What is a Data Management Platform?

What-is-a-Data-Management-Platform

Data management platforms (DMPs) are older than most people know. Some sources date their existence back as far as the 1950s, when businesses began to realise the limited processing power of computers at the time. A data management platform serves as the backbone of data driven marketing and allows businesses to gain unique insights into their customers.

Through the use of various programming languages, data management platforms evolved. They moved from on-premise to online solutions capable of much more than their predecessors.

While DMPs can be very useful they also have limitations and their capabilities must be clearly understood. This article explores what you need to know about DMPs. We’ll cover what they are, how they work, and help you answer the all-important question: should you invest in a DMP?

What is a data management platform?

A data management platform (DMP) helps businesses collect, organise, and activate data from various sources and put it into a usable form. And this is important. The world has a data problem. There’s just too much of it. EMC forecasts that 2020 will see the world generate around 40 trillion gigabytes of data (40 zettabytes). And according to Domo, every person will generate 1.7 megabytes in just a second.

Teams often need to gather data from various sources, make sense of it, and then use that data to make informed marketing decisions. DMPs are designed to help brands perform these tasks. While they have limitations (more on this later), they can be helpful.

How does a data management platform work?

DMPs collect and manage complex data sets from various sources (internal and external). This data is then ingested, organised and used by brands to make smarter marketing decisions.

Types of data include:

First-party data

First-party data includes any information gathered through direct contact or a relationship with a customer (think forms and sign-ups). First-party data includes everything from email addresses, behavioural actions (tracked through cookies, devices IDs, and analytics), demographics, and purchase histories.

Second-party data

While second-party is similar to first-party data, including information about customers, their behaviours, and is also collected via direct interactions, pixel tracking, or cookies. It’s sourced from a different organisation.

Second-party data is best used to get a better view of a large audience similar to your own. And this is critical for DMPs because they cannot run on first-party data alone.

Third-party data

Third-party data is a mash-up of first-party data collected from various sources. It’s then packed and made available. Third-party data is used to supplement your first- and second-party data. It adds depth and a degree of precision that allows you to better target customer profiles.

While DMPs are capable of performing integral analytical functions, they also facilitate external data purchases and transfers, by connecting with third-party ad networks and exchanges (think targeted advertising purchases).

What are the limitations of a data management platform?
Although there are benefits to using a data management platform, DMPs also fall short in certain areas. If you’re considering whether to invest in a DMPs, but need to understand what you’re getting into, here are five must-know limitations they come with.

  1. Longer processing times

DMPs require longer processing times to ingest and analyse new data. As more data is introduced, DMPs must spend time collating data sets to provide useful insights.

  1. Short data retention period

DMP data often relies on the collection of cookies for tracking customer behaviour. While this kind of data is gold, it is typically only retained for up to 90 days.

3. External data is mandatory

DMPs are able to make sense of large data sets from various sources. So, while you may want to focus on data you know to be accurate, you cannot leverage DMPs without data from external sources.

4. Limited data integrity

The requirement of using data from external sources means less clarity on where it comes from. This can be a challenge for brands, especially if data isn’t accurate or outdated.

5. Zero personalised marketing capabilities

As DMPs are incapable of using data based on individual identities, your marketing is limited to audiences and not individual costumers.

Business decisions

Marketing is a complex discipline. As the buyers demand personalised experiences, picking the right marketing tools is critical. DMPs perform certain functions, but also have limitations. While they can gather and analyse data, they only offer the chance to market based on attributes and not individual identities, something that makes a world of difference to today’s customers and your bottom line.

For more information on data management platforms, get in touch with our experts.

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