CDP vs DMP: What’s Best for Customer-Driven Marketers?
Whether you’re looking to optimize your customer experience, strategize on how to spend your digital advertising budget, or centralize your customer data, you’ve probably come across two types of data systems in your research: a customer data platform (CDP) and a data management platform (DMP).
Investing in a new system demands a lot of your team’s resources, so we recommend starting the process by getting clear about what types of data you want, where data sets may already live within your digital marketing systems, and what you plan to accomplish with new or centralized data once you have it.
With your organization’s objectives in mind, it will be easier to understand why and when you would choose a CDP or DMP.
In this article, we break down the key differences and similarities between CDPs and DMPs. We also share our thoughts on when a marketing team might want to invest based on their priorities, goals, and overall needs.
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What is the difference between a DMP and a CDP?
Ultimately, whether you choose a CDP or DMP will depend on your organizational structure, existing tools and resources, and overall marketing goals. But before we dive into the specifics of what both a CDP and DMP have to offer, let’s take a look at some of the key differences between these two types of data platforms.
DMPs are great for agencies working with multiple clients who each have different markets (such as a creative ad agency). While a CDP can help companies with a single customer base understand their own customer-centric data.
DMPs store anonymous data, while CDPs unify your first-party data
DMPs pull information from many sources (usually third-party data from online and offline) to provide anonymous data on market segments who may not already be your customers. CDPs pull information from all of your touchpoints, creating user profiles and unifying your customer intelligence.
So, while DMPs can help you make sense of the data you already have, they won’t necessarily provide you with data completely unique to your organization’s audience.
For example, a DMP might be helpful if your brand wants to start targeting women with household income over $100k living in the Midwest (a segment not currently in your existing customer base). A DMP can give you insights into this market so you can better understand their needs and pain points.
A CDP might be helpful if you want to know how well your existing customers are responding to your marketing efforts, such as how well they’re converting on a landing page. With a CDP, you can find out which of your current segments are engaging and which are bouncing off the page.
DMPs do not store personally identifiable information
DMPs do not store personally identifiable information (PII), including identifiers like names and email addresses, while CDPs do. DMPs work mainly with data sources like cookie IDs and IP addresses and then store the learning anonymously. DMP data is usually available to other organizations that use the DMP, so it won’t help you understand your own customers on a granular level.
Data storage and retention differs in a CDP vs DMP
DMP data is retained for relatively short periods compared to a CDP. This is because a DMP is primarily used for ad targeting and needs the most relevant and up-to-date information. If a media agency is creating a video to target parents with newborns, they want to use the most recent data, not data from five years ago.
A CDP has a more prolonged and individualized approach to tracking and storing data. The more data a company has on their customers, the better they can understand their base.
Commonalities between a CDP and DMP
CDPs and DMPs can both be hugely effective in centralizing the data you need to reach more customers. Each has its specific use cases, but both capture insightful information that can be used to drive strategic marketing decisions.
CDPs and DMPs both analyze the data they collect and generate reports to make that data more digestible. Each system is designed to pull from different sources, but both will help you make sense of the information available.
Both CDPs and DMPs can help drive leads. Which tool you use in this case will depend on if you’re looking for leads in a new market or if you want more leads from your existing market. But both systems can help you gain insights to execute tailored campaigns.
CDP: The window into customer behavior
A CDP is a tool that synthesizes your customer information from across multiple channels, so you can ultimately create a better digital experience for your leads and customers. It’s not the same as a customer relationship management (CRM) tool, which is mainly designed for customer-facing roles so salespeople can develop relationships.
A CDP may be better for your organization if you’re looking to ramp up a marketing strategy like personalization or retargeting. This is because a CDP tracks personal customer insights like email address, name, phone number, and location, whereas a DMP stores only anonymous data.
A CDP can effectively centralize user data from various sources like your website, email, and social media. Because a CDP keeps track of both demographic and behavioral data, you can see patterns more quickly than in a DMP, where accuracy of the data improves over time.
So, with a CDP in place, you can get to know your customer faster and better understand their engagement and behavior.
For example, a CDP can help you see that certain segments see a lot of customer engagement every time they receive a marketing email offering a discount. However, they never engage with marketing campaigns that include scarcity messaging (e.g., “only 5 items left in this style”). You can use this information to target this segment with more effective discount-based messaging.
Building a loyalty program with CDP data
While both CDP and DMP systems can be helpful in targeting new customers, CDPs tend to be more useful when building loyalty and retention.
Modern marketers know that today’s customer expects tailored messaging and relevant ads. When we watch Netflix, suggestions appear based on a user’s personal viewing history—not just what others in our demographic may like. This level of personalization matters to today’s consumer, and is critical to building brand loyalty.
Since CDPs store personal data, and DMPs don’t, it’s much easier to personalize and cater to individuals using this tool. You can personalize your marketing and advertising using a variety of methods in conjunction with your CDP data.
Here’s an example of what that might look like in practice:
In this example, we see that DSW personalized its website for rewards members. When this customer, “Danielle”, visits the website, she’s greeted by name and reminded of her exact position within the rewards program. It encourages her to shop by showing her how close she is to rewards. You can see how this level of personalization wouldn’t be possible without DSW’s data system knowing exactly who each customer is and how they shop.
Of course, this group of loyal customers’ data becomes important to analyze. You’ll likely find information from them that will help you more effectively advertise and market to others.
DMP: Collecting audience data from multiple sources
A DMP collects and manages large amounts of information from third-party sources (data collected from various external sources) and sometimes second-party sources (first-party data sold to another company).
It uses this information most commonly to create lookalike audiences for ad campaigns based on existing customer data.
So, if yours is a relatively new organization, a DMP can be extremely helpful in building your top-of-funnel audience and retargeting functionality. By inputting anonymized identifying characteristics for your ideal customer, a DMP can build lookalike target audiences to begin advertising to.
This might look like wanting to target women in their thirties who live in Manhattan. Of course, within that audience segment, there are tons of different backgrounds, motivations, desires, interests, and financial situations—all of which will impact whether or not someone within this segment is interested in your product.
Ideally, a DMP can fit into your larger marketing technology stack, so that you can get more granular insights into your ideal customer profile and customer journey.
One business may want a CDP for more personalized, loyalty-driven strategies that come into play lower down the funnel, while a DMP can help you get in front of more relevant potential customers.
Which should you invest in?
You should begin to get a sense for whether a CDP or DMP is more relevant for your business. There is no right or wrong answer, just differences in capabilities that may make one tool better for your immediate needs.
If you’re focused solely on growth—especially at the top of the funnel—a DMP might better fit your current needs. A DMP might also be a better fit if you’re trying to strategize ad spend or media buying.
If customer loyalty or being more strategic with personalization is at the top of your marketing team’s list, you may want to look into a CDP. Remember that these tools can coexist and complement each other, so you may even find that you need both down the line.
With third-party cookies being phased out, is a DMP worth it?
DMPs have been struggling to keep up with regulation. Both Google and Apple have made moves to abolish unauthorized harvesting of customer data. This makes it difficult for DMPs to collect the kind of data that marketers use to target their ads. But DMPs are also seeing marketers pull away from data collected in this way. More marketers want their data to be “responsibly sourced”.
However, all is not lost. Google is creating its own cookie alternative in an effort to compromise between consumer privacy and paid ads. And DMPs are beginning to shift against the disruption, too. Some, like Adform, are putting measures in place to use first-party cookies (a more accurate and helpful cookie) and are building data partnerships with publishers to gain access.
In answer to the question, is a DMP still worth it? If you’ve determined that DMP is the right solution for your business, then it depends. You’ll need to choose your DMP carefully and do a bit of research to see how their data is collected. The key will be to make sure your customers are always the focus. Put your brand in the best possible position for customers to trust you and want to do business with you.
Before you invest
Before investing in and implementing an entirely new system, it’s also important to understand the data you already have, where it lives, and how it affects your customer journey. When you can unify this existing data to the best of your ability, you can then more effectively demonstrate any gaps that exist to relevant stakeholders, and get buy-in from the rest of your marketing team.
Showing where gaps exist and how aggregating data specific to either a CDP or DMP will help supplement your existing data, will help you and your team get clear on what you need, and get stakeholders on board.
Today’s consumer expects to see personalized, relevant information, whether they’re opening their email inbox, going to your website, exploring within your mobile app, or seeing an ad on social media.
With help from tools like CDPs and DMPs, it’s possible to positively impact your entire marketing funnel with useful data to create relevant messaging at the right time, in the right place. The tool you ultimately choose to implement will be dependent on your immediate and longer-term marketing and business goals.
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