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IAB: Digital Ad Sellers Will Face Growing Use Of Data Clean Rooms To Overcome Privacy Changes.

As digital advertisers face more privacy challenges, a growing number are using what are known as data clean rooms. It is technology that gives advertisers non-personally identifiable information on which they can target a specific audience segment. They can also be leveraged for audience measurement. In the annual State of Data report from the Interactive Advertising Bureau (IAB), more agencies, brands and publishers say data clean rooms have become an indispensable privacy-preserving technology.

The IAB survey finds two-thirds (64%) of companies leveraging privacy-preserving technology are using DCRs. But that number increases to 85% when including those that are considering the technology. Most companies report they use the technology for vital tasks, including privacy protection and controls, match rates, and interoperability.

But time and money remain the biggest hurdles. Nearly half of DCR users (49%) have six or more employees dedicated to the technology and many say it takes months to as long as two years to get up and running with it. And it doesn’t come cheap with six-figure budgets required, and a quarter spending roughly $500,000 to start using DCRs. “This creates an unfair market disadvantage for small agencies, brands, and publishers that don’t have the resources to meet these investments,” said the IAB report, which was released Tuesday at the IAB’s Annual Leadership Meeting.

Despite the hurdles, the report sees advantages. That includes unifying consumer data from disparate sources into one platform to provide a single customer view. It also works to combine internal and external customer demographic, behavioral, and historical data for real-time purchase analysis and prediction while at the same time protecting users’ data privacy by allowing website owners to have total control over cookies and trackers.

“Cookies are going away and markets are going to have to get their data into platforms to be able to activate upon it,” said a publisher that is looking at making a DCR investment. “Connecting these dots now is going to lead to more investment in the future,” they said.

While interest is high, the IAB report says DCR users are likely not yet leveraging the technology for media mix modeling, attribution, or ROI measurement as early-stage adoption has focused on privacy and audience activation.

The survey found that just 17% are using DCR technology for media decision-making. And 23% are using it to measure a campaign’s ROI. “This represents an opportunity for DCR users to capitalize on the technology’s most powerful capabilities critical for operating in,” the report says.

Yet use is likely to grow based on what one ad agency executive said. “One of the main drivers of setting up DCRs is the idea that neither party, and advertiser or a third-party data provider, are able to see each other’s data,” the executive said. “Therefore, it’s encrypted, anonymized, with a single key that’s useful to activate but cannot be interrupted or decrypted.”

Jeffrey Bustos, VP of Measurement, Addressability & Data at the IAB, thinks momentum to use new DCR technology will continue to grow. “Companies expect to invest 29% more in 2023 to make the most of their DCRs, and that’s really encouraging,” he said. “There is growing demand due to loss of signals and wanting to share data with partners without sharing sensitive data. This may show that companies are understanding what’s required and ramping up their investments accordingly.”

The IAB and the IAB Tech Lab say they will work with advertisers to make it easier for the digital ad industry to understand and use DCRs. In the next few months, the IAB Tech Lab will announce its first DCR specification to support and define interoperable clean room interactions for digital advertising.

“To make the most of DCRs, the industry needs all data providers to make their data interoperable so that advertisers can measure full campaign effectiveness and ROI,” said David Cohen, Chief Executive of the IAB. “There should be no exceptions. It’s in everyone’s interests for closed ecosystems to provide access so that advertisers can effectively analyze their campaign activity. Advertisers need a window into the data.”

Download the IAB’s State of Data 2023 report HERE.

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