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StrategySep 13, 2019

CDP vs. DMP: What’s the Big Deal?

Joseph Bartman

current state of the industry

The marketing technology (MarTech) landscape has exploded in the past eight years. In 2011, the amount of MarTech vendors numbered 150. Today, that number has surpassed 7,000. With such a large variety of vendors and tools it can be difficult to keep track of what is worth implementing and how to use it effectively. Two relatively new tools that have created some confusion are customer data platforms (CDPs) and data management platforms (DMPs). Both platforms obtain and organize data so that it can be activated to engage customers. The primary difference between them is the type of data collected and the focus of customer engagement. In short, CDPs are best utilized to target and grow relationships with existing customers using first-party data, while DMPs primarily use third-party data to help gain new customers. The following article contains a breakdown of each tool and details of how they fit into the current MarTech landscape.

martech reference architecture

Credera’s MarTech reference architecture (see below) highlights where CDP and DMP live within the overall MarTech landscape. While these tools have similarities, it is important for marketers to understand their differences.

“It’s important to use a holistic reference architecture to help understand their current state and develop an actionable roadmap. This helps identify clear long-term sequencing as well as immediate next best steps,” shares Credera partner, Phil Lockhart.

what is a cdp?

CDPs are primarily meant to personalize the existing customer experience with the goal of improving customer satisfaction, retention and engagement. CDP’s leverage first-party data collected by the company. Examples of first-party data include customer data obtained from websites, mobile apps, point-of-sale, and company call centers. This data typically has some personally identifiable information (PII) like names and emails attached to it. Using the PII, the customer data is then organized into a new or existing profile. If an individual uses multiple emails or devices, the CDP should be able to consolidate them into a single profile. Profiles can then be divided into segments based on their personal (e.g., age, location, gender, etc.) and behavioral (e.g., purchase history, ad interaction, etc.) data. Once the profiles are placed in segments, analytics are used to predict future behaviors and determine the “next best action” for different segments. At this point, the CDP passes insights and predictions to be activated by another platform. Currently, most formalized CDPs are being provided through smaller specialized vendors such as Tealium, RedPoint, and Blueconic, though Adobe and Salesforce have recently announced offerings in this space with the introduction of their own CDP solutions.

what is a dmp?

DMPs build audience segments out of potential customers for campaigns using anonymous third-party data. The data collected by DMPs is similar to the data collected by CDPs. However, unlike CDPs, the data collected by DMPs is primarily composed of purchased third-party data. The data is typically anonymous and is available for a limited time. This is what makes the DMP less suited for long-term customer engagement. The data collected is centralized and separated into segments based on demographic and behavioral data. The segments can then be sent to a demand-side platform where it can be used to create a campaign targeting the segment of interest. Typically, the goal of the campaign is to gain new customers. Many of the larger vendors including Salesforce, Adobe, and Oracle provide DMP solutions. Examples of smaller vendors with DMP solutions include LiveRamp and Lotame.

use case comparison

Another helpful way to understand the differences between a DMP and CDP is to look at some sample use cases for each. The following use cases are some of the top value drivers for DMP and CDP usage.

looking ahead

As previously discussed, there is some overlap in the functions of CDPs and DMPs. In the future, integrating the two tools together could be used to increase their effectiveness. We have seen this convergence begin to take place already, with tools like Tealium (CDP) and LiveRamp (DMP) offering an integration to provide a cohesive CDP/DMP solution. By integrating the tools, a user profile in the Tealium CDP can be matched to anonymous web and mobile browsing data accessible via the LiveRamp DMP. The browsing data enriches the first-party data collected through the CDP and allows for greater personalization on advertisements. Similarly, some of the larger vendors (i.e., Adobe, Salesforce) have previously offered broad solutions that combine some of the characteristics of a CDP and DMP, however, these “broad solutions” have become more targeted and are now being marketed as CDPs (“Customer 360” for Salesforce and “Adobe Experience Platform” for Adobe).

case study

From strategy and planning to technical implementation, Credera helps companies realize value in the ever-changing MarTech landscape, including CDPs and DMPs. As an example, Credera helped a leading energy provider develop a digital platform through Adobe. We worked with Adobe to create a platform that leveraged the DMP to create a targeted customer audience. Using the new digital platform, data can be linked to an individual’s activity on the company’s website. The audience and individual behavior data were then used to send personalized ads to those individuals. For example, customers who visit the sustainability section on the energy provider’s website, are now retargeted with advertisements highlighting solar-powered, sustainable energy products.

Interested in learning more about how Credera can help your company learn more about your customers with a CDP, DMP, or other marketing technology solutions? Reach out to one of our MarTech experts at findoutmore@credera.com to get the conversation started.