CDP vs. DMP: How to Choose the Right One for Your Business

Data is transforming modern businesses and revolutionizing fields from human resources to artificial intelligence. Hence, managing and utilizing data collected across channels is a top priority for most organizations, especially regarding their customers’ information. Customer data platforms (CDPs) and data management platforms (DMPs) are two types of tools that businesses employ to collect, manage, and use data.

Both platforms help businesses get to know their audiences. They’re also useful tools that marketers utilize to send targeted offers and messages to consumers. But given that these tools are almost the same and yet widely different, how do you choose which will serve your business needs better? In this article, we’ll provide an overview of CDPs and DMPs and offer criteria to guide you on evaluating their potential benefits to your business.

CDP essentials: Functions and features

A CDP is a data management system that helps present an updated and consolidated profile of an individual customer based on online and offline interactions. With information gathered across multiple channels, platforms, and devices, this platform allows data to flow back and forth between different customer data systems, enabling features like personalized messages and customized experiences.

CDPs are a more recent technology solution born out of the concept that customer experience is the key brand differentiator of the future. Below are the key functions and features of a CDP to determine if this tool is right for your business.

Key functions and features of a CDP:

• Collect personally identifiable information: A CDP allows you to create customer profiles based on personally identifiable information, such as a name, phone number, email address, etc., collected from online and offline interactions across platforms and channels.  
• Follow users across the customer life cycle: A CDP can interpret interactions from anonymous customers and connect that data to a customer once they’re identified.
• Integrate customer data from multiple sources: A CDP can collect and compile data on customers from across platforms, channels, and devices. As customers engage more with your business, you can build their profiles for a personalized brand message.

DMP essentials: Functions and features

A DMP is software designed to manage large, new, and anonymous data sets collected across multiple channels. DMPs sort and classify customer information into detailed categories. They’re best used for digital advertising and marketing campaigns because they mostly use second- and third-party data.

Unlike CDPs, DMPs have been around for a while as digital advertising and campaign tools. They’re proven marketer tools used for tracking campaign performance. In fact, 54% of marketers worldwide use DMPs to measure marketing success or return on investment (ROI).

Key functions and features of a DMP:

• Collect anonymous user data: A DMP can create customer profiles based on anonymous data, such as cookies, device IDs, IP addresses, and demographic information. Their ability to eliminate identifying information from large data sets also helps avoid some of the constraints of data privacy and consent-based regulation.
• Manage segments of your brand audience: A DMP allows you to build sophisticated and accurate segments of customer profiles, which you can then use for targeted, well-timed interactions and advertisements.
• Construct unified customer profiles over time: A DMP can recognize patterns across current customers’ behavior and utilize that observation to create “look-alike markets.”

CDP or DMP? How to choose for your business

CDPs and DMPs are used to collect and combine data from different channels and platforms where the data gathered is sorted and delivered to users as a marketing tool. But that’s where the similarities end. How do you choose what to implement for your business?

Below are points that could help you decide whether a CDP or DMP is the better choice for your business needs.

Reaching large audiences vs. engaging current customers

CDPs mostly use first-party data or data collected from an interaction with a potential or current customer. Businesses can then use the data to engage and target customers in the different stages of the customer life cycle. A CDP can be beneficial for your business if you’re focused on converting potential customers to buyers. If your products or services are ideal for repeat purchases, you also have the incentive of using the platform to gain brand loyalty and retain customers through personalized shopping experiences.

DMPs are designed for advertising and mostly operate on anonymous second- and third-party data. Second-party data is another company’s first-party data, which is shared or sold to another business. Meanwhile, third-party data is primarily purchased from data collection companies.

A DMP’s ability to create “look-alike customer models” is also valuable for a business that wants to reach segmented audiences for highly targeted marketing campaigns.‍

Targeting customer segments vs. individuals

A CDP will help you manage and maintain all collected customer data in one place. You can then use that data to curate a marketing campaign tailored to each customer. This may be in the form of customized discounts and emails.

DMPs are beneficial for any business that doesn’t have a first-party dataset to mine. If your goal is to run wide-scale advertising to gain more customers in various markets, a DMP can be an invaluable tool.

Upwork is also an important resource if you’re looking for skilled, independent experts familiar with data systems like CDPs and DMPs and their various implementations.

Integration with existing data channels

CDPs allow you to easily integrate data from multiple data streams, whether they’re advertising or marketing technology. This type of platform can also capture data across devices and channels anywhere within the customer life cycle. This means you can have updated, expanding data about your customers to use for effective retargeting campaigns.

DMPs are generally pre-built to produce target audiences for large-scale marketing campaigns. And they mostly only work with a demand-side platform (DSP), a system for advertisers to buy and maintain ad inventories from multiple sources. In this case, a DMP will be advantageous if you are a midsize marketer with the intention of advertising to a wide audience.

Time frame for data use

CDPs enable businesses to retain data for a long time. Advanced platforms will even allow you to set limits on how long your customer data is kept. CDPs are built this way to allow for customer data collection over time for a complete customer profile. This is also why they’re the better option if your primary goal is to gain brand loyalty.

DMPs only retain customer data for a limited time, mostly based on a cookie’s life span, which is 90 days. If first-time customer acquisition is your company’s priority, a DMP will be the better option for you.

State of your current data operations

If your digital marketing strategy is run across multiple channels, platforms, and devices, and you can capture customer information at every stage of the interaction, a CDP is what you need. The platform can provide you with relevant, first-party integrated data that you can use to send customers marketing messages to help them make decisions.

But if you are a large company, publisher, or marketing agency that wants to manage third-party data for other companies, a DMP can help you with your goal.

Skilled individuals with proven customer data experience can evaluate your current operations and lend their expertise to your business’s success. Upwork is a great way to connect with independent professionals who can assist in the adoption of whichever strategy you choose.

Using both platforms

Although most marketers tend to pit DMPs and CDPs against each other, they don’t need to be exclusive of one another. These platforms can be complementary and used in conjunction. A DMP can be used to attract and acquire new customers, while a CDP can provide real-time, personalized marketing messages. You can also combine their functions to boost the accuracy of your “look-alike target markets.”

Do more with your data with independent experts

Before you commit to either or both of these platforms, take stock of your digital inventory and make sure you have the resources and the right talent. Remember that these platforms need ongoing support to assemble, manage, and maintain.

Ensure you have the right independent talent to carry out your strategies to ensure marketing success. Take advantage of Upwork’s global talent pool to engage skilled, independent professionals familiar with DMPs and CDPs and their effective implementations.