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What is hashed data and how is it used?

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Written by

Niki Grant

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3 MIN

What is hashed data and how is it used?

Feature image showing what hashed data looks like

In a post-GDPR and increasingly cookie-less world, advertisers and media owners alike are on the hunt for alternative measurement and targeting methods. These new methods often include the use of ‘hashed data’, but what exactly does it mean for data to be ‘hashed’?

What is Hashed Data?

When data is ‘hashed’, it means that it has been passed through a formula that produces a coded version of the original inputs. This renders the data unreadable to programs or humans, however, ensures the data is still usable for its intended purpose. 

Image to explain the 3 steps of how hashing algorithms work

What’s the difference between encrypted and hashed data?

You may have heard the term ‘encrypted’ to describe data; hashed data is similar, however encrypted data can be returned to its original value by using a decryption formula. Hashing however is not designed to be reversible; there isn’t an inherent method to return hashed data to its original state. 

Why do we need hashed data?

Hashing is used in instances where a set of data could be considered sensitive. By hashing the data, should the system be hacked or the data be leaked, the recipient of the information will be left with a seemingly nonsensical series of letters and numbers as opposed to the raw data. For this reason, hashing is used to store passwords and usernames in databases – if the database were to be hacked, storing the ‘hash’ rather than the raw data means that no sensitive information will be accessible. 

Some functions which generally require third-party cookies are being replaced with ‘hashed’ solutions as third-party cookies are being phased out by all major browsers; alternative, cookieless means of sharing data means alternative means of data security are also necessary. Beyond cookies, tighter restrictions regarding data collection, storage, and usage following the advent of GDPR make hashing a welcome solution to issues regarding the security of stored data. 

What is hashed data used for?

Hashed data is used in instances of sharing potentially sensitive information between different systems. For example, advertisers using Google’s Customer Match feature will upload their customer data into the Google interface where the data is then hashed. This means that Google is storing your customer data in a safe and secure manner should this information end up in the wrong hands. 

Image explaining what hashed data is used for in smaller steps

Another use for hashed data is Google’s Enhanced Conversions feature. Enhanced Conversions matches data from your conversion tracking tags with that of Google accounts in order to record a conversion that otherwise may have gone unnoticed. The data used within the Enhanced Conversion matching process can include name, email address, home address, and phone number; Enhanced Conversions uses a hashing algorithm called SHA256 to ensure this personally identifiable information isn’t available or vulnerable to access aside from the original and intended purpose. 

Thanks to data hashing algorithms, personally identifiable information (PII) can be safely and efficiently shared where necessary to address challenges such as measurement and targeting. With zero and first-party data increasingly taking center stage in the digital marketing arena businesses should ensure related data is organized in a way that enables extrapolation where needed. Alongside organized data, hashing unlocks numerous opportunities for advertisers to ‘close the loop’ on their marketing.

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