Builds a dynamic marketing technology stack capable of collecting, transforming, and activating customer data using the Customer Data Platform to enhance your data management platform. Learn how to leverage these techniques to help you turn your customer data into a growth asset.
Marketers use several different solutions to achieve their goals when it comes to activating, organizing, and aggregating user data. It is easy to implement a system with so many options that create operational bottlenecks in the long run.
Therefore, marketers’ real challenge is understanding which solution will best meet their business needs and support future requirements.
Many of the marketers we work with have used a DMP at some point. But now, they need a solution to address the challenges associated with collecting, organizing, and activating first-party customer data while supporting data privacy.
This research process often leads marketers to ask: What is the difference between a data management platform (DMP) and a customer data platform (CDP), and which is right for me?
To help you find the best option for you, this article will discuss the following:
- How CDP and DMP work
- how do they differ from each other
- and how you can leverage them to help you turn customer data into a growth asset
What is DMP, and what can it do?
DMP software controls the flow of data out and supports data-driven advertising strategies such as segmentation.
DMPs have been around for a long time and have historically given brands access to customer data that is otherwise inaccessible and siloed.
DMPs Play Three Main Roles:
- Segmentation
- Data collection
- Measurement and adjustment
1. Segmentation
DMPs take all that data and create an audience filled with anonymous proxies with similar characteristics, depending on the audience a marketer is trying to target. Marketers can then feed these audiences into their demand-side platforms (DSPs) to support ad buying.
2. Data Collection
DMPs consolidate data from cross-device touchpoints and link them to the customer profile most likely to engage using a predictive algorithm. These benefits are twofold: You don’t have to collect personally identifiable information (PII) from customers in every interaction, and you can scale your database more quickly.
Some DMPs may collect and store some first and second-party data—anonymized and hashed before being stored and organized for use by the brand—but rely primarily on third-party data to create a DMP audience. Let’s trust
They Collect Data in Three Ways:
1. Onboarding
This is a largely manual process where customer information determined to be important is put together in a CSV file, then fed into the DMP.
These files typically include fields such as Attributes, Attribute ID, Attribute Type, Banding Rules, and Description. Attributes are aspects associated with people, such as age or gender or whether they have signed up for a loyalty program. Attribute IDs and attribute types are then appended to help keep the information organized, with banding rules to help further define the attribute values.
Details are given to remind teams of the source, value, or importance of that information. Once onboarded, all this data is stored for future use.
2. Tags or Cookies
DMPs collect anonymized, hashed customer information through code embedded in mobile apps, websites, and mobile sites. Tags perform specific tasks – such as recommending products or chatting with customers – while collecting behavioral data on each customer.
Tags and cookies are efficient collectors of users’ data where tags can be triggered with limited digital properties. Tags also have an expiration date and are, therefore, temporary data sources.
3. API
DMPs can also collect formatted data objects from other platforms or services, which a company can use to manage customer data through a server-to-server exchange.
3. Measurement and Adjustment
Finally, a DMP manages audience data, measures, and campaign activity to help establish best practices and optimize ongoing campaigns for future campaigns.
The Right Tool For The Right Job
DMPs is especially useful for marketers looking to acquire new customers through advertising.
But, for all their good, DMPs have some drawbacks.
The reality is that the technology available to the consumer and the brand has changed since DMP emerged.
Government regulations (such as the GDPR and CCPA/CPRA) and growing concerns about privacy and data ethics from consumers have made third-party cookies less available. This is why it is important for brands today to cultivate and harness first and second-party customer data.
In addition, rising advertising and other customer acquisition costs mean companies must focus more than ever on retention and lifetime value (LTV)—holistic and trustworthy customer profiles are central to that effort.
Because the data in DMP is aggregated and anonymized, you cannot build these comprehensive customer profiles with DMP. DMPs use probabilistic matching to create profiles, so they are not 100% accurate. They’ll do the trick for large-scale advertising campaigns—but you can’t use them for 1-to-1 personalization, for example.
So for brands focused on 1:1 personalization, engagement, and retention in addition to the acquisition, DMPs are an incomplete solution.
You Need a Customer Data Platform to Build a Comprehensive and Reliable Customer Profile.
What is CDP, and How Can It Help?
CDPs provide marketers with a single platform from which all customer data can be collected, managed, transformed, and activated, regardless of source.
The most significant difference between CDP vs. DMP is the type of data they collect. CDPs use first-party data to integrate touchpoints and match them with defined customer profiles.
Marketers and teams can pipe that data into other systems such as advertising platforms, product, and customer journey analysis software, CRM tools, etc.
1. Data Collection, Quality Protection, and Governance
As we mentioned above, CDPs collect real-time first-party data (such as email addresses, behavioral data, and device IDs) through packaged SDKs and APIs, so that means three things for brands:
- Instead of relying on third-party cookies, you can create your walled garden of high-quality first-party data.
- Deterministic customer profiles can be accessed by individual-level behavior
- Greater control over data quality management and data governance
With a CDP, you determine what data is collected and how long it is stored—and you can satisfy data deletion requests at any time. Also, some CDPs (such as mParticle) set stringent data protection standards to ensure that your data is collected in a way that complies with privacy regulations and legal requirements.
2. Profile Integration and Identity Resolution
Centralizing first-party data collection with CDPs enable you to create holistic, personalized customer profiles that:
- Include every touchpoint across devices, channels, and time
- Incorporate data from the entire customer journey
- Power individual-level personalization (instead of personality-level personalization)
The customer data collected by the CDP is attributed to a permanent profile, and profiles can inform future conversations based on that specific customer’s history. The customer data collected by the CDP is attributed to a permanent shape, and profiles can inform future discussions based on that particular customer’s history.
While DMPs only retain data for a short period (say, 90 days or more), CDPs retain it for much longer. This means your customer profiles become more detailed and robust as customers continuously interact with your brand.
Additionally, some CDPs merge unknown and known activity into a single profile after a user has converted, giving you a complete view of the customer journey.
3. Segmentation
DMP audiences and segments are created for advertising and follow a rigid structure. On the other hand, the audiences created in CDPs are highly customizable, allowing marketers to target exactly the customers they need to target, even down to the individual level.
Marketers can define Custom Audiences based on high-quality, cross-channel data sets in just a few clicks. Segments can be created based on behavioral data, signals of purchase intent, predicted order value, lifetime value, and more.
4. Data Integration and Activation
Once you’ve created these audience segments, you can forward them directly to any number of downstream tools, along with your event data. These may include, among others:
- Advertising platforms like Google Ads and Facebook
- Other marketing tools for SMS marketing, push, email marketing, and more
- Analytics and business intelligence (BI) tools like Symbology or Tableau
- Customization and Personalization Software
- Customer service and chat solutions too
This means you can create an audience once, then circulate it across all the other tools and systems in your stack. Plus, with pre-built integrations, the process is often much faster, requiring little or no data team resources.
5. Together In Perfect Harmony
If you already have a DMP, here’s our advice: Don’t think of it as a CDP vs. DMP.
Adding a CDP to your stack can—in addition—help maximize the benefits of your DMP—as well as address some of the gaps in data persistence, identity resolution, data activation, and acquisition—customer engagement and retention use cases can provide power.
If you don’t have a DMP in your stack, implementing a CDP can give you the same benefits and then some.
Conclusion
CDPs (Customer Data Platforms) and DMPs (Data Management Platforms) have unique features and functionalities. While DMPs are designed to manage and activate third-party data for advertising and targeting purposes, CDPs focus on collecting and unifying first-party customer data to create a unified view of the customer across channels and touchpoints.
When it comes to choosing between CDPs and DMPs, it ultimately depends on the specific needs of your organization. If you are primarily focused on advertising and targeting, then a DMP may be the better choice. On the other hand, if you want to improve customer experience by gaining a deeper understanding of your customers through unified data, then a CDP may be the way to go.
In any case, it’s important to do your research and carefully evaluate your options to ensure that you select the platform that best fits your business objectives and goals. Emizentech can help businesses set up and manage CDP or DMP solutions to collect, analyze, and leverage customer data.
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