Feature
The Gist:
- CDP versus DMP. These two platforms might both deal with customer data, but they are not the same things.
- CDPs are rising stars. The customer data platform is still newer technology, and it has some growing up to do, one expert says.
- Picking your platform. You don't always have to choose between a DMP or CDP. Some organizations use both platforms, along with other systems, in unison.
Editor's Note: The article has been updated on March 6, 2023, to include new data and information.
As modern customers interact with your brand across dozens of different channels, they expect a unified and seamless experience, no matter where they're at or what they're doing.
For organizations to deliver on that expectation, they need the tools and technology to create a unified customer database that allows for customer-centric marketing strategies.
Managing Customer Data Seamlessly Across Platforms
The standard martech stack needs to be anchored in solid data management solutions that enable customer data to be integrated from all channels and help inform highly-targeted and personalized advertising and marketing campaigns.
Data management solutions, like a data management platform (DMP) or customer data platform (CDP), allow companies to create a detailed view of their customers and customer data so that they can engage people with the right message at the right time.
But these data systems have some significant differences in functionality and potential applications. Before you run out and buy an expensive solution, make sure you know if your company really needs a data management or customer data platform.
What Is a Data Management Platform (DMP)?
A DMP is a software platform organizations use to gather, categorize, classify, store, manage and analyze large volumes of data from multiple sources. It allows marketers to target customer segments more effectively in ad campaigns.
Data management platforms enable marketers to centrally store customer data, such as cookie IDs, and they typically integrate with other data sources, such as customer relationship management (CRM) platforms, advertising systems and other third-party data providers to create a holistic view of the customer journey.
A DMP allows marketers to segment audiences based on various criteria, such as:
- Behavioral data
- Interests
- Demographics
These types of data systems, when used alongside programmatic ad buying and ad networks across thousands of sites, can help organizations target audience segments and optimize the performance of marketing campaigns.
What Is a Customer Data Platform (CDP)?
A customer data platform is a system that collects and manages customer data from various sources to create a unified, persistent and up-to-date customer database. Its purpose is to consolidate and integrate customer data from multiple channels and provide a single view of the customer, with information including:
- Behavioral data
- Preferences
- Interactions across touchpoints
A customer data platform typically has features like data collection, data cleansing, data integration, segmentation, personalization and analytics. It can be integrated with other marketing technologies, such as a customer relationship management platform, marketing automation technology or other systems.
CDPs have grown in popularity over the last seven years. Data from Statista shows that in December 2016, only 18 customer data platforms existed. In June 2022, the number of CDP vendors hit 161.
Overall, customer data platforms are an essential tool for businesses that want to use customer data to deliver more relevant and engaging experiences across channels.
Related Article: What Is a Customer Data Platform (CDP)?
CDP vs. DMP
These two platforms both deal with customer data, but target different data. CDPs focus on first-party Personal Identifiable Information (PII) data that may be structured, semistructured or unstructured while DMPs collect third-party data like cookies and segmented customer IDs which do not identify a specific person.
Anonymous Data vs. First-Party Data
According to Tony Byrne, martech analyst and founder of Real Story Group, DMPs are all about collecting anonymous data — cookies, device IDs and IP addresses.
CDPs can work with anonymous data too. But they primarily focus on first-party data, or personally identifiable information (PII). First-party data and PII include information like names, addresses, email addresses and phone numbers.
Byrne provided an interesting analogy to compare the two platforms:
- The DMP: Like a public park. It's a shared space, and the people in it (and the data collected) are people you don't know, they're anonymous.
- The CDP: Your own park or garden that you control. You know who is in it because you have that first-party data or PII in your data warehouse.
Anonymous Profiles vs. Individual Unified Customer Profiles
DMPs and CDPs collect different types of data. As such, they manage that data in different ways. The DMP, for instance, manages segments of customers with anonymous profiles.
Customer data platforms, however, use built-in advanced unification algorithms to manage an individual customer with a single, unified customer profile that is persistent over time.
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Acquisition Marketing vs. Full Customer Journey
Organizations tend to use DMPs for acquisition marketing applications, such as:
- Direct mail
- Advertising
- Data exchanges
The customer data platform is more flexible in the number of applications or use cases. It focuses on the entire customer journey and looks to capture unique customer data and identify customers. The result is personalized and hyper-relevant marketing campaigns and content that enhance customer interactions and overall customer lifetime value.
Mature Technology vs. New Phenomenon
Joe Stanhope, Forrester VP and principal analyst, enterprise marketing technology, said that DMPs have been around for a while. They're in a mature category, with companies using them to manage customer data and the data warehouse for years.
Customer data platforms are a new technology, however. They are not fully defined yet, he explained.
The phrase "customer data platform" still means different things to different people. As such, Stanhope said vendors and marketers need to develop a common language.
The Future of the Customer Data Platform
Right now, the customer data platform mostly focuses on marketing applications, said Stanhope. But in the future, they need to have a more expansive focus on the full customer experience (CX), on- and offline.
Companies need to evolve into looking at a unified customer experience across all touchpoints — both digital and not digital, he added. And CDPs could be the way to get there.
The future outlook for the customer data platform market is positive, with many companies currently using a CDP touting benefits like:
- Enhanced reporting and measurement
- Better understanding of the customer journey
- Improved marketing efficiency and return on investment (ROI)
- Ability to unify data from multiple sources and platforms
- Ability to manage data privacy, security and compliance with ease
Related Article: How to Filter the Right CDP Short List
CDP or DMP: Which Is Right for Your Organization?
In the end, it's not about the CDP versus the DMP.
Having an understanding of the benefits and drawbacks of each platform will allow you to determine which use cases (and which customer data systems) are right for your business.
Ultimately, DMPs are designed to work with ad networks and allow you to target anonymous segments of your customers.
Customer data platforms allow you to create a unified customer profile that remains persistent. It can enhance customer interactions through better personalization and relevancy.
A DMP and CDP can work together, too. A DMP can be thought of as another channel to feed customer data into your CDP to create more progressive and persistent customer profiles.
