CDP vs. DMP – How are they different? Which one to invest in?


CDP vs. DMP - How are they different? Which one to invest in?The customer data platform or CDP, and the data management platform or DMP, are often confusing. The situation is bound to happen since these platforms collect data for marketers.

The primary difference between platforms is the kind of data it uses. A customer data platform is best used when data is collected from your website, mobile app, and similar platforms. On the other hand, a data management platform collects anonymized sets of data.

Difference between CDP & DMP

There are three main differences between platforms, which we have listed below.

  • CDPs collect 1st party data. In contrast, DMPs collect 2nd and 3rd party data.
  • CDPs collect the personal data of the user, whereas DMPs collect anonymized data.
  • CDPs retain data for a more extended period. On the other hand, DMPs maintain data for a shorter duration.

Let us now understand each of these differences in detail to finally conclude regarding the platform to invest in, being a brand or a digital marketing agency handling a brand.

  1. CDP vs. DMP – Data Usage

    As said, CDPs use first-party data and a bit of second-party data. In contrast, DMPs are famous for using third-party data and a bit of second-party data. If you wish to understand the difference between these types of data, read it through.

    1st party data – This data is collected by your company. The best example is when you collect email addresses at the time when someone subscribes to your website.

    2nd party data – It is 1st party data shared with non-competitive partners. For example, if you decide to sell a product specific to grocery, then partnering with someone in the same field and collecting their email list is a process where you collect the 2nd party data.

    3rd party data – This is the data collected by the data collection companies and then shared/purchased by someone who needs it. For example, the data you use while running an ad campaign on Google Display Networks is where you use the 3rd party data.

  2. CDP vs. DMP – Identifiable Information

    CDPs use the information collected from 1st party data sources like a subscription box, customer satisfaction form, or contact form on your website. We term this information as personally identifiable information (PII). It includes information like email addresses, contact numbers, etc., which CDPs create detailed personalized profiles.

    On the other hand, DMPs use anonymized data based on the user’s behavior. Suppose, if a user has traveled frequently in the past three months, then such users are categorized as a traveler. In such a case, if you run a travel company, then such data will help you target anonymous users interested in purchase.

  3. CDP vs. DMP – Data Retention

    CDPs usually keep the data stored longer than DMP, which keeps data for a shorter duration.

    Supposedly while running an e-commerce website, you decide to reward all your frequent users with some discounts at the end of the year. In such a case, CDPs storing data will help you categorize between normal users.

    On the other hand, while running a travel agency, you want to target audiences who traveled in the past 60 days, then DMPs will be useful for you since users who traveled a year back will not help you.

    Typically, CDPs can retain data as per the limit you set. DMPs keep data for not more than 90 days.

Now that you know the significant differences between the platforms, it will become easy to choose. Both CDP & DMP are useful. It depends on your goals.

Conclusion

Use DMP when running ad campaigns for users unfamiliar with you, as it uses 3rd party data. It will give you an add-on advantage of targeting new users.

On the other hand, as a marketer, if you plan to create a more personalized ad campaign based on the data you have gathered, then use CDP.

However, brighter chances are that you will use a combination of two while running the ad campaigns. CDP will help you monitor and categorize website visitors, whereas DMP will help you tap unfamiliar users. Just ensure that the data you collect is by using an ethical & legal way.

We hope we satisfactorily answered your query of which platform to invest in. In case you still find it challenging, you can connect with us for further understanding.

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