through each of them,” said Bosko Milekic, chief product officer and co-founder of Optable. However, "the integration alone doesn't 100% solve for interoperability," said Kilmartin. "The concern for brands and agencies is that they're going to wake up with more data silos." For example, Pepsi works with a number of partners, such as sports leagues, video partners, and retailers. If each partner were to have its own data clean room, Pepsi could require a different login for each partner. Accessing and understanding trends across all those different platforms then become tricky. Choosing the right partner Marketers are trying to make sense of this new tech, but nearly half (50%) of their campaigns already use data clean rooms, especially within walled gardens like Facebook and Google, estimates Kilmartin. Previously, marketers were limited in their role with these walled gardens, which controlled the data transfer and audience matching. Now, more solutions are coming to market that requires advertisers to have a more proactive role over their first-party data. That’s where things get messy. The tougher economic climate compels the need to understand how this technology is driving greater ROI.Matt Kilmartin, co-founder and CEO of Habu There’s a smorgasbord of data clean rooms from platforms like Amazon Web Services, and identity providers like LiveRamp, to induvial companies like Habu and Infosum, all offering various use cases for marketing goals. “It’s important for agencies and advertisers to talk with their key partners they spend money with to understand what they're doing for data sharing and lean into those types of collaborations,” said Kilmartin. Clean room firms are growing Despite the confusion, there is growth. Infosum’s business doubled in the last year, growing to over 100 partners in 2022, from less than 50 in 2021. Similarly, Optable saw a 10-fold growth in the company’s revenue, thanks to a bullish market in the U.S., according to Milekic, who wouldn't share specifics. To aid adoption and education, trade bodies such as the Interactive Advertising Bureau (IAB) Tech Lab are publishing technical standards for clean rooms this year. These standards, in partnership with firms like Optable, show how to use these solutions effectively around use cases. “The tougher economic climate compels the need to understand how this technology is driving greater ROI of their spend,” said Kilmartin.