CDP vs DMP: What’s the Difference, and Which is Right For You?
What is a CDP?
A customer data platform (CDP) is martech software that creates a unified view of your customer data from your various systems in a single place. This unification makes data accessible throughout the entire organization. The beauty of a CDP is that it operates behind the scenes, providing three key functions: customer data management, unification, and activation. As a result, marketing teams end up with customer profiles that are both accurate and comprehensive. Which in turn, attracts customers and inspires them to buy. But, how does a CDP differ from a DMP?
What is a DMP?
A data management platform (DMP) is a software platform used for collecting and managing data. They allow businesses to identify audience segments, which can be used to target specific users and contexts in online advertising campaigns. A DMP should organize your data, give audience insights, and help with overall ad budgeting. However, there are problems with DMPs around data privacy that by and large have yet to be fixed.
What are the Key Differences Between a CDP and DMP?
A key difference between Data Management Platforms and Customer Data Platforms is the type of data they focus on. The reason DMPs have issues around data privacy is that this platform mainly works with third-party data for managing paid digital advertising and marketing platforms. However, a CDP unifies all your data with a special interest in first-party and zero-party data that can use personally identifiable information (PII) for marketing functions.
The Role of CDPs and DMPs in your Marketing Strategy
Data Management Platforms
What a DMP does well is help marketers create better ad targeting by understanding their audience on a deeper level. Over time, the targeting becomes more honed as more data is gained. The role of a DMP is better ad targeting and improving media spending over time.
Customer Data Platforms
In contrast, a CDP shines in its ability to unify and activate all your data. With a CDP, anyone with permission in the organization can view and harness the datasets. CDPs can also integrate with various systems to make the most out of your data.
How CDPs and DMPs Work Together
CDP vs. DMP Side by Side
CDPs can help DMPs get across the last mile. By itself, a DMP cannot store PII, but a CDP can push audiences with customer PII (name, email, phone, etc.) to DMPs to pass to demand-side partners (advertisers). This process allows a DMP to use PII without having to store it. Similarly, if a customer clicks on downstream advertisements, a CDP will ingest the PII data for further segmentation and analysis.
Together, a CDP helps utilize and capture that extra bit of data a DMP cannot use on its own. The results are even more accurate ad targeting and cost-efficiency.
Why Use a CDP Over a DMP
While there are some advantages to having a DMP we predict they will become obsolete over the next few years. Here’s why.
Data Management Platforms were built around the concept of sharing audiences. For this reason, they cannot store first-party data in their system. DMP’s reliance on third-party data and cookies will be its downfall. As third-party data restrictions become greater and greater, owning and collecting data becomes more vital. Unlike a DMP, a CDP can utilize that first-party data across your various systems including advertising platforms.
Unified Data Source
Because there are restrictions on the types of data a DMP can store, it is impossible for a DMP to be a single source of all your customer data. A CDP however, is compliant with security regulations that allow it to store all types of data including PII. CDPs ingest customer data from all systems across the organization and unify the information into a single customer view. This view is a 360 look at everything you know about your customer in one place.
Powering Your Customer Journey Orchestration
Another benefit of a Customer Data Platform is its ability to integrate your single customer view data back into various systems. For example, a CDP gathers real-time and historical data from your CRM, website, reviews, etc into one place. This customer data can now be used to create segmentation. These segments can then be used to orchestrate customer journeys across all channels regardless of the system. To that point above, there are endless possibilities of where you can use your customer data with a CDP. On our site, we list several integration options.
If you need help choosing the right CDP for your business goals, check out our CDP Buyer’s Guide.