Blog post

Why both CDPs and data clean rooms should be cornerstones of your brand’s adtech stack

Advertising
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Written by
Erin Lutenski
Published on
February 6, 2024

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Your guide to reducing wasted ad spend using first-party data

An estimated 23-56% of ad spend is currently wasted (and that’s before third-party cookies are completely deprecated). So how can brands ensure they’re reaching their ideal audiences at a time when consumers expect more personalized — yet privacy-preserving — advertising experiences than ever before?

Efficient use of customer data is vital for businesses to reach their [potential] customers effectively. Customer data platforms (CDPs) and data clean rooms (DCRs) are two distinct tools to reach this goal, each with its unique strengths and capabilities.


Many know that CDPs offer a comprehensive view of customer touchpoints and seamless campaign orchestration, while DCRs enable organizations to open up beyond their own walls and collaborate externally. 

Recently, some CDP providers have claimed to be extending into the DCR space by offering an environment for their customers to collaborate on first-party data. This has led some brands to believe that CDPs are now a one-stop shop for all their first-party data needs. However, this isn’t the case, as CDPs often have weaker privacy guarantees and fewer capabilities regarding first-party data collaboration. 

In this article, we delve into the strengths and weaknesses of CDPs and DCRs, arguing that both are essential components of a robust, future-proof data strategy.

Comparison chart detailing the pros and cons of CDPs and DCRs
CDPs and data clean rooms have complementary strengths

Two tools to cover all brands’ campaign needs

Many brands are actively investing in setting up CDPs to navigate the challenges posed by third-party cookie deprecation. That’s because one of the primary advantages of CDPs is their ability to construct a 360° view across all customer touchpoints. This view makes CDPs very helpful in organizing customer data into one central repository that serves as a single source of truth. By enabling businesses to collect valuable insights into customer behavior, preferences, and interactions, CDPs provide a much-needed boost to the brand’s first-party data.

And while many CDPs also offer options for first-party data activation with external partners, the fact is they don’t do this in a sufficiently secure manner.

For example, a common method CDPs employ to deliver on these promises is sending personal data such as hashed emails to the other party. Brands relying on CDPs who use this method risk losing control and privacy with their collaboration partner. Still, working together on data is becoming increasingly necessary with the demise of third-party cookies. So how can brands do this in a compliant way?

This is where DCRs come in: Privacy-preserving data clean rooms are the only solution enabling brands to collaborate with external parties in a fully secure and private way. By using these types of DCRs, brands can mitigate the risks associated with direct data sharing and ensure compliance with privacy regulations. This enables use cases beyond mere activation, extending towards innovative collaborations combining first- and second-party data for audience insights, creation, and data enrichment.

By embracing capabilities offered by DCRs alongside their CDPs, brands can bridge the gap between targeting existing customers and reaching untapped audiences, thereby maximizing the effectiveness of their marketing efforts.

Can DCRs be used without having a CDP in place first?

It's important to note that brands can seamlessly integrate DCRs into their data strategies without having a pre-existing CDP. All that is required are identifiers, such as email addresses from a CRM or customer list, for matching purposes. The strength of DCRs lies in their flexibility — allowing brands to derive value even without an extensive dataset.

However, for brands seeking to unlock the full potential of DCRs, the recommendation is to incorporate the richer information made possible by a CDP. The better quality the dataset within the clean room is, the better results brands can expect from their collaborative efforts.

Speed of implementation

CDPs excel in seamlessly orchestrating campaigns across direct and media channels. This ability to streamline marketing efforts ensures a cohesive and targeted approach. However, the implementation period for CDPs can be lengthy, stretching across several months.

With DCRs, implementation can be achieved within a day, making it an ideal solution for setting up campaigns quickly.

Embracing a hybrid approach

CDPs and DCRs should not be framed as an “either-or” scenario. Embracing a hybrid approach that leverages the strengths of both CDPs and DCRs is the key to unlocking the full potential of customer data in the post-third-party-cookie era. It's not about choosing one over the other; it's about harnessing their complementary aspects to propel your data strategy forward.

References

Recommended reading

Your guide to reducing wasted ad spend using first-party data

An estimated 23-56% of ad spend is currently wasted (and that’s before third-party cookies are completely deprecated). So how can brands ensure they’re reaching their ideal audiences at a time when consumers expect more personalized — yet privacy-preserving — advertising experiences than ever before?

Key visual for guide to reducing ad waste

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