What is a Data Management Platform?

One of the hardest challenges in advertising is knowing who to target, especially if a user visits your website but never self-identifies. If only there was a way to serve targeted ads to anonymous users across the web. Well, there is a way, and it's called a DMP.

In this article, you’ll learn:

• What is a DMP?
• How Does a Data Management Platform Work?
• Data Management Platform Benefits
• Data Management Platform Use Cases
• Challenges of Data Management Platforms
• Data Management Platform Tools

What is a DMP?

A data management platform (DMP) is a data onboarding tool that helps you collect first, second, and third-party data so you can retarget users across the web with hyper-personalized ads.

These platforms allow you to segment users into specific audience cohorts, which you can then upload to your advertising platforms so you can target both known and anonymous users and unlock better targeting capabilities to reduce customer acquisition costs (CAC), optimize return on ad spend (ROAS), and increase conversions.

How Does a Data Management Platform Work?

In order to actually get value out of a DMP, you first have to get data into the platform. For third-party data, most DMPs provide SDKs you can deploy on your website to capture behavioral data, which can be tied to a cookie or deviceID, which you can then use for anonymous targeting. For your own proprietary first-party data, usually, the only way to ingest into a DMP is through an API connection or manual CSV file.

The key problem that DMPs solve is helping you link all of your data together by looking at various user IDs like cookies and Device IDs to subsequently tie everything back to one unique identifier within the platform to maintain consistent user profiles. Fundamentally, this means you can link various customer interactions across channels back to one profile using identity resolution. Once these profiles have been created, your marketing team can leverage the platform’s audience manager capabilities to create segments you can then upload directly to your ad platforms for targeting. For example, if a user lands on your website, but never self-identifies, you can use a DMP to still target that user by passing on the cookie data and the deviceIDs to your ad platform.

You can break this process down into four core pillars:

• Data Collection: Bringing data into the platform
• Identity Resolution & Profile Unification: Unifying, deduplicating, and merging customer data user profiles
• Audience Management: A UI for marketing teams to segment users based on traits and attributes.
• Data Enrichment: Enriching user profiles with additional third-party identifiers to boost match rates in ad platforms
• Data Onboarding: Integrations with ad platforms to streamline audience ingestion

Data Management Platform Benefits

DMPs provide a lot of functionality, but ultimately, they offer four key benefits:

• Targeting: By combining first, second, and third-party data, you can segment your audiences based on a broader range of attributes and reach the customers you want with your ads. This also means you have more attributes to target customers. For example, if a user visits your website and searches for running shorts but never makes a purchase, you could target that individual with a Facebook ad for the product they viewed.
• Data Enrichment: DMPs have large data marketplaces where you can enrich your data with other customer identifiers like IP addresses, email addresses, and Mobile Advertising IDs (MAIDs). The more identifiers you have for customers, the higher your chances of matching them on advertising platforms are. For example, you could enrich a customer profile by adding their Facebook signup email, enabling you to match them on the ad platform.
• Personalization: Granular audience targeting means you can serve more relevant and create more tailor-made ads. For example, a health and wellness brand could use data to identify users who regularly visit the gym and browse health blogs on their site. With this insight, the brand could serve personalized ads for new supplements.
• Data Onboarding: DMPs provide integrations with demand-side platforms (DSPs) and ad platforms so you can automatically upload your customer data to each channel without requesting IT support or uploading manual CSV files.

Data Management Platform Use Cases

Some of the main reasons for implementing a data management platform are to unlock better targeting, increase conversions, or optimize ad spend. Here’s a summary of some of the most common use cases for a DMP.

Challenges of Data Management Platforms

Data management platforms are useful tools for consolidating customer data, but they often present costly challenges like:

• Speed: When you’re launching new ad campaign experiments, you don’t want to wait. The problem is that a DMP can take weeks to onboard, process, and enrich your data before your marketing team can ever build audiences. Speed is everything in advertising because you can remain relevant and perform experiments faster.
• Cost: DMPs can be really expensive. LiveRamp charges an average of $1m per customer. This cost can be hard to justify but is needed if you want more performance out of your campaigns.
• Security: You have a responsibility for the customer data you collect, ensuring that it’s safe. Using a DMP introduces a point of failure for a potential security breach and adds another system your data team must set up and maintain.
• Observability: DMPs don’t provide great observability features, which prevents you from knowing when audiences have been updated or failed. This results in poor segmentation which wastes your ad spend.
• Data Accuracy: Because of the long data onboarding times, the data you’re using to create segments is often out of date. You're forced to wait for the DMP to update with new data, which isn't immediate and can lead to targeting the wrong customers and wasting ad spend.
• Integrations: DMPs specialize in ad platforms, so if you want to use your audiences in other marketing applications (e.g., lifecycle marketing tools, marketing clouds, etc.), you will run into problems.

Data Management Platform Tools

The DMP market is pretty saturated, and not all DMPs are equal. Here’s a quick overview of the best solutions available today.

Hightouch

Unlike a traditional DMP, which stores a copy of your data and focuses on cookie-based audiences, Hightouch integrates with your existing data infrastructure. This means your marketers can leverage all of your customer data to build audiences using both first-party data and third-party data to onboard your data to 200+ destinations. Rather than forcing you to store your data in a separate platform, Hightouch simply enriches your audiences with additional identifiers in flight to your advertising destinations so you can boost match rates and unlock better performance across your campaigns.

LiveRamp

LiveRamp is probably one of the most widely used DMPs, but most people don’t actually like the platform and only use it because they have to. The platform provides data enrichment capabilities via its data marketplace, where you can buy third-party data to enrich your data further. LiveRamp also offers an identity resolution solution, providing a unique RampID identifier to help you recognize customers across multiple channels.

Lotame

Lotame is a data collaboration tool investing heavily in deep integrations with DSPs, CDPs, and marketing platforms so you can easily onboard data to power your campaigns. The Cartographer identity graph connects users' devices into a single profile, allowing cross-device tracking. And Lotame's Data Exchanges allows access to third-party data to enrich your first-party with additional data points, providing a deep understanding of your customers.

Adobe Audience Manager

Adobe Audience Manager has been one of the go-to solutions in the DMP world, but it’s slowly being phased out with Adobe Real-Time CDP. The platform offers an identity resolution solution to unify customer data into a single profile and helps with data onboarding into your DSP or ad platform. Adobe Audience Manager also provides a data marketplace where you can securely buy and sell third-party audience data or engage with second-party data relationships.

Oracle BlueKai

Oracle BlueKai offers great data for B2B marketing because of its wide array of data providers, such as Forbes and Bombora. The platform provides access to one of the largest third-party data marketplaces in the industry, allowing you to enrich your first-party data. Oracle BlueKai also offers integrations with other Oracle Marketing Cloud products like Responsys and Eloqua, allowing a more efficient data flow.

Closing Thoughts

Building audiences and sending them to ad platforms is a task that isn’t going to stop any time soon. So you want an option that doesn’t bottleneck your advertising operations and isn’t expensive. A tool like Hightouch gives you all the benefits of a DMP but sits on top of your existing infrastructure allowing you to use the freshest data from your warehouse.

A large health and wellness company got all the same benefits of a DMP with Hightouch and reduced their costs by 80%, took their data onboarding time from 2 weeks to 5 minutes. If you want to learn more, book a demo with one of our solutions engineers.