Sep 27, 2023

Why DMPs as We Know Them Are on Their Way Out

Jeff Larche

Jeff Larche

Why DMPs as We Know Them Are on Their Way Out

When data management platforms (DMPs) first arrived on the scene, I had a standard, oft-repeated description of its twin superpowers. A DMP does two things uniquely well:

  • Segmentation: A DMP uses rich, unified customer and prospect data sets to create finely targeted segments.

  • Activation: A DMP uses APIs to communicate these segments, at a unique ID level, to publishers, ad networks, and even an organization’s internal stakeholders, such as customer support centers.

But are these still unique to the DMP? If these two superpowers seem oddly similar to the capabilities of a customer data platform (CDP), then congratulations! You’ve been paying attention to changes in the tech world.

Probably the biggest difference between these two platforms is that a CDP typically relies primarily on first-party data and a DMP traditionally activates on a combination of first-, second-, and third-party data.  

And therein lies the rub.

A Timely Shift Toward First-Party Data

There is a measurable shift away from DMPs and toward CDPs, due in large part to the privacy laws that are restricting third-party cookies in popular web browsers, as I wrote about in The Importance of CDPs in a Cookieless World.

These forces are causing major MarTech companies to shut down their DMPs, most notably Salesforce. Adobe, another major DMP player with its popular Audience Manager, may soon follow suit as DMP capabilities become completely addressed by Experience Platform, Adobe’s CDP.

It’s not just Salesforce and Adobe. There is plenty of industry speculation that as CDPs become more powerful and versatile, they will step in entirely, using cookieless methods to deliver audiences to publishers and ad marketplaces. What is unclear is the exact nature of these new methods.

One hint of how this might be accomplished comes from recent news that Google is expanding the testing windows for its Privacy Sandbox. There they announce, “We've released trial versions of a number of new Privacy Sandbox APIs in Chrome for developers to test.”

Publishers seem unconvinced. In what may be the most revealing look into the future of DMPs a survey by Emodo, Publishers Priorities and Strategies in a Changing AdTech Landscape, July 2023, reports that 40% of publishers are “concerned” about the future of identity yet nearly two-thirds don’t believe that current solutions such as first-party data and alternative IDs — as present in things like Google Chrome’s Privacy Sandbox — are a “sufficient strategy” to solve for ID loss.

All this uncertainty has not stopped many who had been reliant on DMPs from making the jump fully to CDPs for their advertising identities. A third of respondents to this Piano survey reported they use their CDP as a DMP. It’s a figure that’s still far behind those using their standalone DMPs (roughly half of those surveyed), but this may be because of the handful of use cases where a DMP can still deliver unique value for organizations.

The Bottom Line

The fate of DMPs is a trend worth watching. The death of The Third Party Cookie is like a crime story unfolding weekly. What is clear is that the days of DMPs operating as we know them are numbered.

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