Why You Need Both Consumer Data and Data Management Platforms
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People have a funny quirk: we’re always trying to determine the “best” of something, whether it’s NBA players or data platforms. The truth is that most of the time we are not dealing with a zero-sum game. It is often better for two similar services to work together than to compete with each other. Lebron James and Steph Curry on the same team, maybe? With Lebron’s game and Steph’s shot, they’d be unbeatable, right? This is the case for consumer data platforms (CDP) and data management platforms (DMP). They work in different but complementary ways. Combined, they are more powerful than they could be alone.
Let’s take a look at a side-by-side comparison of the two types of data platforms.
While this comparison may differentiate the two in a way that makes one seem superior to the other, the most effective marketing strategies involve a marriage of the two. They complete each other.
We all know that not all consumer data platforms are created equal and different CDPs can have very different feature sets. CDPs are an added value for marketers who want to see all of their customer data in one system and for publishers who build their first-party data set through a record wall. However, not all users connect to all sites (and if they have to, they can leave)! On the open web, an average publisher can only authenticate ~20% of their audience, which means that ~80% of a publisher’s audience is blind to CDP, which limits its scalability. There is no built-in mechanism to augment authenticated data with anonymous data, so a DMP is a crucial added value.
CDPs collect signals but lack a method to classify users into characters. A CDP can identify how often a person is at a site and what time they are at the site, but cannot give an estimate of the number of people from a specific site. demography visit the site, which is vital for buying and selling advertising inventory. Again, this is where DMP analytics are extremely useful and fill a gap that CDPs cannot.
On the other hand, why do DMPs need CDP? Because in a world increasingly centered on data privacy, the ability to collect, organize and centralize first-party customer-level data becomes more important than ever.
CDPs can extract data from DMPs and share information with them. Both systems work whole to enrich customer profiles. By integrating a DMP with a CDP, a digital marketer can access first-party data to see what customers are doing outside of their interactions with a brand and discover what they want in micro-moments.
In short: CDPs are intrinsically about customers. The DMPs concern audience. CDPs are about harnessing the power of user-known informationDMPs are all about harnessing the power of unknown and anonymized information. Tomorrow’s data world will be driven by a number of identifiers that span first-, second-, and third-party data, and whoever is most adept at integrating and assembling those identifiers will provide the most value.
Will these technologies evolve over time into new types of platforms or even into bundled offerings? Yes! We are already seeing this now, with CDPs bringing DMP-like capabilities in-house and vice versa. And we also see DMPs evolving into identity-centric audience management platforms. Either way, publishers and marketers need to use both types of technologies in concert in order to solve their data use cases. Bring Steph and LeBron together on one team and you go be the real all-star!
Shiv Gupta is Managing Partner of the U of Digital.
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