When it comes to customer data, you’ve probably heard of data management platforms (DMPs) and customer data platforms (CDPs) - two terms that often pop up in discussions about marketing. But what, exactly, do they mean, and why is it important to understand how they relate to one another? This article will discuss these two key platforms and outline how marketers and other media professionals can best use them. In the digital world, the ability to manage and use customer data effectively has become essential for driving successful marketing campaigns. Companies large and small are increasingly investing in ad tech and data-driven strategies to better understand their customers, enhance their advertising systems, and deliver personalized customer experiences. With the value of the big data analytics market expected to exceed $650 billion by 2029, it's clear that data-driven decision-making is more than just a trend: it’s becoming essential for staying competitive. Moreover, as companies invest in analytics to better understand and connect with their audiences, DMPs and CDPs are proving to play a critical role, with each providing unique advantages for marketing teams.
It’s worth noting, however, that while DMPs and CDPs help companies make sense of their customer data, the two tools serve quite different purposes. Think of DMPs as short-term thinkers, perfect for anonymous audience targeting, particularly in digital advertising. CDPs, in contrast, are all about the long game, building a unified, detailed view of individual customers in order to enable long-term engagement. Understanding the differences between the two enables businesses to make informed decisions about collecting, storing, and managing customer information.
Read on to learn more about each platform, including their data retention practices, how they differ from one another, and their use cases, as well as, most importantly, which platform might be right for your business. By the end of the article, you’ll not only have a clear understanding of each platform but also be able to make informed decisions based on your marketing objectives. But first, let’s take a closer look at each platform.
What is a Data Management Platform?
A data management platform is a centralized platform used by marketers to collect, organize, and analyze vast amounts of data from multiple sources. The primary purpose of a DMP is to help companies manage anonymous, third-party data, such as cookie IDs and IP addresses, which can be used to create customer segments and target specific consumer groups in real time. DMPs are widely used in programmatic advertising and display advertising, where the goal is to target audiences with the right message at the right time.
Before we examine DMPs in detail, it’s important not to confuse them with demand-side platforms (DSPs). While both platforms collect and manage customer data, DSPs, unlike DMPs, collect data that advertisers or ad buyers need to buy publishers’ ad inventory. This difference, along with others, makes the DMP vs DSP debate another key discussion in digital marketing. For now, let’s focus on DMPs, one of the key tools in any digital publisher’s or advertiser’s toolkit.
Key Features of DMPs
- Data Collection: As mentioned, DMPs gather anonymous data, often from various external sources, such as ad networks, third-party cookies, and other tracking technologies. This raw data may include segmented customer IDs and IP addresses, as well as the number of page views and clicks, browsing history, and demographic data that’s collected without personally identifiable information (PII).
- Audience Segmentation: DMPs allow marketers to create highly specific audience segments based on customer behavior, interests, and demographics. Segmentation allows ad campaigns to reach potential customers through precise ad retargeting, ensuring that users who have already interacted with a brand are shown personalized ads to increase the chances of conversion.
- Short-term Focus: DMPs focus on immediate, short-term marketing objectives. They do not create comprehensive customer profiles but, rather, group users into segments for targeted advertising based on their recent online activities.
A luxury watch manufacturer, for example, might use a DMP to target users who have either recently visited jewelry-related websites or shown some other interest in luxury goods. With DMPs, brands can retarget such customers by displaying ads on other websites, increasing the chances of conversion. But while DMPs can be very useful for ad targeting and segmentation, they are limited in their ability to provide in-depth insights on individual customer journeys. This is where CDPs come into the picture.
What is a Customer Data Platform?
A customer data platform is a customer relationship management platform that helps companies gather, integrate, and manage first-party customer data from various touchpoints, such as websites, mobile apps, email campaigns, CRM systems, and social media. The primary goal of a CDP is to create a unified customer profile by aggregating all available data into a single, permanent record for each customer.
Unlike DMPs, which primarily focus on anonymous data, CDPs are designed to work with PII, such as customer names, email addresses, phone numbers, and account IDs. CDPs allow marketers to create a holistic view of a customer by consolidating data across various systems and touchpoints.
Key Features of CDPs
- Comprehensive Data Integration: CDPs integrate multiple data sources into a single, unified platform. This can include data from CRM systems, customer purchase histories, customer service interactions, and email marketing. By bringing all this data together, CDPs create a 360-degree view of a customer. This not only enables companies to build detailed, accurate pictures of their customers but, more specifically, allows them to track the behavior and interests of their customers over their entire lifetimes.
- Personalized Customer Profiles: By collecting PII and behavioral data, CDPs build detailed customer profiles that can be used for highly personalized marketing. These platforms focus on long-term engagement, allowing organizations to retain data and understand their customers’ preferences past purchases and interactions, enabling them to develop tailored marketing campaigns.
- Long-term Focus: By maintaining permanent customer identities, CDPs are built for long-term engagement and relationship building. They allow companies to track their customers over time, segment them based on specific behaviors, and engage with them across various marketing channels.
An online fashion retailer, for example, might use a CDP to collect data from their website, email campaigns, and mobile apps. By analyzing this data, the retailer can create detailed customer profiles that include purchase histories, browsing habits, and their customers’ other interactions with their customer service department. Using this information, the retailer can then create targeted ad campaigns, offering discounts on products the customer has previously shown interest in. This level of personalization can help increase customer engagement and conversion rates.
What's the Difference Between DMPs and CDPs?
While both DMPs and CDPs are used to collect and manage data, they’re designed for different purposes and use cases. Here’s a recap of the key differences between the two platforms.
| Feature |
DMP |
CDP |
| Data Types |
Third-party, anonymous data |
First-party, PII, behavioral, transactional data |
| Retention Period |
Short-term |
Long-term, persistent |
| Customer View |
Anonymous, segment-based |
Unified, individual-based |
| Primary Use Cases |
Programmatic advertising, retargeting, lookalike modeling |
Personalized marketing, customer journey orchestration |
| Identifiers |
Cookies, device IDs |
Email, phone numbers, account IDs |
| Marketing Focus |
Audience targeting and segmentation |
Customer experience and relationship building |
DMP vs CDP - Data Types
Source: mparticleThe types of data that DMPs and CDP manage are one of the key differences between the two platforms.
DMPs and Third-Party Data
As mentioned, DMPs primarily deal with third-party data collected from external sources, such as ad networks, cookies, and other tracking technologies. This data is anonymous, meaning it does not include PII. Third-party data focuses on user behaviors, such as browsing patterns, the number of clicks a user makes on a website, and other online activity, which can be used to create audience segments for targeted advertising.
For example, a tech company may use third-party data from an ad network to segment users who have recently searched for new laptops. This allows the company to display targeted ads to those users on other websites they may visit, encouraging them to make a purchase.
CDPs and First-Party Data
CDPs, in contrast, focus on first-party data, which is collected directly from customers. First-party data includes PII, such as a customer’s name, their email address, and phone number, as well as their transaction history. Because this data is gathered directly from customers, it provides more reliable insights into individual customer preferences and behavior.
For example, a subscription service such as Netflix might collect first-party data from its users, including their viewing history, their ratings of films and other content, and profile preferences. By analyzing this data, Netflix can recommend new content based on a user’s specific interests, improving their overall experience.
This ability to track and analyze first-party data over time allows CDPs to provide a much richer understanding of a customer’s journey with a brand.
DMP vs CDP - Profile Identifiers
Source: mappThe way data is tied to profiles in DMPs and CDPs is another important distinction between the two platforms.
DMP Profile Identifiers: Cookies and Device IDs
DMPs use cookies and device IDs as identifiers for users. Because the data in a DMP is anonymous, it doesn’t include personally identifiable information (PII). Instead, users are tracked based on their device or browser, allowing marketers to group them into broad segments based on their behavior and interests.
While this approach works well for ad targeting and retargeting campaigns, it does not provide a clear view of who a customer actually is. This can make it challenging to engage with customers on a personal level.
CDP Profile Identifiers: Email, Phone Numbers, and Account IDs
In contrast, CDPs create unified customer profiles based on personally identifiable information (PII). Common identifiers used by CDPs include email addresses, phone numbers, account IDs, and other unique identifiers that allow a platform to recognize and track individual customers across different touchpoints.
This makes CDPs particularly useful for personalized marketing and customer relationship management (CRM). By having a comprehensive, ongoing view of each of their customers, companies can create tailored experiences and improve customer retention over time.
DMP vs CDP - Use Cases
The use cases for DMPs and CDPs can differ significantly based on the type of data they handle and the goals of a business. Below are the primary use cases for each platform.
| Use Cases |
DMP |
CDP |
| Audience Segmentation |
DMPs excel at creating audience segments based on online behavior, making them ideal for ad targeting. |
CDPs offer deeper segmentation options, allowing brands to target audiences based on comprehensive customer profiles. |
| Retargeting |
Retargeting is a primary DMP function, where users are shown ads based on past browsing behavior. |
CDPs allow for personalized retargeting with relevant messaging across multiple channels. |
| Lookalike Modeling |
DMPs create lookalike audiences by analyzing anonymous data patterns. |
CDPs enable lookalike modeling with richer, individualized data for accurate targeting. |
| Customer Journey Mapping |
Limited to short-term engagement and broad segmentation. |
CDPs excel at mapping out entire customer journeys, ideal for personalized experiences. |
| Loyalty Program Management |
Not suitable for loyalty programs due to lack of personal identifiers. |
CDPs can power loyalty programs by integrating purchase histories and customer interactions. |
The Future of DMPs
As third-party cookies become obsolete, DMPs are under pressure to evolve. Privacy regulations, such as the European Union’s GDPR and the CCPA in the US state of California, are pushing DMPs to seek alternative methods of data collection and management. In the future, we might see DMPs adapt to data privacy standards by incorporating second-party data from data collection companies or integrating with CDPs for better compliance.
The shift to privacy-focused advertising may compel DMPs to transform themselves into more specialized tools, working alongside CDPs rather than acting as standalone solutions. The DMP market was valued at $3.1 billion in 2023, and it’s anticipated to reach $9.4 billion by 2032, growing at a compound annual growth rate (CAGR) of 13.5%. This shift highlights the growing emphasis on personalized, compliant data handling.
The Future of CDPs
In contrast, CDPs are experiencing significant growth as businesses prioritize customer personalization. The demand for first-party data and the ability to create accurate, unified profiles makes CDPs indispensable for companies aiming to deepen their customer engagement.
CDPs in the future will probably incorporate advanced AI and machine learning capabilities, enhancing CDP data insights and enabling even more accurate customer segmentation and predictive analytics. Indeed, the global CDP market is projected to be worth $28.2 billion by the end of 2028, growing at an impressive CAGR of 39.9% from 2024 to 2028. This reflects the broader shift toward data-driven marketing in a privacy-conscious world.
When to Use a DMP or a CDP?
Choosing between a DMP and a CDP depends on your business’s marketing goals.
Use a DMP when you focus on short-term campaigns that include content such as digital advertising and programmatic ads. As discussed, DMPs handle third-party, anonymized data, which helps with audience segmentation and targeting. This means they are ideal for attracting new customers and optimizing campaigns in real-time. For companies focused on acquisition marketing, a DMP may be a good choice for quick audience segmentation and ad targeting.
On the other hand, a CDP is better for businesses aiming for long-term customer engagement and personalized marketing. A CDP consolidates first-party data across various touchpoints, enabling businesses to create personalized customer experiences and improve customer retention. In short, if your goal is to promote long-term loyalty, build customer profiles, or manage customer data effectively, a CDP is the more suitable option.
| Business Goal |
Recommended Platform |
| Short-term ad targeting |
DMP |
| Audience retargeting |
DMP |
| Long-term customer engagement |
CDP |
| Customer journey mapping |
CDP |
| Cross-channel personalization |
CDP |
DMPs and CDPs: The Wrap-up
Both DMPs and CDPs are valuable in today’s marketing ecosystem, but they serve distinct purposes. DMPs are ideal for managing anonymous, third-party data to optimize short-term ad campaigns, while CDPs provide a comprehensive view of customer data, helping businesses build lasting relationships with their customers through personalized experiences.
By understanding the differences between DMPs and CDPs, businesses can strategically choose the platform that aligns with their unique goals. In some cases, companies may even benefit from using both platforms together to cover all aspects of their customers’ journeys, from initial ad targeting to long-term engagement. Both DMPs and CDPs are valuable in a privacy-conscious era. CDPs unify their own data to provide customer insights, whereas DMPs can segment and target broader, anonymous audiences.