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Demise of the DMP, Long Live the CDP

Patrick Tripp | July 10, 2019

The Data Management Platform (DMP) is like a once dominant golfer now retired to the Senior PGA Tour. While there is still a time and place for the elder statesmen to show off their considerable skills, it is with far less fanfare than when they competed at the highest level. The customer data platform (CDP), meanwhile, is the dominating upstart with a more complete, all-around game.

While the reputation of a DMP as the true single source for customer data has been in steady decline for some time, two relatively recent trends have helped accelerate its demise. One is the increased restrictions on web cookies, led with high-profile examples of Apple and Google. More restrictive policies hamper digital advertisers from reaching their intended target. Second, there is now an ability to link identities anonymously in a CDP. Through solutions such as the RedPoint Digital Acquisition Platform powered by LiveRamp, marketers can activate and match activity from downstream ad platforms and networks back to a CDP, giving them control over the customization of a customer journey across digital touchpoints.

It’s All About Personalization

Recent trends aside, the writing has been on the wall for some time that DMPs just don’t have the “game” to keep up with the power and capabilities of a CDP. Customers now demand a seamless, hyper-personalized customer experience across an omnichannel journey, and DMPs are simply not built for that purpose.

According to research from The Harris Poll in a survey commissioned by RedPoint, 37 percent of consumers said that they will not do business with a company that fails to offer a personalized experience. Moreover, 31 percent report being “very frustrated” when a company does not recognize them as an existing customer, which would include receiving an untargeted digital ad. Such ads are, unfortunately, quite common. According to research from Nanigans, 88 percent of consumers say they have seen retargeted ads for an item they’ve already purchased, and 77 percent say they see too many retargeted ads from the same retailers.

Because each touchpoint is part of a dynamic journey, and a specific customer engagement is influenced by the totality of a customer’s actions or behaviors, personalization should not be left to whim. A frustrating experience for a customer anywhere along a customer journey, in other words, will undo even the best efforts at hyper-personalization. A relevant email offer in pitch-perfect sequence with a customer’s buying intent, for instance, will be offset if it’s followed by a digital ad that is irrelevant or, worse, in conflict with the previous offer.

The ability to serve up personalization at scale in the context and cadence of an omnichannel journey, and tracking customers along the full anonymous-to-known interaction cycle has never been the purview of the DMP. It is, however, what customers have come to expect.

Why a DMP is Not a System of Record

DMPs, which have largely been acquired into the belly of the marketing cloud beasts, do provide capabilities for look-alike modeling, onboarding, and audience buying, which are valuable for select business use cases. A marketer might be interested in finding home loan prospects, for instance, and uses a DMP to extend reach beyond first-party data to build or buy that audience.

The misconception that DMPs could serve as a customer engagement system of record took hold because a DMP can handle first, second, and third-party anonymous data – and interface with demand-side (DSP) and supply-side (SSP) platforms. There was a belief that a DMP could do anything from a data perspective. The misconception has largely been dispelled, mostly because they lack first party PII, and lack reporting and measurement capabilities that become more and more important as personalization becomes a competitive differentiator.

According to London Research, working in concert with media agency Truth, 49 percent of media buyers surveyed were concerned with a lack of consistent measurement/metrics of programmatic ads. Another 42 percent cited a lack of agency transparency as a major concern, with a lack of visibility on third parties (39 percent) and fraud (37 percent) also rating as top concerns.

Further devaluing a DMP is the fact that data ingestion, standardization, matching, and keying all infringe on a marketer’s ability to deliver a real-time personalized experience in the context and cadence of a customer journey. As the demand for personalization rises and it becomes even more clear that a DMP is out of its league in this particular arena, taking it off the playing field has the perhaps unintended result of increasing its value by restricting its focus to what it does well – a channel solution for facilitating lookalike advertising.

Precise Audience Targeting with a CDP

Niche DMP use cases aside, a CDP is the preferred customer engagement solution among data-driven marketers for many reasons, not the least of which is the fact that it generates a single customer view that is the backbone of hyper-personalized customer engagement.

From the advertising perspective, a CDP provides better audience segmentation – an important buffer against the very real problem of ad fatigue when engaging with customers across the anonymous to known lifecycle. According to the same Nanigans study, 57 percent of consumers say that retargeted ads have no influence on their decision to make an online purchase.

An enterprise-grade CDP accomplishes more granular audience segmentation than a DMP while maintaining privacy compliance by keeping third-party data adjacent to first-party data in an anonymous data repository.

Advanced identity resolution that produces a full representation of an individual customer across online and offline touchpoints differentiates a CDP as a true engine for personalized engagement. A CDP in concert with the RedPoint Digital Acquisition Platform further reduces the DMPs usefulness because mapping an anonymous record to an identity graph allows a marketer to individualize ads to the micro level for more precise, robust, and finite audience targeting.

Unlike most DMPs, response data can be returned back which allows for increased contextual relevancy, optimized interactions, and marketing attribution. Marketers are empowered to seamlessly manage communications across all online and offline touchpoints, giving them control over the full customer relationship and digital ecosystem. Serving up personalized customer experiences that consumers demand depends on brand marketers having this end-to-end control.

The DMP as a Sidecar

In an open garden environment, which does not lock marketers and business users into pre-built data models or predefined technologies, a DMP retains value when it serves as another CDP data source to contribute to the single customer view. By interfacing with a DSP to serve up a digital ad or build an audience, a DMP provides at least broad information about customers, even via metadata that may help the business understand which audiences are interacting with the brand. Marketing can combine these insights with everything it already knows about a customer to deliver an even more hyper-personalized customer journey across all online and offline touchpoints.

Some Senior PGA Tour players can still hit the ball 300 yards, but they lack the complete, all-around game to compete at the highest level. Like a DMP when stacked up against a CDP, legacy status affords them an opportunity to shine – even if the game has mostly passed them by.

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Patrick Tripp
Patrick Tripp

Patrick is vice president of product strategy for the Customer Engagement Hub at RedPoint Global, where he leverages over 20 years of experience in technology, consulting, and marketing. Patrick is an expert in cross-channel marketing and real-time interaction management, and is a frequent speaker at industry events. He is a certified product manager and holds an MBA from Boston University. Connect with Patrick on LinkedIn and Twitter.