CDPs vs. DMPs: What Marketers Need to Know

Building the best tech stack for your business needs is no easy task — and as more solutions pop up and teach stacks increase in complexity, selecting solutions will continue to increase in difficulty. Choosing the right data solution (or even differentiating between them) can be harrowing, so we’ll be breaking down the top platforms marketers use to help you decipher which is right for your needs and help you build a martech stack that works for your needs. At the center of any future-proofed tech stack is data and there are so many different solutions to solve for “fragmented data”. In this series (Part 1 of the series, CDP vs. CRM can be found here), we’ll explore some of the most widely used platforms and which ones can best support marketers and drive positive results for your business. Up today is the Customer Data Platform (CDP) versus the Data Management Platform (DMP).

Both are well-known platforms, and both deal with the routing of data, but they are worlds apart in function and purpose — let’s dive into the key differences of CDP vs DMP.

Primary Purpose of CDP VS DMP

DMP: Data Management Platforms, or DMPs, help advertisers and publishers buy, sell, and manage digital advertising and optimize media spend by improving audience targeting. DMPs unify, store, and manage anonymous audience and campaign performance data, create rule-based audience segments and connect these audience segments to ad platforms.

DMPs consist mostly of third-party, anonymous audience and campaign performance data generated from digital interactions. They aggregate anonymous web-browser cookies and device IDs that contain audience information such as demographics, past browsing behaviors, interests, location, devices, and limited purchase information. They also enrich audience data with data from external data vendors. A DMP never stores PII (personally identifiable information). While DMPs can onboard offline data, that data must first be anonymized.

DMPs support digital advertising by providing high-value audience segments to target at the cookie-level and optimizing media spend based on segment performance. It should be noted that the future of DMPs has been called into question — Google will be sunsetting cookies by 2022, throwing the world of paid advertising into a tailspin. As new technologies and replacements for cookies emerge, the future of the DMP might change for the better, but the remains to be seen.

CDP: According to the CDP Institute, a CDP, or Customer Data Platform, is “packaged software that creates a persistent, unified customer database that is accessible to other systems.” In practice, this means that CDPs aggregate data from across your business to form a Single Customer View. This enables businesses to move past looking at their data on a channel by channel (or even departmental) basis and allows marketers and other employees to gain access to a holistic view of every customer.

CDPs were created for marketers (regardless of function or team) and built to provide them with data access, activation, control, and speed. Their sole focus is helping marketers deliver more relevant, responsive customer experiences by activating customer data in real-time while cutting out the time-consuming, manual work typically required. Initially, CDPs were not crafted to necessarily replace pre-existing data systems, but rather to unlock value from marketers’ siloed data and use it to drive marketing effectiveness and ROI — though many teams have found that their CDPs can do the job of other legacy platforms (and do it better).

Like other platforms, the CDP and the DMP do overlap — they both manage unknown users. The key difference is CDPs were built with the goal of turning those anonymous users into known users and continuing to track their progress with your brand indefinitely, DMPs simply track unknown users for advertising purposes. CDPs can handle everything from the first touch on, making them the perfect tool to scale data-driven marketing and deliver relevant, real-time customer experiences, regardless of where the customer is in their journey.

What You Need: CDP VS DMP

DMP: These platforms are utilized by advertisers, agencies, and publishers for awareness and customer acquisition use cases. Because DMPs revolve around anonymous audiences, it’s highly unlikely any marketers outside of the paid advertising and media spaces would use the platform — email, push, and SMS teams message known users, making it not a great fit for these teams.

CDP: Customer Data Platforms are steadily becoming an essential part of the modern marketer’s toolkit. Any marketer interested in using AI, or even just becoming more data-driven, needs one to succeed. CDPs bring the tailored, relevant experience of 1:1 targeting not just to advertising channels, but to the entire customer experience. It’s the ideal tool for marketers looking to wow their customers — all with the goal to drive engagement, conversions, and revenue.

CDPs also come with the added benefit of freeing marketing and data science teams from a constant tug of war. Certain CDPs, like the SmartHub CDP, were purpose-built for marketers, but with data scientists and engineers in mind. They have a certain level of user-friendliness that makes it easy for marketers to run campaigns, test, build segments, and much more, all without the need for engineering involvement. But, data science and engineers can also use their own modeling, data inputs, and other customizations with ease. This promotes cross-team collaboration and better use of customer data to fuel experiences, helping both teams reach their KPIs quicker and more efficiently.

Limitations to marketers in the CDP vs. DMP

DMP: DMP use cases are limited to top-of-funnel display advertising and measurement. Because DMPs focus on broad, anonymous, cookie, or device-level segments, they can’t support customer engagement and retention strategies. Furthermore, DMPs only store data for a limited time period, which hinders targeting precision.

And as choices for consumers grow and acquisition becomes more and more expensive, marketers will turn to current customers to generate revenue for their brands. Loyalty and retention campaigns will become the focus of spending and development, and these campaigns need historic data to be successful — which DMPs simply cannot store or leverage.

CDP: The biggest limitation to the CDP industry is a lack of definition. Because the technology is so new, it hasn’t had the benefit of time to organize what exactly qualifies as a CDP, the different kinds, etc. There are so many cases of organizations slipping into the CDP label when it’s convenient, but they really only offer a hyped-up database. And B2B marketers are incredibly talented, so it can be difficult to differentiate fact from fiction when it comes to CDPs: that’s why we’ve created our own Smart Guide to CDP RFPs to help you identify what you need in a CDP solution (for free, available to download now).

Overall, marketers don’t need another solution that’s siloed to channel or function and they don’t need just another place to store data — they need a solution to turn that data into a driving force for their business. CDPs can do just that, but even within the Customer Data Platform realm, there are “just ok” solutions and true transformers. One such platform that’s transforming the way marketers work is the SmartHub CDP.

The SmartHub CDP connects applications around a deep customer understanding and uses it to direct interactions in real-time, enabling brands to deliver relevant, connected experiences throughout the omnichannel journey. If you’d like to learn more about what makes our Smarthub CDP different, connect with one of our CDP experts, today.

DOWNLOAD THE CDP RFP TEMPLATE

Quickly get started on your Customer Data Platform RFP with this complete template: The 50 Essential Questions you need answered when considering CDP Vendors.

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