In recent years, there has been a growing number of Customer Data Platforms (CDPs) and Data Management Platforms (DMPs) entering the market. Both platforms aid in collecting, analysing, and activating customer data, yet they differ in functionality and capabilities. But what are the distinctions? And which platform suits your business best? You’ll find the answers in this blog.
The DMP Explained
A Data Management Platform (DMP) is a tool that integrates, organizes, and activates customer data. By analysing cookies, a DMP reveals how a visitor navigates across different platforms and how often they revisit your platform. A DMP provides you with anonymized data easily segmented into multiple target audiences.
DMPs are primarily used by marketing teams to set up targeted advertising campaigns across multiple channels. By analysing customer data, a DMP helps identify specific customer groups and apply targeting based on the preferences and behaviour of your visitors. Additionally, a DMP informs you about the effectiveness of a campaign, allowing you to further optimize your ads and campaigns based on these insights.
The CDP Explained
A Customer Data Platform (CDP) is software that collects and centralizes your data. A CDP automatically creates individual customer profiles for all your visitors and customers, segmenting them into valuable target groups. These profiles include information about viewing and clicking behaviour, preferences, and interests. Data from your CMS system, such as previous purchases, is also added to these profiles, creating a complete 360-degree profile for each customer.
In addition, a CDP includes tools and predictive algorithms to personalise your platform(s) and content based on the collected data. By combining data on behaviour, transactions, and demographics, a CDP learns:
- What the needs of each customer are;
- How to reach them;
- When to reach them.
CDPs are mainly used by marketing teams to understand customer behaviour and personalise customer journeys. Moreover, a CDP makes it easier to measure and optimize campaign results.
The CDP vs. the DMP: the three most important differences
Although they may seem similar at first glance, there are important differences between these two types of platforms. Let’s explore them all in detail:
1. The cookies used: first- versus third-party
DMPs often rely on third-party data sources, while CDPs only collect zero & first-party data. All data collected by a CDP is your property, while the third-party data collected by a DMP is not. This leads to problems around privacy compliance, as governments are cracking down on the violation of the privacy of personal data.
2. The platform’s purpose
A DMP primarily assists in lead generation and optimizing ads to acquire leads. Thus, the added value of a DMP lies mainly within the orientation phase of the customer journey. In contrast, a CDP is designed to optimize the entire customer journey, from the initial contact moment to post-purchase.
3. The method of data storage
A DMP stores known and unknown data in categories and keeps it for a limited time. Once a cookie expires, the data disappears. A CDP, which only collects zero- and first-party data, consolidates data from known users and visitors into a central overview, building a profile for each customer.
CDP or DMP: which one suits your business best?
The best platform for your organization mainly depends on your needs and objectives. If setting up targeted advertising campaigns across multiple channels is your goal, a DMP may suffice.
If you want to go a step further, gain real insights into your customers’ behaviour, and personalize the customer journey, a CDP is better suited. Moreover, a CDP has the advantage of only collecting zero- and first-party data, ensuring not only GDPR compliance but also preparing you for a future without third-party cookies.
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