CDP vs. DMP: Which one meets your needs?
Using a platform to organize customer data is essential to informed marketing decisions. Two such types of platforms are a customer data platform (CDP) and data management platform (DMP).
Understanding what each platform offers and how each works can help you determine the right one for your needs.
CDPs help unify a wide variety of customer data including historical, contextual, demographic, and behavioral information. This unified data is the foundation for gaining insights—from segmentation to customer predictions—that drive intelligent and personalized experiences. Different teams—including marketing, sales, and service—can discover a wealth of new personalization opportunities across different channels through insights and a persistent customer profile.
DMPs collect primarily anonymous data to profile, analyze, and target online customers; these platforms help digital marketers make more informed media buying decisions and more effectively target campaigns.
These two systems are distinct in their use cases, users, and the data they collect.
The difference between CDP and DMP
CDPs and DMPs work in different ways to achieve different goals.
CDPs are used for creating personalized customer experiences by collecting and tying together customer data through personally identifiable information (PII)—like email addresses and phone numbers—to create a 360-degree view of the customer. The unified customer data, combined with artificial intelligence (AI), generates insights that optimize business processes and customer engagement in business-to-business or business-to-consumer settings.
The primary data source for CDPs is first-party data from customers who have directly interacted with the business online (through website interactions, campaign engagement, online purchases, and loyalty programs) as well as offline (through in-store purchases, in-person events). CDPs may also be able to use second-party data (sourced from businesses that collect and sell first-party data) and third-party data (collected through anonymous identifiers like cookies) in addition to first-party data.
Insights from CDPs are valuable not only to marketing teams for campaigns and churn analysis, but also to sales and service teams who want to personalize customer experiences. For example, cross-sell or upsell recommendations can help a salesperson focus discussions on relevant products that a buyer might want. Next best action recommendations can help a salesperson personalize future interactions. Similarly, calculating a customer’s lifetime spend can help service organizations prioritize calls from high-value customers.
Digital marketing agencies and in-house marketing teams use DMPs to identify audiences by categories like demographic, behavior, or location to better target digital advertising campaigns.
DMPs aggregate high volumes of anonymous customer data originating from multiple sources. The primary data sources for DMPs are second- and third-party data. DMPs must work with anonymous entities like cookies, devices, and IP addresses to exchange information about audiences while protecting personal privacy. Because different companies—including competitors—can usually access the same anonymous data, a DMP does not provide a sustainable competitive advantage. Instead, it helps digital marketers better understand and target audiences.
Defining your goals
Think about your organization’s situation and goals before deciding between CDPs and DMPs.
- Are you focusing on personalizing individual experiences or targeting an audience for digital ad campaigns?
- What kind of customer data do you currently have and where is it stored?
- Do you need to connect customer data and insights to other systems like business applications?
Answering these questions will help you determine whether a CDP or DMP is right for your business needs.
A preassembled and ready-to-go CDP for personalizing customer experiences
If a CDP might be the right fit for your organization’s needs, take a look at Dynamics 365 Customer Insights, the flexible and intuitive CDP solution from Microsoft.
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