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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, most of the time we’re not dealing with a zero-sum game. Often two similar services are better off joining forces rather than competing. Lebron James and Steph Curry on the same team, perhaps? With Lebron’s playmaking and Steph’s shooting, they would be unbeatable, right? Such is the case with consumer data platforms (CDPs) and data management platforms (DMPs). They work in different yet complementary ways. Combined they’re 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 efficient marketing strategies feature a marriage of the two. They complement each other.
We all know that not all consumer data platforms are created equal and that different CDPs can have vastly different feature sets. CDPs are a value-add for marketers that want to see all their customer data in one system and for publishers building out their first-party data set through a registration wall. However, not all users log in to all sites (and if they are forced to, they may leave)! On the open web, an average publisher can only authenticate ~20% of its audience, meaning that ~80% of a publisher’s audience is blind to the CDP, which limits its scalability. There is no built-in mechanism to augment authenticated data with anonymous data, therefore a DMP is a crucial value-add.
CDPs collect signals but lack a method to classify users into personas. A CDP can identify how often someone is on a site and what time they are on the site but can’t give an estimate on how many people from specific demographics are visiting the site, which is vital for buying and selling ad inventory. Again, this is where DMP analytics are extremely useful and fill a gap that CDPs can’t.
On the flip side, why do DMPs need CDPs? Because in an increasingly data-privacy-centric world, the ability to collect, organize, and centralize customer-level, first-party data becomes more important than ever.
CDPs can draw data from DMPs and share information back with them. The two systems work together 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 find out what they want in micro moments.
In short: CDPs are inherently about customers. DMPs are about audiences. CDPs are about harnessing the power of known, user-level information, DMPs are about harnessing the power of unknown, anonymized information. Data in tomorrow’s 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 stitching together those identifiers will provide the most value.
Will these technologies morph over time into new types of platforms or even into combined offerings? Yes! We’re already seeing that now, with CDPs bringing DMP-like capabilities in-house and vice versa. And we’re also seeing DMPs making a shift towards becoming audience management platforms centered around identity. Regardless, publishers and marketers must 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’ll be the true all-star!
Shiv Gupta is Managing Partner of U of Digital.