Difference between a customer data platform (CDP) and a data management platform (DMP)

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Difference between a customer data platform (CDP) and a data management platform (DMP). In this article we’re going to break down what a data management platform is in context to a customer data platform then we’re going to cover a few fundamentals of how these databases are being used for digital marketing purposes.

what is the difference between a customer data platform and a data management platform

well fundamentally a DMP is a data management platform while a CDP is a customer data platform, what they do what they both do essentially is that they can store and analyze data to then use that data to activate it to do marketing activities now the difference is that a data management platform focuses on third party data while a customer data platform focuses on first-party data which is the existing customer data you might have about your business.

third party data is cookie-based mainly so it’s anonymous ids you don’t know who these people are while first-party data is your existing customer data that might be in your CRM system or other forms of marketing platforms and marketing software, and that’s the fundamental difference.

but before we jump into what a customer data platform does let’s unpack a DMP a little bit further.

What is a data management platform ( DMP )

a DMP is essentially a data warehouse which is a type of data management system that’s designed to enable and support business intelligence activities specifically analytics so we have structured data sets that live in these data warehouses then that are prepped to be analyzed by data scientists or a business intelligence team, from there you can extract customer insights and then you can activate audiences.

What is a customer data platform ( CDP )

a CDP is sort of like a DMP in the sense that it is a data warehouse so it can do DMP functions like store and manage data sets which we just talked about it could do extract load and transform solutions to prepare data to be analyzed.

analysis can be done in their reporting and data mining not minding but data mining corrections Aaron, it could also be used to visualize and present data to key business stakeholders and it could also be integrated just like a DMP with other applications to do more sophisticated things regarding you know machine learning solutions out there and ai augmented algorithms that can help to make the data more actionable so it can do all of those things that a DMP can do.

so you might be thinking what’s the difference well there is a difference a customer data platform unifies all of the customer data into a singular view so it solves the data fragmentation issue.

What is data fragmentation

so deep diving into the customer data platform a little bit further as we mentioned there is this data fragmentation issue because data lives in a lot of different places it could live on social media channels through paid advertising it could live on pos systems it could live on mobile devices like email.

so we could take all of that data whether it’s demographic whether it’s behavior whether it’s transactional and we could unify that we can clean that data to remove duplicates we could validate it and we can augment the data what is the point well then we can do this thing called user profile stitching where we take all that information and create one singular profile so it has your name that is your email your phone number you know what social media channels you’re using it takes everything and puts it into one place and then assigns a unique user id.

the great thing about that is that now we could take that, we can create personas right, frequent customers, labs customers, we can define you in a category, loyal customers, customers we want to win back that haven’t purchased in a while which is technically a lapsed customer and then we could activate that but the great thing is that now we can activate that knowing exactly who you are so that we can be efficient with our advertising.

and also just create a better experience overall so we can personalize the website when you land on our website we know who you are so we can take you to the right places and show you the right dynamic content for our ads campaigns if you’re already you know at in a certain segmentation we know we don’t have to send prospecting messages to you we can focus on the messages that are most relevant to you.

for the email campaigns, the same thing we could increase our relevancy tell you the right things and show you the right products because we know who you are and the same thing you know this could be also activated to direct mail campaigns or push notifications if you have an app.

Why are Customer Data Platforms are the future

well that singular customer review like we just talked about helps you to optimize not just your media investment, not just your ads but your entire marketing efforts, you don’t have to send three pieces of mail to someone or send them five emails if you know they’ve already skipped a certain stage and they’re ready to buy, so that overall helps to improve the customer experience.

and the business outcomes are well when you’re saying the right things to the customers and they’re having better experiences they’re going to be more loyal to your brand they’re going to be more likely to come back and buy from you and as we know it is five times more expensive to get a new customer than to keep it existing so businesses need to keep their customers but of course, you know using a customer data platform and optimizing your media and creating this better customer experience makes it more efficient for you to get new customers.

Customer Data Platform brands

there are a few CDP brands out there that you can research on your own and particles pretty big one adobe created their CDP called real time, segment is another one, clevertap, telium, exponia, so if you want to learn more about this CDP’s there’s a lot of them already and you can go do your research but hopefully, this helps you get started.

a few keep takeaways
a data management platform is a data warehouse that is not to be confused with the data lake where it has just a bunch of unfiltered raw data.

a data warehouse is structured data sets that are being used for analysis for reporting and activation of media through a DMP.

a data management platform deals with unknown audiences third-party audiences someone else’s data while a customer data platform deals with your known audience and the information that customers are giving your business a CDP is essentially an evolution of a DMP and it solves this identity challenge so that you can get one single view of who your audience is.

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