CDP vs. DMP: What Are They & Do I Need One?
If you’ve spent any time in analytics circles, chances are you’re aware of Data Management Platforms (DMPs) and the rising popularity of Customer Data Platforms (CDPs). If you ever wondered what the differences were between the two, then you’re in the right place.
Here’s a quick look at what CDPs and DMPs do, what’s different between the two, and how to decide if one (or both) is right for your marketing program.
“Customer Data Platforms and Data Management Platforms may sound similar, but they offer very different capabilities. CDPs allow you to unify all of your first-party customer data into a single platform for a holistic view of your customers’ experience across all channels. Whereas DMPs are centered around second and third-party data such as cookies mobile device identifiers.”
-Lakshmi Ramesh, Senior Director of Data Services at Tinuiti
What Are CDPs and DMPs?
Customer Data Platforms (CDPs)
A Customer Data Platform (CDP) is used to unify all of your first-party data layers for a complete view of the customer experience:
- CRM Systems
- POS Systems
- Loyalty Programs
- Advertising / Martech Platforms
With first-party data integrated from all of your channels, you can see build a holistic view of how customers are interacting with your brand.
CDPs operate on first-party data where the customer has interacted with a brand (such as purchasing or opting-in), enabling marketers to make decisions based on known customers rather than unknown.
This allows marketers to then analyze that data to “make optimizations, figure out the next best action, and personalize their experience,” says Ramesh.
For example, if a person didn’t convert on your website, you can use all of their interactions across all of your touchpoints to create a personalized campaign to entice them to complete checkout.
“Every brand has first-party data, but the problem is that it’s all siloed. Some of that first-party audience might be picked up across Analytics, Email, CRM, and platforms such as Facebook, Google and Amazon. CDPs allow you to integrate all of that information into a single place. Then that data can be used to inform everything from your targeting to personalization across all of your touchpoints.”
-Lakshmi Ramesh, Senior Director of Data Services at Tinuiti
Another underlooked opportunity with CDPs is the ability to run advanced analytics and data science (lead scoring is an example) to better understand the value of each customer.
“I can get all of my customer information within my CDP, do a simple predictive model to score my leads or calculate LTV or churn. I score all of my leads within CDP and then push that back into my CRM to inform my sales team.”
Data Management Platforms (DMPs)
Data Management Platforms (DMPs) provide a large selection of audiences mainly constructed from second and third-party data sources. You can then deploy that data to scale programmatic advertising and discover new audiences and activate similar segments.
Unlike CDPs, DMPs are limited to second and third-party data without PII (personally identifiable information), so the audiences are anonymized. This data can be collected from cookies, IP addresses, mobile IDs and more.
As such, these audiences have a shorter retention period. People clear their cookies, change IPs, and so on.
DMPs also lack the deep analytics that most CDPs offer. “Most DMP platforms aren’t built for advanced analytics. They have some insights, but CDPs seem to have more analytic and data science capabilities.”
One of the major challenges facing DMPs is the fact that there has been a backlash against second and third-party data collection due to recent privacy controversies, such as the Facebook Cambridge Analytica incident.
Since 2018, we’ve seen a crackdown on third-party targeting in the form of Europe’s GDPR and California’s CCPA regulations.
“It’s these rising limitations and regulations is one of the reasons why first-party data is getting more attention from brands,” explains Ramesh.
Which One Is Right For My Marketing Program?
“One is not necessarily better than the other, as they both can be complementary and serve different purposes,” says Ramesh.
“It depends on your brand’s use-case and priorities.”
“If your initiatives are customer intelligence; to build a holistic view of your known customers so you can dial in personalization, then a CDP can help you. On the other hand, if programmatic scale and activation is the priority, then a DMP solution makes the most sense. You can also use both together by integrating your first-party CDP data into your DMP to activate similar segments and acquire new users through programmatic.”
Want to learn more?
How to Leverage Customer Data for Successful Paid Media Campaigns
GDPR for Retailers: Expert Tips on How to Prepare for the Deadline
The California Consumer Privacy Act: What Brands Need to Know
How Will Facebook’s Clear History Tool Impact Advertisers?
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