Data clean rooms offer new opportunities to data-poor verticals
Marketing is entering yet another period where change will be thrust upon it.
There’s a tsunami of data privacy and protection regulations crashing down on the US ad industry, starting with the California Consumer Privacy Act, which takes effect on Jan. 1 2020. Global marketers are already dealing with the impact of GDPR, and more than half of all US state legislatures are locked and loaded with similar bills of their own. While this trend raises compliance challenges for all marketers, it also creates tremendous opportunities for those in historically data-poor verticals, like consumer packaged goods.
The growth of privacy-friendly digital advertising will actually level the playing field for these marketers. It’s true that CPG marketers have never had a compelling need to track consumers at the individual user level, and they still don’t. But new privacy-safe measurement and targeting techniques are going to give them marketing “superpowers” they’ve never had before, allowing them to finally break into the data game in a meaningful way. Data clean rooms will be a key enabler in this transformation.
The legacy model: anemic data, little insight
In the past, CPG marketers have had very limited opportunities to capture data on the end users of their products. That’s not surprising since they generally sell their products through dealers, distributors, wholesalers and other third parties. The disconnect from end users means they rarely obtain meaningful insight into how a particular marketing campaign moves the needle with a particular consumer cohort.
Today’s marketplace demands a new mindset. Where replication of existing distribution channels was once the key to selling more products, CPG marketers now need to step up their focus on establishing tighter connections with their customers so they can learn their preferences and leverage that knowledge in repeatable strategies for targeting like-minded prospects.
The tech may turn out to be the easiest part
Is this a big ask? As organizational changes go, it’s huge, and it may be the biggest challenge these companies face in the new privacy-driven age of marketing. The good news is the technology to enable this new approach is already emerging. Data clean rooms, such as Google’s Ads Data Hub, are a great example. Other companies, including Neustar, Amazon and Unilever, are also reportedly developing clean rooms of their own.
Data clean rooms work by allowing multiple users to share first-party data in a cooperative space and analyze where their data sets intersect, without revealing any participant’s proprietary data to the others. Consumer privacy is protected because analytics are aggregated into groups of individuals with no PII disclosed. In a nutshell, it makes it possible for marketers to personalize at scale without compromising anyone’s privacy and while protecting the commercial and intellectual property interests of each participant in the data co-op.
The clean room model presents an exciting new option for marketers to interact with data in privacy-compliant ways. Companies in CPG and similar verticals will now have access to data-powered marketing strategies that they never had before. Yes, there will be challenges involved in harnessing this new “superpower,” but working with qualified partners and increased automation will help overcome them.
CPGs could lead a new paradigm in data-driven marketing
Much of the marketing world is looking at the trend of increasing consumer privacy legislation as an obstacle that must be overcome. That’s because third-party data has created a marketing ecosystem lopsidedly driven by proxy metrics. Maybe it’s time for a new ecosystem, one where technology provides meaningful insight into how creative actually impacts sales.
That’s just what data clean rooms do.
There’s a certain irony in the fact that marketers in verticals like CPG -- historically the also-rans in data-based marketing -- now have the opportunity to play a leading role in the new paradigm. That is, as long as they have the mindset to seize it.
Adrian is Cloud and Data Strategy Global Lead at MightyHive. As a key member of the MightyHive Global Enterprise Data Strategy Group, he applies a diverse background in digital media, SaaS platforms, and cloud-based solutions to help brands develop new customer value and media insights from connected data sets. Connect with him on LinkedIn.