16.12.2021

A Comparison: Customer Data Platforms and Data Management Platforms

Advertisers know that today data is essential for targeted strategy planning and campaign execution. But not all data is the same. What information do you need to get the best results? This always depends on the campaign objective. But once you know what data you need, there is still the question of how to get a relevant data pool. In this blog post, we contrast the features of customer data platforms (CDP) and data management platforms (DMP) and answer questions like “What are the benefits of these two types of platforms?”, “How do they differ?” and “Which type of platform is more suitable for which marketing objective?” Enjoy reading!

What is a customer data platform (CDP)?

Customer data platforms (CDP), as the name suggests, collect customer data. In doing so, customer data platforms focus on collecting first-party data. This customer data is collected from various contact points and passed on to other tools and IT systems.

CDPs rely on the collection of personal data because they need to identify their audiences in order to then create target groups. To identify them, CDPs use customer data such as email addresses, names, interactions on certain platforms such as social networks or information about purchasing behaviour. In addition, the use of customer data platforms has other advantages:

  • CDPs store customer data over long periods of time.
  • CDPs allow users to set time limits for storing customer data.
  • Increased relevance of marketing through higher accuracy of the audience to be targeted, leading to more targeted actions and goals (for example, better customer retention, higher ROI, more sales, etc.).
  • CDPs do not rely 100% on cookies, they mainly collect data directly from the user. However, this requires the user’s consent, as there is no anonymisation.

Data protection – and in Germany the DSGVO – should therefore also be a priority for CDPs. Companies that decide to use them need the user’s consent and must offer the user options through which he can delete or remove his user data. The company should also offer opt-in and collection preferences. If these requirements are met and the GDPR is respected, the company can collect valuable data with its CDP.

What is a data management platform (DMP)?

Data management platforms (DMPs), unlike CDPs, are focused on anonymised data from third parties. DMPs collect and manage large, non-personalised data sets and, unlike CDPs, also do not collect personal data. This means that users are not identified. Also contrary to CDPs is the feature of DMPs to store data for shorter periods of time. But why should companies use a DMP? Data management platforms also have advantages: 

  • Companies can use this data to find out trends, potentials or interests of a large audience in the present.
  • For example, it is important for travel companies to know which trips were interesting for a customer in the last few days; the search queries from two years ago are of less interest to the company.
  • DMPs offer large amounts of data from many different sources, as the data is either bought from third-party providers or acquired through third-party cookies.

However, this can also become a disadvantage if third-party cookies are blocked, for example by the user. This can harm the effectiveness of the DMP, because less tracking means less data. The associated advertising will then be less targeted.

Customer data platforms and data management platforms: Similarities and differences

To further clarify the differences between the two types of platforms, we have listed the basic differences here: 

  • They use different types of data and the way they collect data also differs enormously.
  • Because of the different focus on the data, the users of the respective platforms also get different results.
  • CDPs and DMPs use customer identities very differently. While CDPs analyse them, DMPs collect data in which users remain anonymous. 
  • The collection and processing of data differs: DMPs use third-party cookies, which makes them finite, whereas CDPs collect first-party data and less second-party data.

However, despite the many differences, the two types of platforms have one thing in common: both types of platforms use data to create target groups for the marketing industry. 

Data management platforms and customer data platforms: Which one is right for which advertiser?

Deciding which type of platform is right depends on several questions that the company needs to ask itself. Among them: What is the marketing objective? What kind of target groups do we want to reach? Do we rather want to analyse website visitors or build an advertising audience first?

DMPs are used, for example, to build a marketing audience or for testing, when different aspects of targeting or marketing are to be tested in an unknown target group. DMPs provide the company with an anonymous audience in the category chosen by the company. This can then be used as a basis for further marketing measures with more specific and targeted groups of buyers and campaign objectives.

A CDP is recommended when website visitors are to be tracked, categorised or analysed. Because a CDP collects specific data about, for example, user buying behaviour and demographics, CDPs are suitable for highly personalised marketing campaigns. This is because different target group segments can be used depending on this user information. For example, loyal existing customers of a brand can be determined, identified and rewarded. This strengthens customer loyalty.

In the end, the type of platform chosen depends on the goal of the advertising measures. Douglas Marketing Solutions uses first-party data from its own CRM system, such as demographic data and the purchase history of Douglas CRM customers, to plan and implement its customers’ campaigns. 

In doing so, the beauty retailer offers its B2B customers a wide variety of off-site and on-site marketing measures, including Audience Ads and Sponsored Product Ads, but also the possibility of running a Beauty Tester campaign.

You can find out more about our advertising solutions and how you can work with us on our website.

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