How Does a Data Management Platform Work?

November 20, 2019
Contributor: Laura Starita 

More than half of marketing organizations have deployed a marketing data management platform, yet confusion remains about what these solutions do — and what they don’t.

Most consumers have visited a website to look at a product, and then noticed ads for that product on every digital channel they used over the next few days. These ads keep brands top of mind and hopefully drive people back to make a purchase.

One technology brands use to drive those follow-up ads and ensure they appeal to a customer is a marketing data management platform (DMP). DMPs pull data from in-house systems and third parties, and use that data to build detailed customer profiles that drive targeted advertising and personalization initiatives.

Yet DMPs don’t independently manage customer data and execute ad campaigns. They are “nexus” technologies that live between data sources and content delivery and interact with both. This location “in the middle” causes confusion for marketers.

“Marketers turn to DMPs mainly to get a multidimensional view of their customers and prospects,” says Eric Schmitt, Senior Director Analyst, Gartner. “They also set up rules to trigger ads and messages and make measurement more accurate.”

Given that four out of five marketing organizations have a DMP or are implementing one, according to Gartner’s 2018 Marketing Technology Survey, it’s important to understand what they do, how they help and what they don’t do.

What do DMPs do?

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.

How do DMPs help marketing?

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.

What don’t DMPs do?

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.

 

This article has been updated from the original, published on July 25, 2016 to reflect new events, conditions or research.

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