Data Management Platform vs. Customer Data Platform

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A Data Management Platform (DMP) is a storage location for all types of data – all the way from contact lists to transactional data. The data stored in a DMP is analyzed for business insights and customer intelligence.

DMPs generally collate data from various business systems, such as ecommerce sites, social sites, or a CRM. DMP often includes processes for cleaning, organizing, analyzing, and distributing “information” at scale for enhanced business decisions.

A Customer Data Platform (CDP), on the other hand, collects and stores customer-related data in a single location. The CDP is some sort of a “data aggregator,” bringing customer data from diverse customer touchpoints (website transactions, online forms, emails, social handles, downloads, subscriptions) across the business to a single location.

Data Management Platforms and Customer Data Platforms collect different types of data and treat the data quite differently for analysis purposes. Though the data-handling methodologies of DMP and CDP vary to a large degree, the ultimate goal of both is same: to provide single-view business data to business users and analysts for enhancing the business processes and customer experience.

Difference in Purpose: Data Management Platform vs. Customer Data Platform

A Data Management Platform is an end-to-end storehouse of various kinds of business data collected from third-party sources. This data, being un-identifiable, is ideal for audience “segmentation or grouping” for marketing campaigns. The DMP works in conjunction with an organization’s social media program and the CRM system.  

In case of a CDP, the wide variety of customer experiences—as discovered through past transactions, feedback, mail queries, social interactions, or chat scripts on any business site —are gathered and analyzed in one repository. As this data is collected from first-party sources and are easily identifiable, they are connected and further data analysis uncovers both visible and hidden connections between the different data segments. Sitting on top of a relational database, the Customer Data Platform creates a “360-degrees view” of the customer. 

If you have to select a DMP vs a CDP for data processing, use these rules of thumb:

Use a DMP when:

  • The collected data is third-party
  • Building marketing campaigns for an unfamiliar audience
  • Building follow-up ads for targeted advertising
  • Building campaigns for targeted audiences, in conjunction with CDP data

This Gartner Insights article describes in great detail how the DMP works.

Use a CDP when:

  • You are strictly following ethical data-collection protocols
  • The collected data is first party and identifiable
  • Creating personalized (custom) marketing campaigns
  • The data will be used for A/B testing or audience categorizing.

Data Access: Data Management Platform vs. Customer Data Platform

The DMP enables users to access data in several ways. The data access methods in a DMP include API access for all applications, embedded interfaces built into application components, and server APIs for access to data residing on specific systems.

The biggest benefit of embedded APIs are that they provide both server-side and client-side access to the same data. This article raises some pertinent data privacy concerns related to cloud-based DMP platforms.

On one hand, cloud platforms have made collecting and processing massive data piles possible. On the other hand, data privacy and governance regulations like General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) are increasingly empowering regulators to monitor global businesses for enforcement of the stringent data privacy laws. As an example, Google Chrome, Safari, and Firefox have decided to phase out third-party cookies. This will likely impact the future of DMPs.

In case of CDPs, the data access is provided via purpose-specific APIs. In this scenario, the API cannot provide both server-side and client-side access to the same data. To access the data in a CDP, a user can use a REST API from the browser.

Data Management: Data Management Platform vs. Customer Data Platform

The DMP acts as a data organizer, much like a Google index. The DMP collects and collatesdata from other business systems to provide an organized view of data. But a CDP acts like a data warehouse, which can seamlessly house both structured and unstructured data. If the DMP is a massive data pile, then the CDP puts some sense to that data pile.

The greatest beneficiaries of DMP and CDP data are cloud service providers who offer advertising services to business clients. Thanks to the cloud services, now even medium and small businesses are taking advantage of advanced ad tech solutions.

User Profiles: Data Management Platform vs. Customer Data Platform

In case of a DMP, the user profile is “generic” (category-level as opposed to user-level) and temporary. The lifespan of the user profile is dependent on cookies. Typically, these user profiles may last up to 90 days.

Since the DMP data is usually unidentifiable, the DMP algorithms match data based on probability. Thus, the audience profiles created from unidentifiable data tends to be a little vague.

In case of a CDP, the common user-profile creation approach is matching emails versus attributes across a bunch of customer datasets. As the email address is a unique identifier, it is easy to match attributes with a particular customer (deterministic matching).

This matching method can yield 90% accuracy—resulting in a rich set of user profiles as repeat customers continue to engage with the business sites. The CDP data is more permanent in nature and is guided by the business’s data-retention policies.

This interesting blog post compares DMP with CDP.

Advantages and Disadvantages of Using a DMP

A DMP:

  • Allows direct interactions with customers, which is not possible via a website
  • Enables business users to view real-time insights about customer behavior across customer touch points 
  • Collects comparative statistics for business use   
  • Focuses on individual customers and provides direct insights into their needs and expectations, irrespective of the type and nature of business  

Review the benefits the DMP offers to ad agencies and media outfits.

The disadvantages of using a DMP include lack of database architecture, lack of visual appeal, and the inability to share data.

Advantages and Disadvantages of Using a CDP

A CDP:

  • Identifies customers most likely to engage with specific marketing campaigns 
  • Manages the customer experience by providing a holistic view of customer data
  • Predicts customer needs and expectations for future offers

To succeed in this competitive climate, a business needs to focus its attention on the customer. The modern customer demands a personalized buying experience, which can only be delivered if the business takes time to analyze and understand customer needs.

Thus, businesses are now collecting and organizing as much customer information as they can, and building complete customer profiles. The CDP is an excellent solution for building that holistic (360 degrees) customer profile. This Teradata article reviews the business benefits of a CDP.

The disadvantages of using a CDP include lack of unified data integration technologies to capture, modify, update, and share data across the internet; lack of scalability to handle the ever-increasing volume of data; time-consuming data approval methods for incoming data; and complex data-auditing practices. A CDP evaluation guide can be found here.

Image used under license from Shutterstock.com

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