Everybody knows that the Customer is the epicenter of everything. One has to always take care of the customer first approach towards their marketing efforts to have more engagement with the Customer and have a competitive advantage over your competitors. It’s essential to provide all the necessary help to the Customer through delivering the information they are looking for or any support they seek.
There are hundreds of platforms out there, which marketers use to create better experiences for their customers and get better ROI for their organization. DMP and CDP are among the popular ones, especially CDP, which is gaining a lot of traction.
Understanding the difference and similarities between both platforms becomes very crucial for any marketer. It will help them to know how they can best utilize these platforms in their favor and also gain a competitive advantage.
Let’s go one by one to understand the main attributes on which these platforms differ and when an organization can use CDP or DMP, and at which stage.
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What is CDP(Customer Data Platform)?
A CDP is an evolution of CRM(Customer Relationship Management) platform on the marketing front. First, let’s try to understand a bit about CRM to get a basic understanding of where it came from. CRM is used to keep track of all interactions(whether via email, Support, Chatbots, Phone). Predominantly all the interactions which happened in the past with the Customer and maintained it as a record. At any given point in time, if there is a requirement to get in touch with the Customer again, then the organization can quickly go through previous interactions with the Customer and take it from there. It helps a lot in making the conversation easier for the organization. From the Customer’s perspective, it is easier for them, as they don’t have to keep track of any details from their end, and interactions can go smoothly between both parties.
So far, it seems a suitable platform since it tracks all the user interactions and keeps a record of everything related to the Customer. Why then is there a need for CDP, a new platform altogether, to increase load further. As if there is any less pressure in the organization. But the answer lies in the limitations of CRM itself.
The major challenge with CRM is the Data Silos issue. Data sits, with different departments within the organization, isolated from each other. So, the sales department don’t have much idea, how is the information organized in the finance department or marketing department. It means that what information about the Customer is available in the finance department is different from what information is with the sales department or support department.
Main Functions of CDP are –
- Unification of Data Silos.
- User Profile Mapping.
- Segmenting Users.
- Data Activation.
There is no unified view of the customer interactions to have a holistic view of all the interactions with the Customer. It can give them a better understanding or insight to further dig deep into customer analysis(like understanding the Customer’s buying behavior, support which the organization provides is enough or Customers want something else, Customer feedback, etc.)
To identify answers to these questions, CDP is utilized, especially for the Marketing department, to get a 360-degree view and get insights about customer behavior, which will help them create or provide the correct information to the right user every time. Overall, engaging customers with more personalized messages catered for them, strengthening the relationship with the Customer, and enhancing brand loyalty and efficacy.
What is DMP(Data Management Platform)?
A DMP collects data from various sources such as websites, apps, CRM’s, analytics platforms, etc., organizes and segments that data into multiple clusters for advertising purposes. It groups that pile of users based on their interest, behavior, demographics, technographics, etc., and makes it available on various advertising platforms to target those users for more enhanced and detailed targeting.
DMPs enable marketers to consolidate data such as cookie IDs and leverage ad networks and DSP(Demand Side Platform) across hundreds of sites to target audience segments and optimize campaign effectiveness through programmatic ad buying.
DMP’s primary benefit is to identify prospective users for advertisers’ products or services. And target them with relevant ads for better performance and ROI. DMP is an AdTech Product. Its utmost use is to run effective ads by targeting relevant users.
DMP works with third-party data. The data collected by DMP about the users are not direct or PII(Personal Identifiable Information); data is collected from Cookies, Mobile devices IDs, etc. Data is processed and sent back to the advertising platforms.
PII refers to any information used to identify details about a specific person. For example, it may be an SSN(Social Security Number), a phone number, or an email address. Personally identifiable information (PII) is a set of data points that may be used as identifiers to track the actions of a specific person.
Main functions of DMP are –
- Data Integration
- Data Segmentation.
- Data Activation.
- Audience Analytics.
Both platforms have a lot of similarities and differences. Let’s discuss them in detail.
The following attributes highlight the differences between CDP and DMP –
Data Sources: In CDP, data accumulated from both – anonymous data, gathered via Cookies, Mobile devices I ds & IP addresses. And known data also referred to as PII’s such as Name, Email Address, Phone Number, Social Security Number. Any data which can directly identify the user at an individual level. Also, CDP focuses mainly on First-Party Data; some advanced CDPs can use third-party data. And DMP majorly retrieves data from Second Party and Third-Party Data. Here also, some advanced DMP’s can use First-Party Data.
Data LifeCycle: Data is available in CDP for a more extended period because data is updated continuously, based on the interaction with the user in their browsing journey. But in DMP, data is available for a short period, mostly around 90 days max. It’s is because the volume of the user data which the platform holds is massive. It won’t be easy to manage such large-scale data for a longer time.
Use Case: CDP is employed to identify and understand the Customer’s behavior from a single perspective. Here, various user touchpoints are matched and correlated with each other for a single customer based on how they interact with its products and services across multiple channels and platforms. Advertising Platforms majorly utilize DMP to target a group of users who have any interest, affinity, or shown any specific behavior in their interaction with various websites, apps, Connected TV’s or channels across the web.
Data Activation: Data Collected over CDP can be shared with any platform; it can be CRM, DSP, analytics platforms, even other DMP’s or any other channels. Data collected over DMP are activated on various types of Ad Tech platforms such as DSP or any other kind of advertising platform, where user segments provided by DMP can be targeted for increasing the effectiveness of ad campaigns.
User Identity: PII (Personal Identifiable Information) such as Name, Email address, Phone, etc., is collected in the CDP platform. User information is kept anonymous in DMP platforms.
Data Unification: In CDP, data is matched by deterministic identifiers such as Email Id or Phone, which is unique to the user. And in DMP, data is identified using Probabilistic identifiers such as Cookie matching or Mobile device id., and is determined by algorithms. These algos are specifically designed to prioritize segmentation and categorization instead of private data to maintain anonymity.
Major Differences between CDP and DMP
| Attributes | Customer Data Platform(CDP) | Data Management Platform(DMP) |
|---|---|---|
| Data Storage | Data is stored in a single place for fast retrieving as data volume is usually low. | Data is stored in two different stores, where one is utilized to keep the large chunk of data, and the other is utilized for faster retrieval and analysis. |
| Data Lifecycle | Usually, data can be stored for a very long duration, as it helps to keep updating the users browsing behavior and identify the patterns. | Data is stored for max of 90 days in most cases because of the massive volume of data that DMP collects. |
| Data Sources | Data is collected from anonymous as well as known(PII) data. In most cases, First Party data is acquired and utilized. | Data is collected from anonymous sources: Cookie id, Mobile Device Id, IP Addresses, etc. |
| Use Case | Mainly used of Marketing – Omnichannel Marketing, Personalized Messaging, Can act as a base source for Predictive Analytics. | They are mainly used to identify users with high interest, affinity, or behavior and segment them into groups to target those users on Demand Side Platforms(DSP). It can also be used for Lookalike Modelling. |
| Utilization | CDP is mainly utilized from Martech Perspective. | DMP is mainly utilized from AdTech Perspective. |
| User identify | User identity known to the organization as PII(Personal Identifiable Information) such as Name, Email, Phone, etc. is collected. | User Identity is Unknown to the DMP platform. It collects data sources that can provide only anonymous data. |
| Customer Type | CDP is mainly used for helping, engaging, and delighting the current Customer of the organization. Based on where Customer is in their journey, personalized messaging is utilized across multiple channels for higher engagement. | DMP is used mainly for identifying better prospective customers. The whole intention behind creating this system is to identify relevant audience segments, which can be targeted for prospecting. |
| Data Activation | Data can be easily activated to any channel, be it CRM, DSP, or any other DMP. | Data in DMP’s are mainly activated over any demand side platforms or ad exchanges. |
| Data Unification | Data is identified about the User via PII. So all the information can be linked with any single entity such as Email or Phone. These are Deterministic Identifiers. | Data is identified via Probabilistic identifiers such as Cookies, Mobile IDs, etc., since exact information about the user identity is anonymous. |
Similarities between DMP and CDP
Till now, we have tried to get information about the difference between both platforms at various levels. But there are few similarities between DMP and CDP. Some of them are mentioned below –
- Both platforms are utilized for improving customer segmentation and engagement.
- Both platforms are typically managed by the marketing departments or marketing teams of any organization.
- Both platforms can be used for Cross-Selling and Upselling purposes.
- Both platforms are used for Statistical Analysis, Data Mining and reporting.
- Both platforms are used for presenting or visualizing data to business users.
- Both platforms are used for Cross-Channel Targeting.
- Both platforms work for the same aim of influencing the user to buy.
How CDP and DMP align to customer journey?
It’s essential to understand where these platforms will help in the customer journey to enhance the Customer’s overall experience. During the various stages of the customer journey, both platforms can play vital roles at multiple levels.
In Customer’s Journey – There are five stages:
Awareness: Where the Customer may or may not be aware of the product or service offered by your organization. Then with branding ads, the Customer gets information about it.
Consideration: Once the Customer saw your ad and interacts with it, either by clicking on the ad or by watching your promoted video. After that, user lands to your website or app, and browses through your offerings or consume content available at your end.
Decision: Once the user has gone through all the details available at your disposal, they may go to other websites or Google search or watch some related content on YouTube or any other streaming service. After reviewing everything, they decide whether to go ahead with the provided product or service.
Service: Here, the Customer starts using the service and organization, helps in understanding the basic functionalities, gives support in every step, makes them comfortable with the product or service, provides all the necessary information required so that the user can get acquainted.
Retention: Once the User gets acquainted with the product or service, they may further expand their understanding of the product or service. To retain customers, the organization can upsell its offerings. For example, suppose the user has taken a Freemium service of any SAAS product or service. In that case, the organization can provide decent discounts or offers to convert them as paying Customers and provide advanced services and their current offerings.
Role of DMP in the Customer Journey :
DMP is majorly considered at the initial two stages of Awareness and Consideration, where new and relevant user segments are targeted via ads. Here, these prospective customers are provided enough information through ads and Landing pages to attract and engage them.
It’s also utilized to create Lookalike Audiences of the Segmented Users to expand the user segment further and identify similar audiences across the internet relevant to the Advertiser. It also establishes a lookalike for Users who have shown an initial level of interest in the offerings.
Role of CDP in the Customer Journey:
CDP’s roles start from the Consideration stage, where prospective customers have already landed on the Website or App. The Customer has basic information about the product or services; the Customer consumes all the information available at your end about your offerings and Brand.
Now they recognize your Brand. CDP tracks all the user information and creates a Journey map for each stage about the Customer. Once it understands which step the user is in right now, it can help remind users about the Brand by retargeting ads with personalized messaging and providing relevant information, which can be real-time.
Which platform to consider for onboarding in your business?
Both platforms have definite purposes, and you should be aware of what medium should be utilized in your business, based on at what level your business is at.
Before choosing any platform, make sure that you have the respective specialized person or resources in your team who understand the platform you are choosing. If you don’t do that, then basically, you may end up just understanding the basics of the platform, and it can extend to months. You will waste a lot of time at your end trying to figure out how to utilize the platform best, which can cost you money, as either platform can come with a Subscription(Monthly or yearly) or Minimum monthly commitment. [Of course, vendors from both platforms are going to help you to get started at the initial level, but it’s always better to have a knowledgeable person at your end who takes care of setting things properly, running, and maintaining the platform smoothly.] Both platforms require regular support, maintenance, and if something breaks, there should be an accountable resource, which can help solve the problem.
How to decide whether CDP is suitable for your business or DMP, or both?
Rather than thinking as separate entities and choosing between the two, you can take them as platforms that complement each other in creating a Data-Centric environment in your organization. Both can be utilized together at different stages of the customer journey. DMP can help identify targeted audiences that can be prospective customers, and CDP can help nurture those audiences, which will help in higher conversions rate and longer retention.
But, if you want to choose between the two, it depends on the at which your business is currently and what you are trying to achieve. Are you focusing on personalizing individual experiences or targeting an audience for digital ad campaigns? For example, if you are a startup and just starting with your marketing efforts, you should probably start with the CDP platform. Because at this stage, your main priority would be to understand your Customer better, getting insight on their behavior and on how they are interacting with your product or service.
Once you understand your Customer, you can probably think of attracting more relevant users to your website or app. At this stage, you might have already got an idea about your Customer’s Buyer Persona. Here, to identify more relevant prospects at scale, you can utilize a DMP solution with any DSP(Demand Side Platform) to show targeted ads to audiences with better chances of converting.
Also, CDP’s pricing is mainly on a subscription model. And comparatively low as compared to utilize DMP overall costing. When the number of users is less at the initial level, you can use CDP to delight your customers with better personalized messaging and interactions, which indirectly can help you achieve organic growth via Word of Mouth. And once you are better off, utilize DMP to get scale in your business.
Conclusion
We have gone through a decent volume of information to understand the difference between CDP and DMP, compare them in all angles, identify their similarities, understand why to use, when to use, where to use, and how to use both platforms. CDP’s mainly help you get a unified view of your Customer, while DMP’s are effectively used in prospecting new customers. Both these platforms are created to increase customer engagement and enhance the overall customer experience.
Both platforms will help you achieve and create a Data First Organization, where decisions are based on data rather than intuition or gut. At the end, all that matters is, creating an environment where your customers are delighted with your services and are with you for a long time. And as a marketer, you can achieve fantastic Customer Lifetime Value(CLV).