How Does a Data Management Platform Work?

DMPs gather data, organize it and share it with other marketing technology systems.

DMPs gather data from a range of sources. For internal data, DMPs might pull from CRM software or from company-owned channels like websites or email. For external data, DMPs might connect to third-party data brokers or corporate partners.

Once they’ve gathered the data, DMPs organize it to build a profile of each individual customer (the data in DMPs is usually anonymized). Marketers define rules for when that person visits a website or calls in to a call center. Marketers also link “look-alike” profiles that share attributes — such as all men in Florida over 50 who use an iPad — into an audience so that all members receive the same marketing messages.

DMPs then share information on audiences with digital ad platforms and in-house marketing channels so those platforms know who to serve which ads or content. DMPs in turn collect information on ad performance to analyze and improve future ad purchases.

By gathering, organizing and sharing data, DMPs enable marketers to design targeted ad campaigns, extend their reach beyond known customers to look-alike prospects and drive more personalized interactions across channels. The benefits accrue in the form of more customer purchases and more efficient ad programs.

To illustrate how this could work in practice, consider Luxe Trux, a fictitious auto company that wants to engage men over 40 who live in urban locations and like driving performance ATVs and trucks. When loyal Luxe Trux customer Terry visits the company’s website, the DMP recognizes him from an ID placed in his browser, connects his info to the company’s CRM system and shows a display ad for a new-model white SUV.

Later, when Terry visits ESPN to check the game scores, the ad exchange operating on that site connects his profile to the information shared by the DMP and shows another ad for the same SUV. A day later, when Terry launches a mobile app, he sees a new ad with a rebate offer. Motivated, he goes into the dealer to take a test drive — and maybe to buy.

At the same time, all across the web, truck lovers in their 40s like Terry — his “look-alikes” — are seeing ads for white SUVs. Some of them eventually click through to LuxeTrux.com, where the brand can individually engage with them.

In this mock scenario, the brand moves Terry from an exploratory visit to a test drive and possibly a sale. It also brings a new prospect to its website, all with the help of a DMP.

DMPs perform some of the same functions as other marketing technologies, like data analytics platforms, demand-side platforms or customer data platforms. However, there are important differences.

DMPs don’t perform the same breadth and depth of analysis as stand-alone data analytics platforms because the technology only gathers certain kinds of data and only analyzes ad performance from digital channels.

DMPs can’t operate ad campaigns on their own, either. They connect with demand-side, supply-side or media platforms, which serve the ads. In fact, DMPs are often embedded in solutions like marketing cloud platforms, adtech platforms or media ecosystems as one component of these larger platforms.

Given their strengths and limitations, DMPs can be a key tool to enable more targeted and personalized ad campaigns. Many marketers already have them in their technology mix — although some may not know it. Before considering a new investment, “Contact your digital marketing, media or other agency partners who may already be using a DMP on your behalf to understand whether it is being fully used,” says Schmitt.