July 8, 2021

CDP vs. DMP: What is the difference between a customer data platform and a data management platform?

minute read

Brands use a number of different tools to manage, analyze, and activate their data for marketing campaigns. Whether you’re building, upgrading, or adding to your martech stack, CDPs and DMPs are great tools to consider for data management. Here’s a rundown of the differences, features, and use cases of each.

Shopping behaviors have evolved greatly over the last few decades.

Today, customers expect seamless and unified shopping experiences across all touchpoints. There are a number of reliable technology platforms that allow organizations to meet consumers' shopping expectations. These platforms facilitate a unified shopping experience and allow the implementation of customer-centered marketing strategies.

To succeed in retail, you need to make good use of your customer data to create targeted and personalized advertising and marketing strategies. Data management solutions like Customer Data Platforms (CDPs) and Data Management Platforms (DMPs) provide comprehensive customer insights so that your business can interact with the right consumer at the right time and pass the right message.

Here is a run-down of the significant differences between CDPs and DMPs, their features, and use cases.

What is a CDP?

A Customer Data Platform (CDP) allows you to unify customer data from every touchpoint, channel, and system, including enrichment data from second-party and third-party sources. Using this combined data, CDPs create omnichannel customer profiles that allow you to gain a better understanding of who your customers are and how they interact with your brand.

These comprehensive insights allow you to hone your ad campaigns and marketing strategies to suit your target audience. They also facilitate better customer service and improve all other customer experience initiatives.

CDPs are designed to work as the central location for all your customer data. They store data from personal identifiers, website visits and actions taken on your website, email engagement, social media actions, and any other form of consumer information to which your business has access. This information is updated in real-time and provides businesses with a seamless flow of customer information.

CDPs are primarily used by marketers since they provide useful consumer information that is vital to marketing campaigns. However, there are no limits on the amount of information a CDP can help you collect—and some CDPs, such as Lexer’s, include tools that benefit not only marketing, but also service, retail, IT, and executive teams.

Interested in learning more about the benefits and use cases of a CDP? Click here to browse our customer story library and see how Lexer’s CDP has improved revenue and engagement for leading brands and retailers.

What are the benefits of a CDP?

Here are just some of the benefits of a CDP:

  • Single customer view: CDPs consolidate your customers’ information into a single view, allowing you to access a detailed analysis of customer data across all channels. This gives your organization a notable competitive advantage.
  • Holistic and easy-to-use: CDPs are unlimited in the variety of information they can collect. This means that a CDP can capture holistic consumer information from any system, channel, or touchpoint. CDPs also synthesize the data into simple attributes such that even non-data scientists can understand and use it.
  • Sophisticated data analysis: The sophistication of CDPs allows them to analyze customer data at an advanced level, providing both information and insight.
  • Speed: This feature makes CDPs unique from other data platforms. CDPs provide, analyze, synthesize and store data in real-time. This feature works well to allow you to engage your customers and receive feedback in real-time.
  • Personalization: CDPs allow you to customize customer emails and other messages according to each consumer's information.

For a deeper dive into the benefits of a CDP on business transformation, revenue growth, cost savings, and the overall customer experience, click here to read “How to Measure the Impact of a Customer Data Platform (CDP).”

What is a DMP?

A Data Management Platform (DMP) provides a centralized data platform that aggregates cookie browsing behavior to create large, de-identified audiences for targeting across digital channels. It is mostly focused on third-party data or unknown prospects. They can reach very large consumer audiences, but the marketing will be less targeted.

Since DMPs are primarily based on cookie data, they do not collect personally identifiable information or PII. In the wake of Apple's new data tracking updates, retailers need to focus on building an owned customer dataset to improve personalization and maintain consumer trust.

CDP vs DMP: Significant differences

Both platforms are great at collecting consumer information, but they vary in functionality and purpose. Here are the key differences between CDPs and DMPs:

  • Type of data collected: While CDPs can collect any type of consumer data and consolidate it into single customer profiles, DMPs are only focused on third-party information or unknown prospects and create generalized audience groups for wider marketing.
  • Data lifetime: CDPs store consumer information for an infinite amount of time while DMPs store data for 30–90 days, after which the information expires.
  • Data analysis capabilities: CDPs take a wide variety of customer data, sort it into relevant categories, and then group the data into personalized customer segments. DMPs collect advanced audience metrics based on consumers' online behavior through third-party cookies. They do not collect personally identifiable information or transactional data, and they don’t create unified customer profiles. Their integrations are limited to advertising, as opposed to the full customer journey.
  • Speed of data collection: While CDPs are designed to collect information in real-time, DMPs do not unless they are integrated with a DSP or a Content Management System (CMS), which allows a DSP to receive data in real-time and identify specific marketing audiences.
  • Delivery systems: CDPs integrate with a variety of marketing channels for easy data activation and real-time segment updates. DMPs collect audience data and facilitate target marketing platforms. Because of the generalized nature of the data collected by DMPs, it may not be completely accurate.

What is a CDP used for in marketing?

CDPs aggregate, digest, and filter the customer data collected into a single customer view. This is vital for targeted marketing strategies that focus on specific audiences. They provide what is termed as the “holy grail” of marketing by improving the customer experience in retail and giving marketing teams the ability to gain insights into customer preferences. This fuels personalized customer engagement across all channels.

A CDP is still important even if you are already using a DMP because:

  • DMPs can reach very large audiences, but they are less targeted. By supplementing this extensive reach with CDP's targeting and personalization, you can get the best out of both and come up with the most efficient marketing strategies for your brand.
  • CDPs can refine the data collected by your DMP while providing real-time data collection capabilities.
  • CDPs provide people-based ad-targeting, which can help you avoid ad fraud.

Lexer is the CDP of choice for leading brands like Quiksilver, Igloo, Nine West, Rip Curl, Supergoop!, and more. As the only CDP built for retail, we help the world’s most iconic brands drive incremental sales from improved customer engagement.

Do you think a CDP might be right for your business? Click here to learn how to build the business case for a CDP.

Interested in learning more about how Lexer can help you improve customer engagement and maximize results? Book a demo with one of our retail experts today.

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Elizabeth Burnam
Content Marketing Specialist
Elizabeth Burnam is a content marketer and a poet at heart. She has a degree in Professional Writing and experience developing high-impact marketing assets for a broad range of industries.Outside of work, she enjoys reading, painting, people-watching, and exploring the natural wonders of Vermont.