15 April 2023
CDP vs DMP: How to Choose the Right Platform
Data is gold, and it is crucial for any business operating in today’s fierce market conditions to find the right way to handle their data. Especially when it comes to commercial providers. All the data assets you collect and process shape your sales in many ways.
To help streamline this aspect and gain more insights, specialized solutions emerge, such as DMP (Data Management Platforms) and CDP (Customer Data Platforms). Both offer sets of tools and capacities to automate and boost data management, derive richer insights, and keep things unified. But what is a customer data platform in practice, and what is a data management platform in terms of your own workflows?
When it comes to the CDP vs DMP comparison specifically, business owners and entrepreneurs get confused a lot. Why so many abbreviations for a single purpose? What is the essential difference, and how to pick the best-fitting solution for a particular case?
Let’s figure it out so that you can easily pick the best way to boost your marketing strategy.
Difference Between CDP and DMP: A Quick Overview
The most common misconception is perceiving the two types of platforms interchangeably. Although each collects and helps derive the marketing value out of data, there are different functional constraints and data acquisition priorities. What is a CDP exactly and, alternatively, what does DMP mean for confused businesses? Let’s take a look at each.
What is a CDP and How It Works
A customer data platform is used to absorb and retain data coming from many different channels to sort of collect it in bulk and unify it in a single place, in a well-structured format. With a focus on first-party data pulling, it helps build consistent target audience portraits and customer profiles (which can be updated in real time).
What is a DMP and How It Works
A data management platform is focused on customer data collection through third-party data sources. Centralizing such data points as browsing history, cookie IDs, and other shared anonymized data assets, it allows for shaping better-researched marketing campaigns that hit the spot for specific target audiences.
CDP vs DMP: Data Collection, Storage, and Governance
To dive into more specifics, the two types of platforms in discussion essentially differ in the way they collect, store, and govern data. In particular, they focus on varying degrees of data coverage and target audience analysis, as well as specific types of channels and sources for input gathering.
- DMP pulls in third-party data, i.e., miscellaneous pieces of info gathered from across random websites and public repositories or bought from a data marketplace or exchange (including only anonymous info, such as IP addresses, cookies, and device readings).
- CDP collects first-party assets, i.e., data shared directly with your brand by your website visitors, subscribers, or clients — you name it (including both anonymous and PII data, such as names of individual customers, emails and phone numbers, postal addresses, etc.).
- DMP solutions temporarily store third-party information necessary to outline an audience-based persona. For further use, assets must be properly segmented, and only then can you achieve a consistent persona. You are, basically, working with listed overviews of target audiences.
- CDP may store data for as long as you wish, making it reusable for a number of digital marketing campaigns. It gathers all raw, unstructured assets of various formats. But first-party data often comes in a pretty consistent form from the get-go, so particular customers can be identified right away.
- DMP’s third-party data-gathering approach is strictly governed by the GDPR and CCPA/CPRA regulations, while there are also ever-growing data privacy concerns that make users less eager to accept cookies.
- CDP’s first- and second-party data-gathering practice does not fall under strict data regulations because it is all voluntarily-shared information. Issues may stem only from how legitimately that information is shared originally.
CDP vs DMP: The Use of Personally Identifiable Information (PII)
Yet another cornerstone of the difference between CDPs and DMPs is the way they employ PII — personally identifiable information. PII is any share of data that can identify a certain person. For instance, an email address or social media page, transaction report, phone number, direct user interactions online, or any other similar asset.
Collection, analysis, and retention of the PII help organize gathered data touchpoints to efficiently track a certain user’s actions, patterns, and habits online. But the two types of platforms in question perceive PII in completely different ways.
Because they are focused on anonymized data, data management platforms (DMP) cannot actually get a hold of PII, only gathering surface-level information on anonymous users. This serves its own purposes, but can make your data ethics compliance problematic (you may find it difficult to report all data sourcing specifics).
In turn, PII is the main type of data “feed” for CDPs, which need as much info stored as possible in order to work to the max and deliver the most relevant insights. Best customer data platforms offer reinforced data security and guidelines for setting the data standard to cover only willingly shared first-party info. This should help you keep up with the data collection ethics more easily.
Use all customer data to grow your business
CDP vs DMP: Customer Data Retention
Moving on with the underlying differences, the two types of platforms also differ in how long they are able to retain gathered assets. This is yet another indicator of the platforms’ unique roles.
A data management platform usually retains data for short timeframes. The most common storage period is up to 90 days, after which the data must be updated (platforms today are equipped with artificial intelligence to update autonomously). This is done for relevant targeting — you cannot build new marketing campaigns based on outdated customer insights.
A customer data platform can store data for long periods of time, enriching its capacities and delivering more relevant insights with enough “feed.” The most obvious use case of this ability is the identification of the most valuable customers based on their history of transactions or other eCommerce interactions.
CDP vs DMP: Examples & Use Cases
Last but not least, let’s summarize this global comparison with the difference in common use cases for both types of platforms. First, in a nutshell (see more details in the table below).
- CDP boosts marketing and customer relationships. Its primary use cases can include all sorts of marketing tasks as well as customer relationship management.
- DMP boosts advertising and media sales efficiency. Its main use cases are bound to advertising and efficient ad targeting as part of striking short-term campaigns.
At the same time, equally efficient and fitting results can be achieved with each. It is all about the underlying processes, specifics, and approaches, rather than a single definite goal. So the final choice is often decided by how exactly you use this or that platform, not its common benefits.
To give you more applicable directions, here’s how market players put these powers to practice in the real world:
- One of the biggest sporting goods retailers in the USA, Dick’s Sporting Goods, decided to personalize the customer experience they offer via CDP integration only to get over 20 million more loyalty program members. The company focused on smart customer segmentation based on collected insights to make customer journeys individual.
- As for DMP examples, World’s third-largest cruise line Princess Cruises powered its advertising strategy with a DMP for better service targeting, eventually saving 65% of landing page costs and getting a 300% boost across identifiable audiences. The company segmented customers into groups based on internal databases, booking data, etc. This case is a great answer to the common question — “what is a DMP in marketing?”
CDP or DMP: Which is Right for Your Marketing Strategy
It all comes down to making a weighted choice based on what both types of customer data management platforms have to offer. This article should serve as a great reference point. Answer the following questions:
- What type of data do you need to collect and manage (1st, 2nd, or 3rd-party)?
- Do you need to focus on PII for your marketing campaigns?
- Do you need to retain gathered data long-term?
- Are you looking to put more focus on long-term marketing campaigns or iterative advertising campaigns?
- Do you need to research individual customer profiles at all?
Use the comparisons given in the article to settle your priorities. The need for long-term data retention calls for customer data platform software, while extensive third-party data sources coverage is achievable with a DMP, and so on.
What you need to do is indicate the touchpoints that a dedicated platform should help you cover in terms of a campaign. Use the questions above and, for even more detail, this elaborate comparison table to settle your priorities:
Customer Data Platform (CDP)
Data Management Platform (DMP)
Gathers raw data sets on a granular level to store historically for unlimited time periods.
Often presents collected data in aggregated, high-level views.
Stores complete customer descriptions (including historical, contextual, behavioral, and other data).
Stores segmented and organized lists of customers with predefined categories and subcategories.
Helps shape personalized customer portraits based on direct inputs for streamlined communication and brand interaction.
Builds temporary, summarized customer personas using anonymous cookie IDs, demographic info, and transaction touchpoints.
Syndicates data seemingly across channels and campaign stages, offering dynamic customer journey modeling and retargeting.
Organizes data against the pre-defined sets of anonymous audiences, providing efficient marketing directions and complementing pinpointed customer data.
Integrates with all sorts of systems, tools, channels, and sources that deliver data in any format.
Integrates with commonly employed transactional marketing tools, like APIs, payment gateways, databases, user cabinets, etc.
Creates well-researched, well-outlined portraits of individual customers for pinpointed ad targeting.
Shapes audiences and personas to put in the foundation of ad and marketing campaigns for relevant outreach and wide coverage.
Ultimately, you should notice from the comparisons that the two platform types complement each other in many ways. From DMP not really being oriented to collect PII to essentially different data coverage scopes — one may certainly help perfect the other.
How CDP and DMP Can Work Together
The final misconception we must point out is that you have to choose one platform type over the other. We beg to differ. While you may need different approaches for different goals, why not combine the best of both worlds?
CDP offers more personalization. DMPs offer wider coverage, but to have only a DMP in marketing is to wield an incomplete tech stack. CDP data can be used for added input when creating a DMP-based marketing campaign. And the other way around — DMP can help enrich the CDP data for better customer communication in terms of ad targeting.
An audience-based marketing campaign elaborated with the DMP’s help can be boosted with personalized customer profiles for individualized targeting. Add CDP to the tech stack and amplify the DMP benefits, or vice versa.
Data sets the stage for business. But pure data is not enough. No matter whether it is a personalized email marketing campaign or widely targeted advertising you are looking to set up — you need the right tools and knowledge to wield them to manage it properly.
What does a DMP mean in marketing workflows of your particular company? Alternatively, what is CDP’s role in all that? Most importantly, can you enhance the best data management platform you already have by combining the two?
Use this article as a reference sheet to clarify these questions and acquire the best-fitting solutions. And if you are looking for guaranteed top results tailored to your ongoing workflow — contact us for professional guidance and product recommendations.
Better yet, let’s launch a custom integration or creation of a tailored data management platform, customer data platform architecture, or both to really hit the spot for your business.