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With more data on the world wide web now than ever before, a lot of your digital marketing efforts ride on how well you utilize that information. While data gathering and reporting directly improve knowledge around subjects like traffic sources and user behavior, to name a couple, delivering actual results is somewhat lagging behind. Why is this so? Because reactive capabilities are not part of these data systems, where a multi-channel coverage delivers high accuracy.

This is why people invented the data management platform (DMP). It aggregates first-party, second-party, and third-party data from multiple digital marketing channels. In other words, a DMP is a centralized tool that collects, organizes, and configures your own data with data exchanged between businesses and data from properties you don’t own, making it available to various systems, as well as users. Performing these important functions often raises questions of where do DMPs fit in the general data solution landscape, and more importantly, do you really need them. Here are a few considerations points that should tingle your spidey senses in a good way.

Distinct Audience Segments

In this new era of data, data-driven marketing is at the very core of almost every marketer’s job. The general idea behind DMPs goes perfectly in line with that notion, enabled by the ability to combine all kinds of party data from multiple channels. Basically a form of a data warehouse, a DMP holds audience and campaign data from different sources that work toward one goal – merging that data across a variety of sources into actionable insights. Hence, it allows you to define targeted audiences in a narrower fashion that ultimately fits your criteria, be it demographics, browsing behavior, purchasing history, location, device, and so on. These audiences can be targeted with relevant ads to increase engagement and help communicate your message in a more meaningful, distinct way.

A DMP first collects, then segments the data

Source: Clearcode

More Than A Data Warehouse

While it may look like the DMPs act primarily as databases with some serious data classification & structure power, they are more than that. Analyzing data about different audience segments, ad buys, information about certain publishers, as well as tracking cookie IDs and integrating information relating to ad campaigns are also part of the package. It’s an all-encompassing piece of software that allows centralized audience analytics and reporting on a campaign and audience level, as well as integrating with media buying platforms such as ad networks, ad exchanges, DSP, etc. Speaking of DSPs…

DMPs Help Out DSPs for a More Efficient Operation

Along with data-driven media buying, DMPs also have a very helpful role in the DSP (demand-side platform) cycle. The two platforms communicate wherein DMPs “talk” to DSPs by sending audience data and get ad performance in return. Then, a DMP performs an analysis of the results a DSP has sent back and points to it exactly which audiences are providing them the best results. Once again, it relays the information to the DSP so that it can modify campaign bidding and target for optimization. In a nutshell, the technology allows for more rational spending of your budget whilst providing an even better and nuanced understanding of your target audiences. Which means…

The connection between a DMP and a DSP

Source: Admedo

Hyper-Targeted Ads on Multiple Channels

Based on the analysis and subsequent creation of relevant audiences, the campaigns can be regularly optimized to reach those audience segments that perform the best. Using that detailed information, you are able to create highly specific ads that result in higher conversion rates and add to your ROI. What’s more, you can do this across your entire marketing landscape, because DMPs allow porting your audiences from one marketing channel to another. Creating a single customer view (SCV) allows tracking customers across multiple device and channels. With clearly defined segments, you can market to them via your email campaigns, ads over a variety of ad networks, your very own landing pages, and more. The entire process is housed under one roof without the need to redefine and connect data over and over again. You end up with a more coherent customer experience across channels.

Still, a Data Management Platform Is Not Suitable for Everyone

Those are just some of the more imminent benefits that DMPs routinely deliver. So, the question remains: do you really need a data management platform? The answer is yes, for the most part, as there are too many benefits to look the other way. However, there are some instances where the inherent complexity of the platform in question goes far beyond needs. According to Gartner’s Marketing Technology Survey, more than half of enterprises currently use a data management platform, either directly or through an agency partner.

Out of the rest, one in five marketers feels they can do without one just fine. The polarity of results only highlights the fact that a DMP is not necessarily the go-to option. This can be especially true for those in SME’s (small and medium-sized enterprises) whose data needs cannot support or don’t require the levels of complexity a DMP brings. For instance, managing media buys directly through media platforms like Google and Facebook or through an agency partner. In addition, there may be some regulatory restrictions that could seriously undermine the value of a DMP (like GDPR and EU privacy requirements).

That being said, a DMP is a strong tool that tries its best to simplify an increasingly complex digital marketing environment and allows you to develop a strategy that’s firmly based on data. There’s not much technology out there that can perform that many important functions and help reach your marketing objectives. At the very least, every digital marketing persona should be acquainted with this particular platform and whether they need to adopt it or not. If you haven’t paid much attention to DMPs, now is as good a time as any to do so, seeing that customer interaction across the multi-channel ecosystem is bound to grow even more.