Customer Data Platforms (CDP) and Data Management Platforms (DMP) sound similar and do share a few common attributes. However, these platforms actually have a number of differences.
4 Key Differences Between CDP and DMP
DMP is designed to serve one function for advertisement platforms. It collects data from different sources and then categorizes and classifies that data. It then segments that data so that marketers and advertisers can target customers.
On the other hand, a Customer Data Platform has a system of records to manage the real customers of a company. A CDP gathers data from the company database, CRM, websites, apps, or transactional systems. This is then used by the company to prepare offers, promotions and customize emails. The CDP can also be used to create customized web content that the customer views when logged into the website.
Operating Data Types
There are primarily three types of data that both CDP and DMP deal with; namely first-party, second-party, and third-party data.
First-party data is collected directly from customers who are real people and who have interacted with the company’s website or app. It can also be generated from the CRM, purchase transactions done over the company’s website or newsletter subscription sign-ups.
Second-party data is that which is collected or bought from another company. Third-party data is obtained from a collection of different sources and many times carries privacy concerns with it.
The primary target of DMP is third-party data, and work with anonymous tags such as IP addresses, devices, and cookies. However, the primary target of CDP is first-party data and stores personally identifiable information such as names, email, mailing address, and contact numbers.
User profiles for DMPs are focused on segmenting and categorizing the customers and seldom last over 90 days, based on the lifespan of the cookie. Since the data is anonymous, the DMPs make a data selection based on several field values known as probabilistic matching.
CDPs on the other hand, do away with the guesswork and makes a data selection based on a specific customer identifier, such as an email address. Since this match is consistent across an entire data set, it is known as deterministic matching.
CDP can integrate online and offline data and uses customer analytics and machine learning to create targeted marketing campaigns, whereas a DMP can only provide an anonymous audience for advertisements.
DMPs are useful in capturing generic data, such as a noting when a particular user visited a website and how long was they were on the page. CDPs can take this a step further to analyze if the user can be converted to a customer or understand content affinity based on the customer’s inclination to visit articles and search for specific products.
DMPs are very helpful for digital channels, and prompt marketing initiative decisions can be made based to reach a particular audience. CDPs allow access to social media websites, offline transactions, and can even capture social sentiments since they are tagged with a unique customer identifier.
A DMP can only show customer performance related to the segmented data, which then needs to be extracted outside for customer analytics. CDPs store historical data, making them capable of capturing customer communication, product or service transactions and even utilizing machine intelligence to associate sentiments with customer behavior.
DMPs primarily push data to add networks, whereas CDPs are capable of both pull-in and push-out data. CDPs also have the added advantage of accessing Facebook advertising, Google ads, etc. and can even onboard data to DMPs.
Choosing Between a CDP or DMP
There are many factors to consider when choosing a CDP or DMP. Understanding your desired outcome and goals will help the decision-making process. Once you have well-defined expectations, determining the best platform for your needs is straightforward.
Here is a list of several comparisons to consider in your evaluation:
- CDPs can be integrated with different systems for advertising
- DMPs cannot perform advanced identity matching
- CDP stores data in a single place making them flexible and fast to analyze
- DMP stores data in two places making it difficult for integration
- CDP gets raw data and builds historical information on it
- DMP gets high-level data which is often short-lived
- CDP is a differentiator and can capture data anywhere in the customer cycle
- DMP is an equalizer and will retrieve the same data for a set query
- CDP can disclose new customer traits that can be used for personalized marketing
- DMP stores anonymous user profiles and can only segment the audience
- CDP can store contextual, demographic, as well as historical data
- DMP can extract only segmented data based on different categories
Although in many instances CDP and DMP complement each other, if you are primarily looking for third-party data from vendors, a DMP may be a suitable platform. However, for long-term customer reach to leverage your first-party data, you need a CDP.