Customer Data Platforms (CDPs) and Data Management Platforms (DMPs) are often pitted against one another in a CDP vs DMP standoff. Some marketers presume that it is an either-or scenario: they must pick one at the expense of the other because it’s needless or impossible to use both.
In actual fact, this is incorrect. In an ironic twist, it’s their similarities that cause confusion.
Both Customer Data Platforms (CDPs) and Data Management Platforms (DMPs) use data to build and create various target audiences for marketers. However, where they differ is in the data that each one of them uses.
Both platforms use different data: CDPs use 1st party data and DMPs use 3rd party data. But because they’re different platforms that use different data types, they yield different results.
In this blog, we’ll take a closer look at CDPs and DMPs, outline their differences, and show examples of them in action so that you can decide which one is right for your business.
CDP Vs DMP – The TL;DR Summary
Let’s begin with an overview of the respective strengths of CDPs and DMPs.
A Customer Data Platform, or a CDP, is most effective at collecting and organising first-party user data from various touchpoints. Once the user’s data has been collected, a CDP will then share the data with other tools used in a martech stack.
This is a CDP’s major benefit. CDPs make marketing more relevant because they improve the accuracy of the targeting involved in various types of advertising and marketing campaigns. For example, data collected by a CDP could be transferred into an email marketing tool where it will be able to send relevant emails to the most appropriate segments of the audience which it has identified.
Meanwhile, a Data Management Platform, or DMP, is a platform that is best suited for collecting and managing large, anonymised third-party data sets. This is one of the initial major differences to be aware of when discussing CDP vs DMP: CDPs identify their audiences, whereas DMPs anonymise them and the data’s source and so don’t.
DMPs work by either collecting their data through purchasing the data sets from data sellers or by having such a copious user base that it can collect, assess and anonymise its data.
CDP Vs DMP – The Key Differences Explored
Aside from the ways that they build and use audiences, there are three other main differences that separate CDPs and DMPs. They are:
Data Usage Differences
CDPs and DMPs both require data to work, but the data types they use vary considerably. CDPs primarily use first party data (data collected by the business, for example, an email subscriber) and a small amount of second party data (data collected by another company and then sold or shared to another non-competitive company. For example the sharing of an email list in a collaborative promotion campaign).
On the other hand, DMPs predominantly use third party data (data collected by a data collection company, e.g Google Display Network such as cookies, devices and IP addresses) and also only use a small amount of second party data.
In general, first party data is seen as the most valuable for companies because it is exclusive to the company. Meanwhile, third party data is seen as less valuable because it is widely available to anyone, which means that competitors could be using similar data sets in their marketing campaigns, rendering both of them less effective.
Customer Intelligence Platforms, on the other hand, are a marketer’s triple threat: they offer the same DMP audience curation and CDP functionalities with the additional benefits of third-party data enrichment. CIPs offer a way for next-gen marketing teams to personalize the entire user journey.
Where CDPs and DMPs overlap in their data collection is in their second-party data usage. CDPs will usually receive second-party data from tools that are sharing data with one another, for example, an email marketing tool transferring data to a CRM (customer relationship management platform). DMPs meanwhile will attain their second-party data from data exchanges, such as that of Facebook.
The most significant difference between CDPs and DMPs is how they use customer identities, otherwise known as Personally Identifiable Information (PII).
PII is a combination of personal data touchpoints that can be used as identifiers to track a user’s specific actions, for example, a full name, phone number or email address.
As mentioned above, CDPs need to identify their audience to create the most accurate audiences possible, and therefore rely on PII collection to operate effectively.
DMPs meanwhile do not collect PII because they only use anonymised data sets. So whilst a DMP will collect data on its anonymous users, it will not identify them as a CDP does.
CDPs can identify their audiences by collecting information such as names and email addresses, previous transaction data and social media interactions (like CTRs and engagements with the businesses social media profile).
However, both CDPs and DMPs can benefit from using CIPs (customer intelligence platforms). CIPs offer a unique opportunity to make unknown users, website visitors, or customers known individuals. They achieve this by using third-party Identity Resolution which allows a brand to remove the guesswork on their properties through the use of an identity or people graph. A third party identity graph allows brands to consistently offer personalized experiences even as users switch between devices and channels, so the brand can still track who they are and offer personalized experiences.
Because of their ability to personally identify their audiences, it’s of paramount importance that CDPs are privacy-first, and is therefore mandatory that businesses using CDPs display opt-in and collection preferences, as well as options for a user to remove or delete their data.
Another significant difference between CDPs and DMPs is the length of time in which each one retains data.
CDPs retain data for long periods and let their users set specific time limits on the length of time each customer’s data is held. The reason behind CDPs holding data for a larger length of time is because they become more effective when they have collated more data, which has a beneficial impact on a company’s marketing because it is even more relevant.
For example, a CDP could identify a store’s most valuable customers by assessing their transaction data, which has been stored across a length of time specific to the store, like a season or a year. This then helps the store identify and reward those customers to retain them and potentially boost their LTV.
On the other hand, DMPs are used most effectively when they have stored data across shorter periods, for example, 30, 60 or the maximum 90 days. The reasoning behind this is because there is no need to identify customers, companies utilising DMP data can act according to trends or interests as they happen in the present.
For example, a holiday booking company may use a DMP if it wants to advertise to those who have expressed a recent interest in travelling, such as within a 30, 60 or 90 day time period to capitalise on the interest. If the company was to wait and use data that was a year to two years old, circumstances and interests could have changed, rendering their advertising ineffective.
However, once third party cookies are blocked, the tracking stops which harms the effectiveness of the DMP because reduced tracking means that the advertising associated with the data will begin to become less targeted.
CDPs meanwhile are non-reliant on cookies, but instead must focus on the consent of data as it’s not anonymised.
Real-world examples of CDPs and DMPs in action
If you’re still unsure of which tool to go for, these real-world examples will help you understand what your business needs.
1. Using applications in a MarTech Stack
When being used in a stack, a CDP is interoperable with any martech stack and can collect and push data to an unlimited number of locations. An outcome of this for example could be feeding first party data into Facebook Ad Manager to creative effective lookalike audiences
DMPs on the other hand cannot live up to a CDP’s interoperability. This is primarily because DMPs can be thought of as an already established audience ready for various methods of experimentation of display targeting. Passing information on to other tools will therefore not be as effective because the audience will be unidentifiable, which doesn’t help to enhance specific segmentation targeting for example.
2. Building a comprehensive Customer View
If it’s a comprehensive understanding of your audience that you’re after, a CDP is almost designed for this purpose. CDPs store a variety of information about a user, from their transactional and social data to behavioural data, historical purchasing data and even demographics. Having this much information to hand provides copious opportunities for personalised marketing with a higher chance of success through leveraging relevancy.
On the other hand, DMP audiences are completely anonymous. DMP audiences do come with predefined categories, such as interests, hobbies or demographical identifiers (but no specifics), but it is not possible to identify any more information about a user other than the initial unidentifiable information they come with. This makes hyper-personalised marketing opportunities scant.
3. Capturing, analysing and storing data
CDPs capture raw data in high levels of detail and store the information in a single, scalable place – often with unlimited capacity. As CDPs are made for longer-term storage, multiple data formats are supported ensuring that the data is easy to access, as well as being fast, and flexible to both read through and analyse for multiple departments.
DMPs will capture data such as APIs, tags and uploads in a similar manner to transactional marketing tools. This often results in the data being stored in a high level and aggregate manner. DMPs also predominantly only retain user information for a shorter period which means data formatting options are limited. DMPs do house two different data stores, however: One contains the raw data, whilst the other enables fast utilisation of a subset of the data and it is stored separately to allow for easier access.
4. Storing 1st Party Data, including PII
CDPs store both anonymous and PII data, as well as first, second and third party data. CDPs do come with advertising capabilities, and so will also store DMP information such as anonymous cookie IDs and audience tags.
DMPs are unable to store first party data due to their use as an anonymous data collector. They will store anonymous information like cookies, devices and IP address information instead.
CDP Vs DMP – Which one is right for you?
Ultimately which data platform you use will depend entirely on the objectives of your advertising. CDPs can monitor and categorise website visitors, whilst a DMP can take that information and use it to build an advertising audience.
However, if your advertising objectives are specific: For example, you want to create a marketing campaign in an audience unfamiliar to you in order to A/B test different aspects of your targeting or marketing, you could use a DMP. A DMP will provide you with an audience of the category of your choosing, and make it entirely anonymous so that you can use the data to build a more accurate targeted campaign.
On the other hand, if your marketing objective is to create a hyper-personalised marketing campaign that leverages different audience segments depending on specific personalised information, it’s best to use a CDP. A CDP will collect website data on your users and provide specific information about their behaviour, demographics and other information.
Regardless of the platform you use, consent management is becoming ever more critical and so you should ensure that the data you’re handling has been collected ethically and legally.
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