Today’s customers interact with your brand across numerous different touch points and leave a significant trace of valuable data in these channels. Modern companies collect this data and turn it into opportunities to attract new customers and create a seamless experience for them across all these touch points. In order to get the most out of their data potential, companies need the appropriate technologies. That’s why more and more organizations are investing in Data Management Platforms (DMPs) and Customer Data Platforms (CDPs) to help manage and monetize their customer data. When integrated with the complete MarTech stack, these technologies enable organizations to create a complete 360° view of their customers and target them with the right campaigns at the right time.
But what exactly are DMPs and CDPs? What can they do and how do they differ? And more importantly: Which one do you need? Read all about it in this blogpost.
What is a DMP?
A Data Management Platform (or DMP) collects non-personally identifiable information (non-PII) from different sources (mostly 2nd and 3rd party data, but also 1st party data) and enables marketers and advertisers to categorize this information into different segments and eventually target their campaigns to the right audiences.
For those who aren't familiar with the different types of data, here's a short reminder:
- 1st party data is data you collected directly from your audience, like for example CRM data from your customers or data gathered from analytics platforms and social channels.
- 2nd party data is basically someone else's 1st party data. The seller, mostly a partner organization, collects its own 1st party data and then shares this data for a certain fee.
- 3rd party data is mostly purchased from large data aggregators. Those companies usually aren't the original owner of this information, but buy these big data sets from publishers and other data owners.
A DMP uses 3rd party cookie IDs to identify and track online behavior of web & app visitors and centrally store this information. The DMP then builds profiles based on these IDs alongside demographic data and other centralized information. As mentioned above, only non-personally identifiable information is captured in the DMP, which means that the information can’t be de-anonymized because of legal restrictions on the use of 3rd party data.
Their ability to manage large sets of data and create high-value audiences makes DMPs the ideal tool for advertisers and marketers. When implemented alongside a Demand Side Platform (DSP) for example, they are able to target their ads in the most efficient and accurate way and optimize campaign performance. Therefore DMPs are an essential tool for publishers, media houses and e-commerce. DMPs are also great for lookalike modeling.
What is a CDP?
A Customer Data Platform (or CDP) is a more recent solution. It consists of a persistent and centralized database which integrates online and offline customer data from multiple sources (websites, apps, CRM, etc.) and builds unique customer profiles based on personally identifiable information (PII), like email address, name and customer ID. It’s also possible to retroactively tie interaction data of anonymous customers to identified customer profiles and stitch data across devices.
These unified profiles provide a 360° view of each customer and enable organizations to deliver a personalized experience across all channels. On-site personalization and customized email campaigns are examples of this.
Other main advantages of CDPs are their long-term data storage ability and integration possibilities beyond the MarTech stack, like for example CRM systems.
Differences and similarities
One of the main differences between the two technology solutions is their purpose. While DMPs are generally used as advertising platforms, CDPs focus mostly on personalization and targeting across the customer journey.
The use of personally identifiable information is another huge differentiator. Because DMPs frequently exchange data with DSPs an ad networks, they aren’t allowed to use PII because of privacy regulations. CDPs on the other hand often utilize 1st party CRM data and use PII like names, email addresses and customer IDs.
Another big difference lies in their ability to target different audiences. DMPs focus on audiences and segments created with anonymous data based on cookies, IP addresses or device IDs. CDPs, however, are focussed on individual customer profiles based on both anonymous and identified information. This individual approach enables marketers to personalize their communication on a 1-to-1 level.
But CDPs and DMPs also have some things in common. They both leverage existing customer data and use this information to activate their target audiences.
Which one do I need?
Note that CDPs and DMPs are complementary solutions. You can enrich your CDP with DMP data in order to enhance customer experiences. The other way around you can also use CDP data in a DMP to boost the accuracy of your targeting activities and to optimize lookalike audiences. In a future-proof marketing stack where the two solutions are properly integrated with each other, a DMP could attract customers to your site, where a CDP could provide them with a tailored experience.
If, due to budgetary limitations or other reasons, you aren't able to implement both solutions, you should pick the one that best suits your demands. Before you choose between a CDP and DMP, there are some things to take into consideration. What do you want to achieve? What are your needs? What resources does your organization possess? And what is your analytics maturity?
The most important factor while deciding between one of the solutions is the desired purpose of your marketing activities. If you want to focus on targeted advertising and optimization of your media buying strategy, you will be better off with a DMP. If you’re primarily interested in a seamless and personalized experience across different touch points in the user journey, a CDP is the way to go.