CDP vs DMP: The Ultimate Guide to Customer Data Solutions

To stay ahead of the curve, businesses must grasp how their customers make purchasing decisions. This understanding not only facilitates the analysis of campaign efficiency but also empowers businesses to optimize their expenses.

Putting customers first and meeting their expectations has become the cornerstone of business success. However, achieving this is only possible with reliable software solutions. As the volumes of data that companies need to analyze continue to grow, the use of technically advanced platforms, such as a data management platform (DMP) or a customer data platform (CDP), has become a norm.

With our extensive expertise in AdTech and MarTech, we understand that these terms can be confusing. They may sound similar and even seem to mean the same thing, but we're here to clarify that they are not interchangeable.

Both platforms leverage various data sources to understand consumers’ digital behavior and provide “building rocks” for specialists to target particular audiences. However, they work with drastically different types of data sets and thus can address various marketing needs.

In this article, we provide information about these platforms, highlight their characteristics, and explain what makes them different and what they have in common. In other words, if you are trying to make the right choice in the CDP vs DMP dilemma.

What Is a Data Management Platform?

We offer to start with the definition of a data management platform.

DMPs work with anonymous audiences or new customer categories rather than familiar customers.

Though such platforms mainly deal with second and third-party data, they rarely rely on first-party data, such as data collected from CRM systems, apps, website visits, and social media. They mostly use non-PII (personally identifiable information) data, like cookies or IP, to communicate with other systems compatible with third-party data.

DMP data doesn’t provide a connection to particular identities but instead builds a temporary customer profile based on anonymous third-party data.

How Does a Data Management Platform Work?

DMPs are used to target and retarget users using cookie IDs. A DMP can track a cookie ID and collect data about user behavior as the user continues browsing the Internet.

Such tools record anonymous customer data and categorize it as a relevant data segment. Then, this data is retained until the cookie lifetime expires in a 90-day interval. Eventually, DMP analyzes the data to craft look-alike audiences, which helps to enhance marketing campaigns.

To better understand whether an enterprise data management platform can be helpful for you, you need to have a closer look at how it works in real life.

For example, suppose a DMP has some categories, including “fitness lovers.”These users can be targeted with your ads. All users who have visited websites devoted to selling fitness accessories and clothes and blogs that publish articles on relevant topics can be categorized as “fitness lovers.” For that, these web pages should have a DMP tracking code. Today, however, practically all websites contain a code that can track visitors while surfing the net.

A modern DMP can link users’ desktop habits with their mobile and web browsing activities. This can give your business even deeper insights into people’s online activities.

Marketers can also unite similar profiles with something in common to send them the same marketing messages. For example, all women aged 30-55 who read blogs that publish healthy recipes can become addressees of the same message.

When a data management platform gathers data, this data is organized into an anonymized profile of each customer. Then, this information about the audience is provided to digital advertising platforms and in-house marketing channels.

However, although such platforms collect personal data, it is not revealed to marketers. This means that DMPs sanitize and hide information such as users’ names, addresses, etc.

Purpose and Benefits of Using DMPs

DMP is a good choice for you when accessing the audience segments most suitable for the given campaign. As third-party data is collected and retained under one hood, DMP lets you run more efficient advertising and marketing campaigns. Using DMP-enabled data, you can determine how to tune your targeting for the most essential marketing needs and control expenditures.

Why do marketers rely on DMPs?

1. Gathering all the data in one place. Data management platforms let marketers collect and accumulate data from their own and external sources. DMPs offer the possibility of collecting unlimited attributes, allowing specialists to get insights into users' activities to achieve their business goals.
2. Audience segmentation. DMPs ensure advanced audience segmentation. By analyzing data from various sources, DMPs can create detailed segments. This is done under demographics, behaviors, and other attributes. As a result, businesses can execute more targeted and effective marketing campaigns.
3. Enhanced targeting. With improved audience segmentation, data management platforms let companies leverage more precise targeting of ads and content. This leads to higher engagement rates and better ROI on marketing efforts.
4. Personalization. Thanks to leveraging the vast data collected, DMPs help deliver personalized content to users based on their preferences and interests. This has a positive impact on user experience and conversion rates.
5. Data monetization. Businesses can use such platforms to monetize their data and create a new revenue stream. They can share anonymized audience segments with advertisers and other third parties.
6. Regulatory compliance. DMPs can help companies comply with GDPR. They provide tools to ensure data collection and usage comply with legal requirements, protecting customer privacy.
7. Cost efficiency. Thanks to improving targeting and personalization, DMPs can reduce ad spending. More efficient use of marketing budgets leads to cost savings and better resource allocation.

Data Management Platform Examples

We recommend considering the existing products to understand better whether such solutions will be helpful for your business or whether you should consider developing a platform of this kind.

Adobe Audience Manager

Adobe's DMP offers many features and advantages for businesses of different types and sizes. The platform relies on the ML and AI framework dubbed Adobe Sensei. Users can leverage our advanced customer insights, audience segmentation tools, and real-time processing.

Audience Studio by Salesforce

While Salesforce is mainly known for its CRM software, it also offers its data management platform. It collects data from different sources to give businesses access to insights into user preferences, which can be used to provide people with personalized ad campaigns. Audience Studio allows companies to enjoy customer device graphs, advanced audience segmentation, and ML/AI tools like Einstein. It supports data science analysis.

Nielsen DMP

By combining different data types, Nielsen DMP can offer businesses a complete view of customer behavior. It has all traditional DMP functionality, such as audience segmentation, profiling, orchestration, media planning, etc. Moreover, it also offers advanced AI capabilities for better audience segmentation and ad personalization.

Is It Worth Building a Data Management Platform?

Today, there are a lot of ready-made solutions that you can opt for. Experts say the DMP market size reached $3.1 billion in 2023. It is expected that in 2024 it will grow to $3.4 billion, while in 2032, it can hit the level of $9.4 billion. The forecasted CAGR for 2024-2032 will be 13.5%. This growth is explained mainly by businesses' desire to access detailed information about their customers, choices, activities, and preferences.

While many companies rely on off-the-shelf platforms, others prefer to develop custom solutions. There are weighty reasons for that.

1. Support of all your specific business needs. A custom DMP can be better tailored to meet the unique requirements of your business. It means that you can ensure that your platform will adequately support all specific data types, sources, and business processes that you expect it to.
2. Flexibility and scalability. Custom DMPs offer the flexibility and scalability to adapt and evolve as your business grows and changes. At the same time, off-the-shelf platforms often need more adaptability.
3. Easier integration. When you turn to custom software development services, DMPs can be designed to integrate seamlessly with your existing technology stack. Your data management platform can be integrated with your CRM system, marketing automation tools, and analytics platforms. Regarding ready-to-use solutions available in the market today, some restrictions can be related to integrating a DMP with other systems you use.
4. Enhanced security. When you have your custom solution, you have complete control over data security measures. As a result, you will know that sensitive information is protected according to your security policies and regulatory requirements.
5. Cost efficiency in the long run. The development costs are a rather serious investment. Nevertheless, your custom platform will help you avoid ongoing licensing fees and customization costs associated with off-the-shelf software in the long run. Moreover, your custom DMPs will include only the features and functionalities necessary for your business. When you have a ready-made platform, you may need to bear additional costs related to unnecessary features.

DMP Development Process

If you believe a custom solution is the most appropriate choice for your business, you must understand how to build a data management platform.

This is a complex process that involves several key steps.

1. The preparatory stage includes hiring a development team, defining requirements, selecting the right technologies, integrating data sources, and choosing the data management platform architecture. Also, at this step, developers must ensure that your platform complies with data privacy regulations.
2. When all requirements are discussed and approved, the team will plan the design and development process, set milestones and deadlines, and proceed to the active phase of the project realization.
3. The development approach may differ depending on the team you work with. At Geomotiv, we usually rely on the agile methodology, which allows us to break down the entire process into sprints. This helps us stay flexible and continuously improve our solution.
4. We also pay close attention to QA and testing activities during development and always test the product's functionality after it is built.
5. Our team can provide support and maintenance services when the platform is successfully delivered and implemented. These include, but are not limited to, platform performance monitoring and regular updates.

What Is a Customer Data Management Platform?

When you need to make a DMP vs CDP choice, you need to know the peculiarities of both types of platforms. Now, let’s analyze what a customer data platform can offer you.

These platforms severely impact all types of marketing. CDPs mainly work with first-party data, but their capabilities are more comprehensive than this.

• Customer data management platforms can also work with anonymous and known data, including names, email addresses, phone numbers, and other personally identifiable info.
• They store data over long periods. Therefore, it is necessary to create in-depth, accurate customer profiles that can be further utilized to nurture customer relationships.
• They can share data with any system that needs this information, including CRMs and DMPs.

How Does a Customer Data Platform Work?

CDP data collection occurs automatically across channels in a company's MarTech ecosystem. The technology creates a full 360-degree view of the customer profile and ensures user profile data refresh with real-time segmentation. CDP then activates that data for various marketing purposes. 

The primary function of such systems is to gather as much customer data as possible and create a detailed image of the customer, which helps deliver personalized communication across all the used channels.

In the modern business world, it is vital to get access to this data as it will let you see who your “ideal” customer is. Thanks to this, it will be easier for you to find people with similar interests and needs so that you can target your advertising and marketing to them.

Advantages of Using a CDP in a Business

CDP is your choice if you want to connect every customer touchpoint with your brand to craft a superior cross-channel customer experience. Thanks to CDP’s outstanding accessibility functions, it is easy to consolidate every marketing effort and respond to every marketing challenge.

What will you get after the implementation of a CDP?

• Unified customer profiles. A CDP can consolidate data from various sources to create comprehensive, unified customer profiles. With this holistic view, you will better understand customer behavior, preferences, and interactions across all touchpoints.
• Accurate segmentation. With detailed profiles, you can create precise and meaningful customer segments based on various criteria. These segments can be identified based on demographics, behavior, purchase history, and other parameters.
• Tailored marketing campaigns. You can use the rich data a CDP offers to deliver highly personalized marketing messages and offers. This personalization increases the relevance of campaigns, leading to higher engagement and conversion rates.
• Dynamic content. CDPs allow the delivery of dynamic content that adapts to individual user profiles, ensuring that each customer receives the most appropriate information.
• Cross-channel consistency. CDPs can integrate data from multiple channels, helping to provide a consistent and cohesive customer experience across web, mobile, social media, email, and offline interactions.
• Efficient marketing automation. Customer data platforms can support marketing automation. They can streamline processes like audience segmentation, campaign execution, and performance tracking.
• Enhanced targeting. Detailed customer insights allow for more effective targeting of ads and communications. Businesses can focus their efforts on the most promising segments, improve ROI, and reduce the waste of expenses on efforts that wouldn’t bring any positive results.
• Data-driven decision-making. CDPs provide businesses with access to data that supports data-driven decision-making across marketing strategies and tactics. Businesses can also track their campaigns' performance in detail, allowing them to optimize and improve their processes continuously.

Examples of Customer Data Platforms

While comparing customer data platforms to data management platforms, it is also worth mentioning some examples of CDPs.

Microsoft Dynamics 365 Customer Insights

As you may have already guessed from the solution's name, it is part of Microsoft’s set of tools for marketing facilitation. This CDP is divided into two segments: audience insights and Engagement insights. The first segment focuses on connecting transactional, behavioral, and observational data. At the same time, Engagement insights let companies better understand how users behave on various channels.

Oracle Unity

This platform is intended for both B2C and B2B brands. It works with traditional marketing and advertising data that can be received from online, offline, and third-party customer data sources. This CDP has all the required functionality that may be useful for connecting customers across multiple devices, channels, domains, and networks.

SAP Customer Data Platform

This solution will help you unite front-end and back-end customer data to gain deeper insights into your target audience. With the functionality provided by SAP, you can deliver trusted, personalized engagements at any stage of your customer interaction.

Custom or Off-the-Shelf CDP?

Like DMPs, the CDP market is continuously growing. While its size was $5.1 billion in 2023, it is expected to reach $7.4 billion in 2024. Positive tendencies are believed to continue influencing this segment, and by 2028, it may reach $28.2 billion. This means the CAGR for the forecast period (2024-2028) will be close to 40%.

Though it is usually much faster to start using a ready solution provided by a vendor, custom development has advantages similar to those we’ve mentioned concerning DMPs.

The development of a custom CDP will ensure:

• Complete correspondence to your needs;
• High security;
• Seamless integration with your tools and platforms;
• Scalability, etc.

However, to enjoy all these benefits, you must work with a professional team of developers with relevant experience building AdTech and MarTech solutions.

Customer Data Platform vs Data Management Platform: Which Tool to Choose

When you start choosing between these two types of platforms, you must know there won’t be a single correct answer. Both types have their benefits and can be helpful for various purposes.

CDPs and DMPs help marketers efficiently manage data and better understand and organize their audiences. They rely on various data types, user identifiers, and retention methods to do this. Here are the key differences between them.

CDPs mainly focus on data (first—and second-party) that provide insights into individualized customers. DMPs mainly deal with large groups of audiences, which is possible thanks to second and third-party data. CDPs accumulate PII, and DMPs work with cookies, IP addresses, and other general identifiers.

DMPs usually store data for around 90 days. At the same time, it is presupposed that CDPs will keep collected information for years.

DMPs are designed to help marketers understand how to engage customers immediately, which is why they are often used for targeted advertising campaigns.

Data collected by CDPs can be applied to broader marketing goals, such as enhancing the personalization of user interactions across multiple channels.

You can find a summarized comparison in the table below.

DMP vs CDP: Final Word

Each platform can be isolated to become a valuable AdTech and MarTech asset.  But it doesn’t mean that they can’t be used together at your organization, especially when you need to build and support relations with different segments of your target audience. Let us provide you with a short, simplified explanation.

If you aim to engage with customers unfamiliar with your brand, use a DMP. It helps to collect anonymous data about your best customers. With a CDP, your reach to individual customers will become more targeted through unified customer profiles.

As a leading AdTech and MarTech development company, Geomotiv will help you unlock the full potential of advanced data-driven platforms that bring actual value to the business. Our experienced team can design and build a custom DMP and CDP from scratch or integrate other AdTech and MarTech tools into your existing platform.

To get more detailed information about our services, you can always contact us to book a free consultation with our experts. Share your requirements with us, and we will find the best approach to address your task using the most powerful digital solutions.