Handling Your Data: DMP vs DSP vs CDP

In today’s modern, tech-filled world, data is what drives most aspects of digital media. In order for organizations to compete in the marketplace, they need to know how to put customers first. Customer experience is quickly becoming one of the most significant factors that set a company apart from its competitors. To give your customers what they want, you need to first understand how to gather data from every touchpoint along their customer journey and use this information to determine how to make the customer’s experience even better. While researching these topics, it didn’t take long to notice that no single professional or company agrees on what exactly distinguishes these three topics.

Many organizations look to Data Management Platforms (DMPs) and Customer Data Platforms (CDPs) as ways to manage all of their customer’s information being gathered. With this data, companies are then able to use Demand-Side Platforms (DSPs) to buy appropriate forms of advertising, such as display, video, and search ads.

There are still many differences between these types of platforms. Let us help resolve any confusion by explaining what each one does, and which solution is best for your kind of business.

What is a DMP?

In short, data management platforms are synonymous with data warehouses. It’s a software system designed to collect and manage data – and lots of it. Since current and potential customers interact with their digital devices dozens and dozens of times a day, they leave data at every stop along the way. DMPs help collect the data you need from these stops and allow you to actually do something with it. Although DMPs can be used to house any form of information, many marketers use these platforms for targeted advertising on specific audiences. With the help of DSPs, the data collected from DMPs can be used to create custom and more personalized content for the target market.

• DMPs use 1^st, 2^nd, and 3^rd-party data to surpass surface-level customer information.
• “Real DMPs” give marketers full control of audience and campaign data.
• Businesses can manage information with this platform to optimize campaign efforts to reach the right people and improve ROI.
  

An enterprise-level DMP tracks billions of data points, giving marketers the ability to obtain high-level and more specific insights into which campaigns are working alongside any changes needed to be made in order for the company to produce more promising results.

What is a DSP?

Many times, when marketers implement a DMP, they also use a DSP in conjunction with it. A DSP, or Demand-Side Platform, is a piece of software meant to allow advertisers to search through ad inventories across digital environments. While using one DSP, you’re given access to a very large percentage of all digital advertising inventory and audience data among other categories. Historically, digital ads typically have been bought and sold by human ad buyers. This wasn’t always the most efficient of processes, as these salespeople were often expensive and unreliable at times.

DSPs make the process cheaper and more effective by removing the human element from certain parts of the procedure. Compared to traditional ad networks, DSPs allow you to buy, sell, and track ads using a single, centralized tool.

Now the big question here is how do they work? Well, it’s actually quite simple. DSPs allow advertisers to buy impressions from various publisher sites. An impression is a term used to indicate when an ad is viewed once by a visitor or displayed on a webpage.

The interesting thing here, however, is that these ad impressions are tailored to specific users based on information like their location or previous browsing behavior. A lot of the time, this data is provided to the DSP by a linked DMP. Through real-time bidding on DSPs, impressions are auctioned off to the highest bidder. The DSP then charges a fee, by taking a small percentage of the transaction for itself.

What is a CDP?

Many businesses today are flooded with more data than ever before. This data is typically stored in data silos, consequently making it more difficult for companies to use in order to provide regular, consistent customer experiences across multiple channels and devices. This exact challenge is where CDPs come in. A customer data platform is a software system that creates a unified database of customer information which can be accessed by a variety of systems. Bringing this information together forms a much more detailed and comprehensive view of the customer.

A CDP must:

• Have a user-friendly, web-based UI with a basic set of functions within the system itself.
• Be able to gather data from different sources (websites, email, CRM data, etc.) in real-time.
• Know how to combine information from multiple sources to form a single customer profile.
• Push needed data back out to other platforms/external systems (email, social media, web, etc.).

Ultimately, CDPs help companies get a better understanding of their customer’s behavior, which then allows the organization to deliver a consistent digital experience for that customer.

DMP vs DSP: Complementary of Each Other

A DMP’s purpose is quite different than that of a DSP. Traditionally, a DMP is used to gather and sort through all kinds of data. A DSP, on the other hand, is a way to identify appropriate digital media buys to close in on potential new customers. Although these two platforms complete two different tasks, many people say they are “co-dependent.” As a matter of fact, some might say the lines separating DMPs and DSPs are beginning to fade away as they merge into one entity.

• Today, many DSP providers also offer DMP services along with it.
• Many marketers say it is a good idea to first identify a DSP partner.
• Having an independent DMP makes it easier for companies to feed data into a range of DSPs.
  

If these companies were to decide to change their data management plans in the future, then obtaining a DMP would provide a very easy way to transfer information. In the end, DMPs are what tie together all campaign and audience data before sending it off to DSPs to determine how to optimize media buys and ad creative for each customer.

DMP vs CDP: Aren’t They The Same?

CDPs and DMPs are incredibly similar and share many commonalities. However, there are actually quite a few differences between the two:

Anonymity is essential with this kind of system in order to maintain the personal privacy of users when exchanging information about audiences between sources. The use of PII, or personally identifiable information, helps de-anonymize data to identify more specific groups.

Although these two systems are very similar in many ways, they are each useful for different audiences. Marketers who primarily search for third-party data from vendors will want to stick with a DMP. If you have a tighter budget, however, then working with a CDP is the right choice for you. It is a more promising solution for long-term customer reach that will eventually lead to additional ROI.

Know What to Use

There are many different types of data management platforms out there. Most marketers already have a DMP in place. If they do choose to eventually implement a CDP, this will give them the added benefit of essentially amplifying their already-existing use of their DMP in conjunction with a CDP in hopes of being able to identify more potential customers.