The question of “what’s in a name?” is at least as old as Shakespeare. While I can’t promise that this blog will be so eloquently written, I’ll do my best to unpack the differences between two familiar and similar-sounding names: the customer data platform (CDP) and the data management platform (DMP). Marketers often confuse CDPs and DMPs for one another, although the two technologies are quite different.
DMPs, which have been around longer, are designed to aggregate and store business data from multiple internal sources (e.g. online and transactional data) as well as externally generated, non-personally identifiable demographic, geographic, and industry data from third parties. A DMP is frequently used in conjunction with stand-alone analytics tools to identify potential customers, drive business decisions, and answer common questions like, “which markets are being underserved by our business today?”
CDPs are relatively new to the scene, although their rapid adoption by enterprises has made them a frequent topic of conversation. CDPs are designed to drive campaign and engagement decisioning using first-party customer data. For example, a CDP might be used to identify what type of content is being consumed by certain segments and then search for lookalikes with the same content affinities.
Now that you have some idea of the nuances between the two, here are three additional differences between the two that can help you decide which technology you need (‘both’ is an acceptable answer, too!).
Difference #1: attracting customers vs. engaging customers
DMPs can help you attract more customers to your store or website by identifying segments based on age, region, income, and more. In this way, DMPs can help you understand who your prospects are and where they spend their time.
On the other hand, CDPs are designed to drive better customer experiences by identifying the what and why behind customer engagement. So, if all you want to do is find new customers, start with a DMP. But if you want to engage with and delight those customers by delivering personalized, meaningful experiences month after month, you need a CDP.
Difference #2: DMPs depend on IT’s help; CDPs don’t
In order to get answers from your DMP, you’ll need IT to handle those data requests for you. If you’re a marketer, the chill that just ran down your spine is the realization that getting insights from a DMP takes a lot of time because of IT bottlenecks. (And if you’re an IT person, what we mean to say is that you’ve got way too many things to do.)
With a CDP, marketers don’t need to pass their data requests through IT—they can get their answers directly from the CDP. If you’re reading this blog out loud, that cheer you heard in the next cubicle was probably from an IT person.
Difference #3: DMPs focus on data quantity, CDPs on data quality
DMPs are basically big data repositories; you pool data from different sources and then go searching for nuggets of information. Because DMPs emphasize data quantity over quality, marketers tend to have trust issues with the freshness and accuracy of DMP data. In addition, because DMP data comes from many different sources, there are often missing attributes that make it hard to segment customer data accurately.
CDPs focus on first-party data: the customer data that comes from your own transactional and omnichannel sources. It’s relevant, which makes it ideal for real-time decisioning and obtaining actionable insights based on customer behavior and engagement levels.
DMPs and CDPs play nicely together
While CDPs and DMPs are different, it’s important to note that their differences make them complementary, not competing, technologies. Many successful businesses use both a CDP and a DMP. The key to their success lies in understanding the strengths of each and, of course, in choosing the right CDP and DMP platforms for their business.
If you want to learn more about CDPs, DMPs, and the differences between them, scroll up and fill out the form on the right to download Lytics’ whitepaper, “CDPs and DMPs: Demystifying Data Management for Marketers.”