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DMP (Data management platform)

A software platform that is used for managing and collecting data. This optimizes the advertising budget as it provides insights into the audience, markets, and users.

What is a DMP (Data Management Platform)?

A DMP, or Data Management Platform, refers to a software system utilized in the fields of marketing and advertising for the purpose of constructing profiles of anonymous individuals, aggregating and preserving information about each individual, and facilitating the sharing of such data with advertising networks.

Why Are DMPs Used in Digital Advertising & Marketing?

DMPs are employed to manage, store, and scrutinize data relating to advertisement campaigns and target audiences. A DMP can be linked to a Demand Side Platform (DSP) or Supply Side Platform (SSP) to enable the procurement of advertisements via ad networks. The DMP ingests anonymous identifiers of customers, cross-references these against external lists, creates a lookalike model with summarized data, selects similar anonymous individuals from third-party lists, and transmits such lists to advertising systems.

In essence, a DMP serves as a platform for audience data management. It is indispensable for audience segmentation, the development of lookalike audiences, and the optimization of paid media expenditures. It does not store first-party data and primarily utilizes third-party data in the form of cookie IDs and user behavior patterns.

How Does a DMP Work?

A Data Management Platform (DMP) is a technology solution that facilitates the collection, organization, and activation of first-party, second-party, and third-party data from various online, offline, and mobile sources. The purpose of a DMP is to build detailed customer profiles that drive targeted advertising and personalization initiatives. These anonymized customer profiles are then made available to other tools such as ad exchanges, demand-side platforms (DSPs), and supply-side platforms (SSPs) to improve targeting, personalization, and content customization.

DMPs are critical to digital marketing as they allow organizations to gain a deeper understanding of their customers. As more customer data is created and collected, DMPs provide a robust solution for managing this data effectively and turning it into insights that drive outcomes. DMPs can handle different types of data including first-party data collected from website visits, CRM systems, social media, subscriptions, mobile, and apps; second-party data obtained from a mutually beneficial relationship with another company; and third-party data from websites and social media platforms that is used to reach a wider audience.

The focus on first-party data has increased in recent times, and DMPs are capable of effectively collecting and managing this type of data, typically pulling first-party data from CRM software or company-owned channels and connecting to third-party data brokers or corporate partners for third-party data. However, some industries, such as consumer packaged goods, have a scarcity of first-party data, and DMPs must augment their platforms with innovative technologies, such as identity graphs, to build vast data lakes that can be segmented and activated.

Being data-driven is not enough in the era of digital marketing, and the focus must be on quality data-driven initiatives. A sophisticated DMP allows organizations to safely analyze and refine their datasets, ensuring only the most accurate data is used in marketing efforts. A DMP works by analyzing both first-party and third-party demographic, contextual, and behavioral data to build targeted audience segments. The data collected by a DMP is organized to build an anonymized profile of each customer, which is then shared with digital advertising platforms and in-house marketing channels to serve targeted ads or content.

Who Should Use a DMP?

If you’re a marketer just starting out with digital advertising and audience segmentation, a DMP can be a useful tool for you. It allows for the creation of look-alike audiences based on key data points, such as individuals who live in Cleveland and own a Play Station 5.

However, many marketers have a wider focus that goes beyond digital ads, making it beneficial to integrate a DMP with other marketing technology tools. This allows for a comprehensive view of the customer journey, enabling the identification of customers like John Doe, who lives in Cleveland, owns a PS5, is researching iPADs, and recently purchased a smartwatch from your online store.

What Sets a DMP Apart from a Customer Data Platform?

While a DMP can be a great starting point for becoming a data-driven marketer, it’s best used as part of a larger marketing ecosystem. On the other hand, a Customer Data Platform (CDP) is designed for all types of customer data and creates a 360-degree view of named, individual customers.

DMPs focus on anonymized audience data, while CDPs gather data from various sources, including first-party data and personally-identifiable information (PII). DMPs store data for a maximum of 90 days, while CDPs retain data long-term to build robust customer profiles.

In conclusion, DMPs are suitable for short-term audience segmentation tasks, while a CDP is necessary for a comprehensive understanding of individual customers and intelligent orchestration of their journey. Most CDPs can be integrated with any DMP, using the DMP identifier to enhance the customer profiles in the CDP.

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