Rely on a trusted partner to build and run your data clean room

Executive summary:

Retailers and their CPG partners are committed to offering consumers a more personalized experience with their products and services. Yet, consumer data privacy requirements have made it increasingly difficult for marketers to create targeted campaigns across multiple platforms. To address the opposing demands of data access and privacy is the data clean room, a digital environment for retailers and their partners to share customer data and develop insights that are meaningful but anonymous.

Read our white paper to learn how a data clean room works, why every retail media network (RMN) needs this new digital environment, and EXL’s approach in working with clients to provide this solution.

It’s a new world in data collection and privacy

Open season for harvesting consumer data without permission is over. No longer can companies share all the rich details of their customer data with other organizations without their customer’s knowledge or consent. Companies can still mine their own first-party data, but anything that involves sharing that data now requires a process that ensures privacy and consent. That’s why websites today are littered with pop-up windows asking for permission to collect user data.

How privacy restrictions are impacting data-driven advertising

Enhanced privacy requirements have caused significant challenges for advertisers using omnichannel platforms for targeted outreach. Regulations like GDPR and CCPA restrict how companies can gather and use personal data, particularly impacting the use of third-party cookies. Advertisers are increasingly relying on first-party data and exploring privacy-focused solutions, such as contextual advertising and data anonymization

One noteworthy change has been a deficiency in marketing attribution. Advertisers no longer fully know how their marketing tactics led to conversions, nor the conversion paths taken by their customers.

Reporting, in general, has become less accurate and less effective due to enhanced user privacy regulations, such as limitations on ad tracking on Apple devices. Plus, there are correlation gaps when companies are matching their first-party data across networks. Without a cross-platform view of third-party tracking, advertisers have to spend more resources to perform a deeper analysis of each platform.

Despite these challenges, retailers and their CPG partners are more driven today than ever before to provide a personalized buying experience for their customers.

Enter the data clean room

A data clean room is a highly secure digital environment where retailers can work with their CPG partners to mutually share their respective first-party customer data. Similar to the limitations imposed upon on a physical clean room, a data clean room is a closed environment with where established rules, policies and procedures govern its use to ensure security, privacy and quality standards.

A data clean room allows collaboration between two organizations while maintaining each party’s respective privacy standards. Each company brings their first-party user data which is then aggregated and anonymized within the data clean room. The combined results and related insights are shared with both parties, while not revealing any personally identifiable elements to either company.

Measuring ROI is a key driver for data clean rooms for retailers

Data clean rooms can be useful in many industries, but they are especially productive for retailers and CPG marketers. Within a data clean room, companies can leverage rich attributes of customer behaviors, preferences, and purchase histories in a safe manner. These findings give both the retailer and their CPG partners accurate, privacy-compliant data that can improve attribution accuracy and help them make informed decisions for multichannel outreach.

Data clean rooms are a must-have for retail media networks

Data clean rooms are a critical component for any retailer wanting to host a retail media network, a company-owned channel that delivers targeted advertising across various touchpoints. First adopted by Walmart and Amazon, hosting an RMN is an increasingly popular business strategy. According to a forecast from McKinsey, RMNs could amount to $100 billion in ad spending in the U.S. by 2026.

An RMN allows marketers to have direct access to a retailer’s customers by purchase advertising space across all the channels owned by that retailer. The underlying activity of an RMN requires access to first-party data to provide targeted outreach at key touchpoints. To open this network to their CPG partners, retailers must rely on a data clean room with the highest level of privacy and compliance regulations for data collaboration.

Turn to a neutral partner to build your RMN and data clean room

For retailers looking to build an RMN or a data clean room, finding a resource that offers third-party neutrality is an important starting point. Third-party neutrality sets the stage to ensure that all participants achieve their respective goals within the data clean room while maintaining data security and privacy requirements.

The EXL advantage for retailers seeking a data clean room

With a long history in working with global retail and consumer brands, EXL offers proven expertise in data-driven transformation. Leveraging that foundation, EXL is now partnering with retailers to serve as a neutral third-party resource to implement and run their data clean rooms.

EXL, a leader in AI and data analytics, offers a valued combination of retail domain and technology expertise. EXL understands data, knows how to organize data, and has created intelligent digital solutions for data management. In setting up a data clean room, EXL could potentially enter a tri-party contract to access data, implement rules and performance ratings, build the data platform, determine the appropriate machine learning algorithms, run the data clean room for a specific period of time, and then purges the data based on the privacy requirements of all the participating organizations. However, this approach could be tailored based on a retailer’s individual needs.

The EXL data clean room solution for retailers and their CPG partners

EXL has pioneered a sophisticated, neutral, and controlled data clean room solution where companies can analyze first-party data without compromising user privacy. The EXL offering ensures sensitive personal data is never shared between parties, maintaining strict adherence to privacy regulations. Designed to anonymize data while preserving its utility for analysis and targeting purposes, the EXL data clean room solution is architected to be a privacy-first, secured, and closed environment on the cloud. Individual first-party user information is hashed and encrypted, then grouped into clusters. Only then is the aggregated and anonymized data shared, enabling marketing teams to perform measurement, analytics, and targeting activities without compromising user privacy.

Figure 1. Data sharing between a retailer and an advertiser using the EXL data clean room solution in a cloud-based environment.

The EXL data clean room solution features a commitment to innovation and expertise in addressing complex data management challenges while maintaining privacy and regulatory compliance. First-party data is aggregated and anonymized using advanced analytics techniques including cohort level analysis, propensity modeling, market mix and activation, measurement and attribution, lifetime value analysis, prediction of customer churn, and sentiment analysis.

Key features of the EXL data clean room solution

Privacy and anonymity. A data clean room allows organizations to give a new lever to their partnerships with the power of data collaboration while making privacy and anonymity a top priority. It can be used in all industries by organizations owning the first-party data of their consumers.

Balancing scale and performance. The EXL offering is based on a robust cloud infrastructure with a pay-as-you-go model that can automatically handle scaling requirements. Performance is optimized using distributed computing techniques, parallel processing, and advanced algorithms. We are cloud agnostic and can work with cloud provider of your choice, or can build a solution on-premise if that’s the chosen infrastructure strategy.

Addressing diverse data sets. To ensure compatibility and consistency across data sets, the EXL solution includes automated integration routines and harmonized processes for data cleansing, transformation, and enrichment. Regular data audits and a stringent data governance practice are also implemented to maintain data integrity in addition to alerts as part of the workflow.

Empowering marketing teams with trusted results. By using a complex data assimilation and access strategy, marketing teams are empowered to devise effective marketing outreach strategies. The EXL data clean room is a highly scalable and distributed system with standard operating procedures for partner onboarding and operational support, ensuring seamless marketing activation.

For more information about how EXL brings together data, digital, and analytics for retailer and CPG companies, go to: https://www.exlservice.com/industries/retail-and-consumer-products

Author:

Sudip Das, 
senior AVP, data management and genAI practice, 
EXL