100 years ago, the richest companies of this world fought for oil. Today they fight for data.  And not only the richest ones: small businesses also adopt a data-driven approach to digital advertising, since it yields the best results.

Companies that focus on customer data in their marketing endeavors are 6x time more likely to have higher profits YoY compared to their counterparts that neglect the data. According to the DMA (Data & marketing Association) statistical fact book, 44% of marketers use a data management platform, while 33% of them are planning to integrate it into their workflow.

Read here more about what DMP is

However, the new ad tech solution appeared on the horizon — a customer data platform. It claims to have more customer data management features applicable to all marketing channels and also features some properties of CRM.

A DMP is a great choice when it comes to gathering data for ad targeting and regathering. Still, a CDP beats it up if you need to utilize data for walking customers through their whole journey from the first contact to the final purchase.

What data management option suits your company? Or probably you need them both? To help you figure this out, we compiled an ultimate list of CDP vs. DMP differences.

What is a Data Management Platform?

A data management platform (DMP) is ad tech software that collects, sorts, analyses, and stores anonymous customer data retrieved from various data sources (mobile and desktop web, analytic tools, CRM, etc.) Once data is consolidated, advertisers use it to segment their audience and serve targeted ads to their customers through demand-side platforms.

What is a Customer Data Platform?

A customer data platform (CDP) is more of a marketer-based solution than advertiser-based. It gathers personally identifiable information (PII) in one place, creating a unified database and allowing other software solutions to access this data. Marketers use CDPs to manage their customer records and apply them to the variety of marketing campaigns.

Key Differences Between a CDP and a DMP

These definitions sound pretty much the same: both a CDP and a DMP are designed to collect and process customer data in order to facilitate marketing and advertising efforts in the company. However, there is a plenty of crucial differences between them that the following table illustrates:

Benchmark

Data Management Platform

Customer Data Platform

Main Purpose

Gathering and analyzing anonymous data for further use in targeted ad campaigns. Increasing the cost efficacy of media ad buying.

Creating a unified customer database with individual identifiers for more effective customer treatment.

Usage

Only in advertising (mostly in programmatic advertising conducted via DSPs, SSPs, and ad exchanges).

Multiple communication and marketing channels including advertising.

Types of Data

Mostly 3rd-party data such as cookies, IP addresses, and device identificators. A small amount of non-PII encrypted 1st-party data.

Mostly PII 1st-party data retrieved directly from customers, some amount of 2nd- and 3rd-party data. Collects names, postal and email addresses, phone numbers, etc.

Data Sources

Tags on websites and mobile apps, cookies, APIs, S2S integrations.

Web and mobile analytics tools, CRM, transactional systems, subscriptions and newsletter signups.

Data Storage

Data has a lifetime of a cookie — up to 90 days. A DMP is not able to store PII data.

Data doesn’t expire, but can be updated as users provide new information about themselves. A CDP is able to store PII data.

Storage Location

Data is stored in two places: one is a comprehensive database, another is a subset for fast utilization.

Data is stored in one place as a unified scalable database.

Data Detalization

Data isn’t structured.

Data is highly detailed and presented in a chronological order.

Customer View

Access only to audience segments built on a probabilistic method. Since data is anonymous, a DMP’s algorithm can only guess what’s the connection between data pieces and split it into the roughly determined categories. Belonging to the category can’t be changed, since data is already labeled before uploading into a DMP.

Access to single customer view based on a deterministic method. A CDP matches users to their data utilizing their email addresses (or other unique IDs) and merging all information connected through various channels in the one profile. Also, it moves users between categories in real-time, since data may be easily updated.

Customer Profile

A DMP builds temporary anonymous profiles based on non-PII IDs like cookies, demographic information, or Google Advertising IDs.

A CDP builds complete customer profiles with all available information about the person (name, age, addresses, phone number, etc).

Customer Journey Map

Only effective on stages of awareness and consideration, when you actively advertise your product/service to the user.

May be used throughout the whole customer journey.

Integration and Data Portability

Data can be transmitted to ad tech tools (DSP, SSP) and ad networks.

Data can be transmitted to every marketing channel and tool.

Personalization

Only suitable to serve roughly targeted ads to customers, no real personalization is available.

Analyzing the buying behavior of a particular customer, a CDP is able to improve personalized marketing campaigns.

Payment

You’re paying for access to pre-built segments to run your advertising and retargeting campaigns.

You’re paying for collecting customer data and merging it in a single profile.

CDP vs. DMP: What to Choose for Your Business?

One could say that there is nothing to discuss, the choice is clear since the CDP wins all benchmarks. However, there is no need to overpay for more features, if you are an advertiser and only want to use 3rd-party data in display advertising. A DMP manages audience segmentation just well, while a CDP lacks the ability to gather anonymous 3rd-party data.

Also, a DMP may come in handy if you don’t have resources to collect 1st party data, or you need to segment your customers based on their activity on 3rd-party websites.

But if your priority is 1st-party data delivered by your customers, we recommend you to stick to CDP. Worth noting, 80.1% of users prefer receiving personalized messages based on information they shared with the brand directly (i.e. on 1st-party data). Taking this into consideration, it is better to utilize a CDP if you decide to implement personalized experiences in your marketing strategy.

what is the difference between DSP and DMP

So if you are a marketer and need data to promote your product through various marketing channels, a CDP is your pick.

However, both a DMP and a CDP can’t do much without linking to other martech or ad tech tool. To reap the most benefit from your data, you need to transmit it to other software. The only common software these platforms support are programmatic solutions used to serve ads to an end customer.

Regardless of the chosen option, you can integrate your data management system with a Demand-Side Platform to launch an advertising campaign. Or, if you want to monetize your website, take advantage of a Supply-Side Platform and sell your inventory programmatically. SmartyAds is a full-stack programmatic advertising solution that has platforms for both advertisers (DSP) and publishers (SSP) that support API integration with every data management platform your business might need.

Make the most of your data — enrich your advertising experience with the SmartyAds programmatic ad tech company.