What Is a DMP (Data Management Platform)?
Marketing teams for businesses that use the internet often implement software applications to help streamline their marketing campaign processes. One type of software used for online marketing is a data management platform, which helps marketers organize customer data for easier analytics and more successful campaigns. Knowing about DMPs is useful if you're marketing for an online company with many kinds of customers and collect data from multiple sources. In this article, we learn about what a DMP is, how and why marketers use them for campaigns and the advantages and disadvantages of this software for targeting an audience.
What is a DMP?
A DMP, or data management platform, is a piece of software that contains data about a company's audience and marketing campaigns. This platform collects and organizes data from multiple sources, including first-party information directly from customers and third-party information from websites. This data may include survey results from a specific demographic, which ads website users click on the most or which businesses are the most popular for a target audience. A DMP compiles all of this information with a company's marketing data in one place for easy access and analytics.
What is a DMP used for?
Marketers use DMPs for marketing campaigns that require customer data. These campaigns typically include online ads targeting a group of people based on their age, location and interests. First, the DMP collects data about customer shopping patterns and web activity. Here, customers refer to people who have made a purchase from the company before and potential customers who have interests in similar companies. With this activity, the DMP can provide analyses for which products are most popular and which campaigns generate the most sales.
Using these analytics, marketers learn more about their target audiences and can narrow the people to whom they advertise. These types of people are also referred to as audience segments, which means they are more specific groups within the larger company audience. A DMP helps marketers identify and organize these audience segments, which then allows them to create focused ads that are more likely to convert to sales.
Here are some careers that may use a DMP for marketing:
Digital marketing manager
Email marketing manager
Director of advertising
Advantages and disadvantages of a DMP
While DMPs are useful for many online marketing campaigns, there are some downsides to this type of software. Changing technologies and attitudes often make certain software obsolete, so it's important to think about all the pros and cons of a DMP before you use it for your marketing team. To help you decide, consider the following advantages and disadvantages of using a DMP:
Here are some advantages of using a DMP to market your products and services:
Easy access to data: Since DMPs compile different forms of data in one place, it's easy for marketers to access all of their information when they want it. Marketers can access first-party, second-party and third-party data from various sources to compare results and look for inaccuracies. These comparisons make it easier to find trends and patterns in the data.
Deeper audience understanding: Comparing data and finding trends can help marketers learn more about the audiences they're targeting. Knowing the online behavior of potential and returning customers allows marketers to deepen their understanding of what those customers want from businesses, products and advertisements. This may help marketers create more successful ads.
Discovering new audience segments: Another benefit of using a DMP is discovering new audience segments through third-party data. Third-party data may provide more insight into specific group identifiers, like household income, that narrow the target audience for a product and change how customers shop online. Marketers can then create new audience segments with this data.
Targeting customers effectively: Data from a DMP gives marketers more information about how their campaigns perform online. With this information, they can better determine which ads are successful and which ads need to be changed to generate sales. Analyzing the detailed data from a DMP can help marketers target their audience more successfully to generate sales.
Related: How To Become an E-Commerce Manager
Some disadvantages of using a DMP include:
Using cookies to track behavior: Cookies are files that contain small pieces of data about customers and their behavior. DMPs get third-party data from cookies. Although some companies are moving away from cookies because of privacy concerns, many websites offer customers the option to disable cookie tracking or choose which information a website can track. While this data may be less specific, it can still generate useful reports when combined with first-party data.
Complex to learn: One reason to avoid a DMP is its complexity. There are many sources of data and sections of information on this platform, so teaching it to your entire marketing team may be challenging. In addition, with changing technologies, DMPs may add extra features that users have to learn to use or could become obsolete altogether. However, learning how to use a DMP can better prepare your team for using other data collection software in the future.
Possibility for skewed results: Analytics results depend on the data provided, and a DMP may not always have quality data. If third parties collect or label their data incorrectly, customer behavior results can become inaccurate. This affects how marketers create audience segments and campaigns and can lower the chance that you'll convert ads to sales. A simple way to fix this is to compare third-party data against other sources to check for inaccuracies.
Needs information source: The final disadvantage of DMPs is that they need an information source to function. A DMP can't collect data on its own, so you have to combine it with other technologies that can take data from websites and put it into a DMP. This makes the collection process less efficient and creates more work for your team. It's a useful feature, however, for organizing your first-party data with third-party data that a program wouldn't usually collect at the same time.
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