Data sharing has become more complex, both in its application and our relationship to it. There is a tension between the need for personalization and the need for privacy. Businesses must share data to be effective and ultimately provide tailored customer experiences. However, legislation and practices regarding data privacy have tightened, and data sharing is tougher and fraught with greater compliance constraints than ever before. The challenge for enterprises is reconciling the increased demand for data with increased data protection.
The modern world runs on data. Companies share data to facilitate their daily operations. Data distribution occurs between business departments and external third parties. Even something as innocuous as exchanging Microsoft Excel and Google Sheets spreadsheets is data sharing!
Data collaboration is entrenched in our business processes. Therefore, rather than avoiding it, we must find the tools and frameworks to support secure and privacy-compliant data sharing. So how do we govern the flow of sensitive information from our data platforms to other parties?
The answer: data clean rooms. Data clean rooms are the modern vehicle for various data sharing and data governance workflows. Across industries – including media and entertainment, advertising, insurance, private equity, and more – a data clean room can be the difference-maker in your data insights.
Ready to get started with a data clean room solution? Schedule time to talk with a 2nd Watch data expert.
What is a data clean room?
There is a classic thought experiment wherein two millionaires want to find out who is richer without actually sharing how much money they are individually worth. The data clean room solves this issue by allowing parties to ask approved questions, which require external data to answer, without actually sharing the sensitive information itself!
In other words, a data clean room is a framework that allows two parties to securely share and analyze data by granting both parties control over when, where, and how said data is used. The parties involved can pool together data in a secure environment that protects private details. With data clean rooms, brands can access crucial and much-needed information while maintaining compliance with data privacy policies.
Data clean rooms have been around for about five years with Google being the first company to launch a data clean room solution (Google Ads Data Hub) in 2017. The era of user privacy kicked off in 2018 when data protection and privacy became law, most notably with the General Data Protection Regulation (GDPR).
This was a huge shake-up for most brands. Businesses had to adapt their data collection and sharing models to operate within the scope of the new legislation and the walled gardens that became popular amongst all tech giants. With user privacy becoming a priority, data sharing has become stricter and more scrutinized, which makes marketing campaign measurements and optimizations in the customer journey more difficult than ever before.
Data clean rooms are crucial for brands navigating the era of consumer protection and privacy. Brands can still gain meaningful marketing insights and operate within data privacy laws in a data clean room.
Data clean rooms work because the parties involved have full control over their data. Each party agrees upon access, availability, and data usage, while a trusted data clean room offering oversees data governance. This yields the secure framework needed to ensure that one party cannot access the other’s data and upholds the foundational rule that individual, or user-level data cannot be shared between different parties without consent.
Personally, identifying information (PII) remains anonymized and is processed and stored in a way that is not exposed to any parties involved. Thus, data sharing within a data clean room complies with privacy policies, such as GDPR and California Consumer Privacy Act (CCPA).
How does a data clean room work?
Let’s take a deeper dive into the functionality of a data clean room. Four components are involved with a data clean room:
#1 – Data ingestion
Data is funneled into the data clean room. This can be first-party data (generated from websites, applications, CRMs, etc.) or second-party data from collaborating parties (such as ad networks, partners, publishers, etc.)
#2 – Connection and enrichment
The ingested data sets are matched at the user level. Tools like third-party data enrichment complement the data sets.
#3 – Analytics
The data is analyzed to determine if there are intersections/overlaps, measurement/attribution, and propensity scoring. Data will only be shared where the data points intersect between the two parties.
#4 – Application
Once the data has finished its data clean room journey, each party will have aggregated data outputs. It creates the necessary business insights to accomplish crucial tasks such as optimizing the customer experience, performing reach and frequency measurements, building effective cross-platform journeys, and conducting deep marketing campaign analyses.
What are the benefits of a data clean room?
Data clean rooms can benefit businesses in any industry, including media, retail, and advertising. In summary, data clean rooms are beneficial for the following reasons:
You can enrich your partner’s data set.
With data clean rooms, you can collaborate with your partners to produce and consume data regarding overlapping customers. You can pool common customer data with your partners, find the intersection between your business and your partners, and share the data upstream without sharing sensitive information with competitors. An example would be sharing demand and sales information with an advertising partner for better-targeted marketing campaigns.
You can create governance within your enterprise.
Data clean rooms provide the framework to achieve the elusive “single source of truth.” You can create a golden record encompassing all the data in every system of records within your organization. This includes sensitive PII such as social security numbers, passport numbers, financial account numbers, transactional data, etc.
You can remain policy compliant.
In a data clean room environment, you can monitor where the data lives, who has access to it, and how it is used with a data clean room. Think of it as an automated middleman that validates requests for data. This allows you to share data and remain compliant with all the important acronyms: GDPR, HIPPA, CCPA, FCRA, ECPA, etc.
But you have to do it right…
With every data security and analytics initiative, there is a set of risks if the implementation is not done correctly. A truly “clean” data clean room will allow you to unlock data for your users while remaining privacy compliant. You can maintain role-based access, tokenized columns, and row-level security – which typically lock down particular data objects – and share these sensitive data sets quickly and in a governed way. Data clean rooms satisfy the need for efficient access and the need for the data producer to limit the consumer to relevant information for their use case.
Of course, there are consequences if your data clean room is actually “dirty.” Your data must be federated, and you need clarity on how your data is stored. The consequences are messy if your room is dirty. You risk:
- Loss of customer trust
- Fines from government agencies
- Inadvertently oversharing proprietary information
- Locking out valuable data requests due to a lack of process
Despite the potential risks of utilizing a data clean room, it is the most promising solution to the challenges of data-sharing in a privacy-compliant way.
To get the most out of your data, your business needs to create secure processes to share data and decentralize your analytics. This means pooling together common data with your partners and distributing the work to create value for all parties involved.
However, you must govern your data. It is imperative to treat your data like an asset, especially in the era of user privacy and data protection. With data clean rooms, you can reconcile the need for data collaboration with the need for data ownership and privacy.
2nd Watch can be your data clean room guide, helping you to establish a data mesh that enables sharing and analyzing distributed pools of data, all while maintaining centralized governance. Schedule time to get started with a data clean room.
Fred Bliss – CTO Data Insights 2nd Watch