How to Differentiate Between CDP and DMP in the Age of PII?

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Although CDP and DMP both provide marketers with crucial insights about their audience, they collect different types of data. In this article, we will take a look at how to differentiate between CDP and DMP in the age of PII.

As the marketing function is becoming more data-driven, Customer data PlatformsOpens a new window (CDP) and Data Management Platforms (DMP), both are helping marketers with crucial insights about their customers. So how are they different from each other? While they share some common characteristics, they are quite distinct in the type of data they provide.

In this article, we will shed some light on the differentiating factors between CDP and DMP with respect to Personally Identifiable Information (PII).

What is a Data Management Platform (DMP)?

A data management platformOpens a new window (DMP) is a tool that consolidates data from a variety of first, second, and third-party data sources, and further allows organizations to segment their audience to deliver an ultra-targeted display ad experience.

Also Read: Demystifying the DMPOpens a new window

What Is a Customer Data Platform (CDP)?

The Customer Data Platform InstituteOpens a new window defines a CDP as, “a marketer-managed system that creates a persistent, unified customer database that is accessible to other systems.”

The three key functions of a CDP are:

  1. Collecting all customer data in one place.
  2. Allowing external systems to use the data.
  3. Making data management easy.

Also Read: What is a Customer Data Platform and What are the Benefits?Opens a new window

What Is Personally Identifiable Information (PII)?

PII is any data that can identify an individual or distinguish one person from the other. PII is divided into two categories.:

  • Linked Information: Any information that can be used to identify an individual, which includes information such as the full name, address, email id, SSN, contact number, login details, etc.
  • Linkable Information: Any information that can identify a person when combined with another data point. It includes information such as the first or last name, location, gender, age group, work details (job designation, company), etc.

How to Differentiate Between CDP and DMP?

Data Types

The three types of data sources that CDPs and DMPs utilize are first, second, and third-party data.

First-party data is generated directly from customers through CRM, past transactions, company website, mobile app sign ups, etc. Second-party data is usually bought from another company, i.e. it is the first-party data of some other company, whereas third-party data is collected from other websites.

A DMP mainly uses second and third-party non-PII data such as cookies, IP addresses, and device IDs. DMPs don’t rely much on first-party data. The data you get with DMPs is anonymous and segmented in different categories.

A CDP primarily uses first-party PII data. CDPs consolidate online and offline data and can create a universal customer view. Since advertising systems are integrated with CDPs, they are also capable of holding DMP–esque information such as cookie IDs.

Also Read: Identity Resolution and CDP (Customer Data Platform)Opens a new window

Customer Profiles and Information

A DMP builds temporary user profiles based on anonymous non-PII identifiers like cookie IDs, Google Advertising ID (GAID), identifiers for advertisers (IDFA) or demographic information. Due to legal reasons concerning the sharing of third-party data, DMPs can’t reveal concrete identities. Another shortcoming of DMPs is that the wide availability of third-party data won’t help you gain any competitive advantage.

A CDP builds customer profiles based on PII identifiers such as customer email ID, name, address, login, etc. and consists of historical, behavioral, demographic, geographic and contextual information about customers. As customers engage more with the brand, it unveils even more traits about customers helping the brand personalize on a granular level.

Also Read: CDP: Reinforcing Competitive AdvantageOpens a new window

Use Cases

A DMP focuses explicitly on advertising. After collecting data, DMP segments the data helping marketers and advertisers target display ads in a better way and improving the efficacy of media buying.

DMPs also let you develop look-alike models that you can use to reach out to a wider audience.

Since a CDP hosts a lot of information about customers, it can help marketers target them in different stages of the customer lifecycle. The real strength of a CDP lies in scaling the personalization aspect of marketing. Right from crafting custom offers and discounts to personalized emails and website content, marketers can perform all these tasks at scale.

You can further harness the power of CDPs for social media ads (Facebook, Twitter, and LinkedIn) by building custom audiences by uploading PII like email addresses.

Data Retention

Since DMPs utilize cookies to collect data, the user profile data is usually short-lived. It typically lasts for 90 days.

A CDP stores user profiles for a longer period and it keeps improving as the user keeps re-engaging with the brand.

Pricing

As DMPs collect data from third-party sources, they would ideally charge you for utilizing their pre-built, anonymous segments to run display and remarketing ads.

CDPs collect and manage diverse customer data, and therefore you would be paying to manage your customer data.

Also Read: DMPs and CDPs: The Ultimate Consumer-Centric Tool KitOpens a new window

In Conclusion

You might be confused with whether to go for a DMP or a CDP. Each has its benefits, and they complement each other due to their functionality. If you are looking to manage third-party data from other vendors, go for a DMP. But if you’re thinking long-term and want to utilize the first-party data to its fullest potential, go for a CDPOpens a new window .