Wednesday, January 10, 2018

Overview of a Data Management Platform

I'm a numbers guy so I'll share some statistics. The Data Management Platform (DMP) market is expected to reach ~ USD 3 billion by the end of 2023 with approximately 15% growth during the forecasted period from 2017 – 2023 according to this report. The other statistic from a report published in August 2015 (a lot has improved since then) is that only 50% of companies were using a DMP then. This tells me that there is still a lot of juice to be squeezed when it comes to companies investing in a DMP. So, what is a Data Management Platform?

As per WikipediaA data management platform (DMP) is a centralized computing system for collecting, integrating and managing large sets of structured and unstructured data from disparate sources. My definition is slightly different and this is how I define it.

A data management platform (DMP) allows marketers to integrate multiple data sources such as 1st party (online, email, media, offline/CRM), 2nd party (partner) and 3rd party (provider) data into a centralized system typically leveraged for digital advertising media activation and optimization.


Now that we got the definition out of the way, let’s look at a few advantages and features that a DMP offers:

  • Integrate and Centralize data: A DMP leverages a common identifier that allows us to integrate multiple data sources. First party data such as client’s own onsite data is captured using a device/cookie ID that can be integrated with campaign media data typically tracked by adding tracking pixels to digital advertising banners. This data can be further integrated with offline CRM where a user ID captured on sign in can be extended by bringing in additional user metadata to the DMP via an offline file. DMP also has the capability to allow marketers to purchase additional 2nd party and 3rd party to bring in new qualified users (cookies/devices) into the DMP.
  • Maximize Marketing Spend: A DMP allows digital marketers, advertisers (most common) and publishers to leverage integrated data across multiple sources and cross device channels. The marketers are able to leverage the platform to take data from multiple sources and share it with outbound platforms called Demand Side Platforms (DSP) such as Adobe Media Optimizer, DoubleClick Bid Manager etc. A DSP allows advertisers to buy media to run retargeting or other campaigns based off data that may be a combination of online first party and provider’s 3rd party data shared out via the DMP. A common use case is to retarget users who've added an item to their shopping cart but left without purchasing. With this, the marketers aim to increase conversions which probably wouldn't have happened.
  • Deliver a Personalized Experience based on Integrated data: Testing and personalization tools such as Adobe Target have the ability to take first party onsite data and offline CRM data from the DMP to run personalization tests. An example use case can be running a personalization campaign comprising of demographic data such as gender, location or income combined with onsite behavior tracked in the DMP and serving an experience customized per visitor.
  • Display consistent Advertising to users across devices: A DMP is also able to stitch users traversing across devices using a hashed email address (most accurate), IP address and location. As users log in, a DMP is able to identify the user across devices as well as on the same device even is the user is not logged as a profile of the visitor is created. This feature allows marketers to deliver a consistent message or retarget the same users across devices, which can be one of the objectives of a campaign.
  • Audience extension via Data Providers: A DMP has partnerships with different 3rd party data providers such as Acxiom, Dun & Bradstreet etc. who sell user demographic, psychographic and other offline behavioral data. These data providers either charge a flat fee or bill based on a CPM. Advertisers can build out test segments in the DMP to see how many new prospects they can get with the 3rd party data set to target more users for their campaigns. As an example, marketers who are planning to run a campaign to sell high-end laptops might want to target technical professionals who are between the ages of 25-35. This data wouldn’t be available in their first party data set so they can purchase this from a data provider and combine it with onsite data in the DMP for a prospecting campaign.
  • Leverage Lookalike Models: Lookalike models or algorithms are used to identify similar audiences from a benchmarked audience segment. An example use case might be to create a lookalike from a base/benchmark segment of users who’ve converted and run the model against a bunch of 3rd party audiences to find new users who exhibit similar conversion behavior.

There are other features that a DMP offers such as testing audiences, overlap reporting, frequency capping reporting etc. but they are supplemental to the main features already covered in this article. I will discuss these in some capacity in the future.  

Based on all the advantages that a DMP offers, it’s imperative for organizations to invest not only in a DMP but also in resources who know how to leverage it properly so that they get the best return on investment.