The modern connected customer has completely redefined the relationship between brands and consumers. 

People now use dozens of digital and physical touchpoints during their path to purchase. They expect seamless transitions between the various channels and relevant messaging at all points along their journeys. 

To provide the engaging experiences consumers want, marketers must rid themselves of fragmented marketing stacks and create a single view of the customer. They need a solution that can integrate the functional and channel-specific silos into a single source of truth for engagement, allowing them to send the right messages to the right consumers at the right time.

In recent years, brands have relied on data management platforms (DMP) for the collection and connection of their data. But more recently, customer data platforms (CDP) have taken the industry by storm and have left many wondering how their capabilities compare to those of DMPs. 

For a better understanding of what each has to offer, let’s first break down their core functions.

Related Download: Customer Data Platforms Buyer’s Guide

What Is a Data Management Platform?

Digital marketers, advertisers and publishers use data management platforms to store and manage audience and campaign data, often from multiple sources. Companies can use DMPs to identify and target specific audiences according to device IDs, look-alike targets based on segmented audiences or digital targets. These platforms are known for using ad networks to reach anonymous customers, broadcasting a specific ad based on established rules and then capturing the results.

What Is a Customer Data Platform?

A customer data platform unifies customer data across functional and channel-specific data silos into an always-on, always-processing customer profile available throughout the enterprise. It makes unified data easily available to business users at the moment of need, without them having to put in a request to the IT department.

Unlike DMPs, which mainly focus on anonymous interactions, CDPs can ingest all enterprise data sources and types (e.g., first-, second- or third-party data, structured, semistructured, unstructured, XML, JSON, Hive, HDFS, social media, websites, transactional or operational databases, customer relationship management systems) to provide powerful insights into customer behaviors and preferences. After ingesting this data, a CDP normalizes, validates and matches records to provide high-accuracy customer profiles and then makes those profiles actionable, providing high-level visibility that can be used to orchestrate cross-channel customer engagement and serve wider business functions beyond marketing.

Key Differences Between CDPs and DMPs 

Let’s break down DMPs and CDPs a bit further with a side-by-side comparison.

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How a data management platform operates:

  • Works mainly with anonymous entities, such as cookies, device IDs and IP addresses.
  • Uses deterministic key matching to track customers and build anonymous profiles across digital channels.
  • Updates customer profiles via batch process every one or two days.
  • Maintains an anonymous customer record for a short period of time.
  • Supports rudimentary audience segmentation, with segments usually marketed on digital channels and ad networks.

How a customer data platform operates:

  • Works with both anonymous and known individuals, storing “personally identifiable information” (PII) such as names, postal addresses, email addresses and phone numbers.
  • Uses sophisticated cleansing and matching algorithms to provide high-quality unified customer profiles — customer “golden records.”
  • Continuously processes batch and streaming data to keep profiles up to date and accurate.
  • Maintains customer golden records that persist over time.
  • Supports building progressive customer personas (unknown to known) for hyperpersonalized customer interactions across all channels.

Related Article: Keep Your Eye on Customer Data Platforms: They'll Be Worth $1B by 2019

Adding a CRM to a DMP Will Not Create a CDP

Many people assume that pairing the anonymized data from a DMP with the known customer profiles from a customer relationship management (CRM) system will create the 360-degree customer view they need.

That will not work, and for a few reasons. First, CRMs are largely focused on customer interactions, which limits their ability to address wider business functions beyond marketing. They are also notorious for suffering from data quality issues and lacking the sophistication to support marketing needs, which is why there are other solutions for activities like email, social media marketing and advertising. Most importantly, though, CRM systems cannot reconcile multiple profiles of a single person, device or visitor, which is a critical function of a CDP.

Related Article: How Master Data Management Improves Your Understanding of the Customer

MadTech: Where DMPs and CDPs Collide

Advertising and marketing are increasingly becoming part of the same ecosystem, and that development is reflected in an emerging convergence between ad technology and marketing technology. Called “madtech,” this convergence will blend the anonymous audience acquisition capabilities of ad tech with the relationship-management functionality of martech into a single ecosystem that allows a central point of control for both. There are synergies between the two systems, ensuring that the anonymous insights that are captured by DMPs can be shared (where privacy is appropriate) with direct customer data engagement systems like CDPs, and vice versa. Being able to add first-party profiles to ad targeting for lookalikes can be powerful, and bringing digital insights back from DMPs to append to customer profiles is now possible.

When considering whether a DMP or a CDP will work best for your brand, be sure to consider what exactly you want to do with your data. With that in mind, it’s good to think of DMPs as channels of data that can be brought into a CDP to create more progressive customer profiles. A CDP can then use those robust profiles to deliver relevant offers and messages to the consumer, including via DMP and CRM channels.