Ask the Expert: What’s the Difference Between CDPs and DMPs?

‘Ask the Expert’ is a series that breaks down the tools, tech, and trends you’ve been hearing about in the trade pubs and around the office. We ask our in-house experts the tough questions and write up the answers in bite-sized pieces for your reading pleasure.

This month’s topic? Customer Data Platforms (CDPs) and Data Management Platforms (DMPs). We brought in Centro’s VP of Performance Analytics and Ad Operations, Zach Moore, to give us the breakdown.

What’s a CDP? What’s a DMP? What do they do?

A CDP, or Customer Data Platform, and a DMP, or Data Management Platform, can be complimentary to each other—but ultimately exist to accomplish different objectives for marketers.

A CDP contains data attributes for known and unknown customers: Names, addresses, purchase histories, product preferences, etc. These data points are aggregated from multiple systems, matched to profiles, and ultimately, used to create personalized touchpoints.

A DMP, on the other hand, operates anonymously and utilizes browser cookies. DMPs exist to segment audiences, gain insights into specific actions, and facilitate targeting these users anonymously.

What’s the primary difference between the two platforms?

A CDP typically contains PII (personally identifiable information), whereas a DMP is not usually permitted to store this type of information.

What’s an example of how a marketer would use a CDP or a DMP?

Let’s say a brand wanted to launch a targeted email campaign to their e-commerce customers. Using a CDP, they can utilize different messages and offers based on their customers’ predicted lifetime value (LTV).

They can target their high LTV customers, who are more likely to keep spending, with an e-mail that contains a discount or special offer on a big ticket item. Low LTV customers, who are less likely to spend a significant amount of money, can be targeted with an email that features moderately priced accessories or an alert about an upcoming sale.

Let’s say the same brand is attempting to get prospective customers down the purchase funnel, but they experience a drop-off right before conversion. By utilizing a DMP, the brand can map out the prospects’ journey throughout their website and build rules to collect and segment the prospects—to target them more efficiently and gain better insight into their path.

These user segments can be activated within ad buying platforms. For example, the brand can target those users with an ad to remind them that they still have items in their cart, or retarget them with variations of similar products that they’ve already viewed.

What should a brand keep in mind when considering either a CDP or a DMP?

Both are major investments for any marketer and should be carefully considered. The marketer should have a firm use case for each platform, as well as solid buy-in across the organization early on in the process. It’s likely that various teams will need to play a part at some point. Everyone in the organization should be aligned around the business use case, and metrics should be established up front to gauge success.

For CDPs in particular, organizations need to input “clean” data in order to receive actionable data as an output. There should be a large emphasis on data hygiene in order to start the process correctly. If this is a new concept and your data is a bit of a mess, stakeholders will need to be realistic about short- and long-term goals.

Along these lines, it’s important to ask yourself: When was the last time you audited your CRM data? Are these customers still active? Have they moved? Be honest with how fresh your data is.

For both CDPs and DMPs, create a plan for how to use your data and a clear path to customer segment activation. In the case of media activation, ensure your partners can ingest what you’re sending them.

When it comes to DMPs specifically, stay in lock step with your dev and/or IT teams, to make sure that the necessary data points are surfaced in your website’s data layer, or available through the existing tag management solution. If they are not readily available, extra development will be needed to bring them to the forefront.

How does Centro work with clients who currently have, or are looking to obtain, either solution?

Our clients can bring Basis in-house or utilize our managed services option to easily activate segments programmatically. In situations where neither of these options are a perfect fit, Centro meets clients where they are to create custom solutions.

Not sure where you stand? Connect with us to learn more!