At the moment of writing there are already multiple whitepapers on Data Management Platforms (DMPs). Almost always have whitepapers been written by suppliers of DMPs as a tool to sell their products, thereby those papers lost their credibility. Within this whitepaper – which has been established with the insight information of experts – I aim to provide an objective overview of information regarding the latest developments. This whitepaper is meant to give the reader an objective overview of the subject. DMPs are capable of delivering many advantages to advertisers, but can also be difficult to implement. Finally there are also multiple possible ways of using a DMP that an advertiser should consider.
- What is a DMP?
A DMP is a central platform that makes it possible for an advertiser to collect data from different sources, to manage data sets and use it for commercial purposes. Firstly, a DMP enables an advertiser to collect consumer data from different first-party, second-party and third-party data sources (online and offline). Secondly, a DMP analyses this data and makes segments of relevant customers and prospects and finally a DMP targets real-time messages through the available channels in order to reach consumers and prospects. The result is a much more efficient marketing formula for advertisers.
What does this mean in practice? Through this platform advertisers have the tools to better identify with which potential client they are dealing with. For example if the person is a returning customer, it is valuable to know what you have bought, through which device you are shopping. For example, if you have booked a KLM flight to Bogota, you do not want to be chased by advertisements regarding this flight. You do want to be offered complementary products or services. This is possible if the advertiser uses a DMP.
An advertiser is now finally able to deliver the right message, at the right time, on the right device to the consumer. With a DMP an advertiser is able to service and entice consumers much more efficiently.
The working and possibilities of the DMP can be explained by outlining the three layers. Please find the explanation below.
2.1 Data collection
The first layer of a DMP is data collection. The data is combined from multiple sources. This is not new, but one of the advantages of a DMP is that the data from all the different sources is combined in one place (and later made actionable).
There are three kinds of data:
1st party data (existing customers):
- CRM system
- Media Data (e.g. banners on other websites)
- Offline data (e.g. a customer card)
2nd party data (1st party data of partners):
- Customer data shared by trusted partners
3rd party data:
- Data offered/sold by other parties that do not have a direct relationship with consumers (e.g. your own DMP provider)
As data is collected from different sources it automatically means that there are a number of complexities. The two most important issues advertisers will have to deal with are data quality and data unification. We will go more into detail on this later.
2.2. Data segmentation
The second layer of a DMP is data segmentation. Once all data has been collected and available you can start looking for patterns in this data. You want to serve a different ad to an existing customer than to a person that is a prospect. When making target audiences you set up different criteria that you will use to target your marketing campaigns. For example if you are a retailer which is selling apparel you can identify an existing customer online when know that she has bought a pair of jeans in your webshop. Only this time you will not chase her anymore with the same pair of jeans (which is futile and annoying to the customer), but you can offer her a discount on new shoes that go perfectly with the jeans.
2.3 Data activation
The third layer of a DMP is data activation. The target group chosen by the advertiser can be targeted through one or more marketing channels. As previously mentioned, an advertiser is able to use multiple channels:
- Display/RTB (via dynamic banners)
- Search (via remarketing lists)
- Site (via dynamic content)
- Direct Marketing (via e-mail)
- Offline (in store offers)
A result of the three layers is that data activation will become more and more a case of continuous optimization. This will also change the way that advertisers are working with internal and external media agencies. It is important for advertisers and agencies to work more closely as they should have a clear common understanding of who the customers are and what they want.
- Do you need a DMP?
The implementation of a DMP is costly and requires some time to implement it. However, on the long term the correct use of a DMP can generate additional revenue and saves time doing so hence, what should one look for if you are still busy orientating? My suggestion is to start with answering a couple of simple questions:
- Do you advertise using multiple online and offline campaigns?
- Do you advertise using multiple ad networks, publishers, and ad-exchanges?
- Do you use 1st, 2nd and/or 3rd party data?
- Is there a discrepancy between channels in the messages to the same consumers?
- Are you sending the wrong message to the wrong customers?
- Do you have multiple digital contact moments for customers?
- Do you want to know on a detail who your customers are?
It is important to answer these questions before making any, potentially costly, decisions. Yes, a DMP offers many great possibilities and sometimes it is presented as the holy grail of marketing. But you have to make sure that it will actually help you and that it will not make marketing unnecessarily complicated.
- What are the requirements of a DMP?
A DMP must be capable of performing a number of multiple tasks. In the previous chapter we explained the three layers in which the tasks of a DMP are incorporated. Let me elaborate on that:
The first task of a DMP is to collect data. This means that data from all different sources must be entered into the database. Before being able to combine all online data, an advertiser should build a data layer. A data layer is a structure which enables an advertiser to collect numerous and varied types of data (e.g. online transaction info, on-site behavioral data, mobile app usage). Make sure that, when choosing your partner for building the data layer (and later also your DMP partner) they are able to connect all the systems, this is not always the case.
The second task of a DMP is to organize data and profiles. Logically, before being able to target audiences, all data must be organized in such a way that it is understandable. Before a DMP can be used efficiently a marketer (or someone else, see chapter 6) must be able to select segments of these audiences based on the desired characteristics. This is the third task of a DMP: Examine, Transform, Export insights & Audiences. At this moment a marketer can choose the desired target group to which he/she desires to engage with. The marketer can, for example, choose to target existing customers. The marketer can also target more specifically: he can target, for example, existing female customers who buy jeans in your webshop more than once a month and return more than 50% of the time. As long as your data is stored correctly possibilities can be endless.
The fourth task of a DMP is where the action happens. A DMP is capable of making data and insights actionable. When the DMP is integrated with all desired platforms and partners (e.g. e-mail, SEM, display, CRM) the data and insights can be used realtime. For example: Caroline has bought a pair of jeans in the webshop of a retailer. While walking through the city Google recognizes that she is near the offline store of the same retailer. The retailer does not only know that a customer is near the store, but also that she has already bought a pair of jeans. Now the retailer can offer a banner on Facebook showing an in-store discount on the shoes that perfectly match these jeans.
- Resources & Ownership
The question of who is responsible for the DMP and which resources are needed is different for every advertiser. But this question must be answered before starting with the implementation of a DMP. Only when you know exactly how you want to use a DMP, then you are capable of deciding on who will be responsible for the DMP after implementation. In this case there is no perfect answer, but it is wise to have a multi-disciplinary team that is capable of representing the different departments. You want, for example, to have people from the technical side (e.g. website, apps, offline data store) and to have people from the business side (e.g. marketing, analytics, development, operations).
Aside from the technical and business significance of a DMP, one must not forget the issue of data safety and ethics. A DMP can be a powerful tool when implemented and used in the correct way, but it can also be very intrusive to consumers. It is imperative that you know where and how your data is stored and that this is protected in a safe way. And as an advertiser you should also think about which data you actually want to store and use.
Finally there should also be a person who has the end-responsibility for a DMP. Because a DMP integrates all aspects of marketing (online and offline) the most logical person is the Chief Marketing Officer (CMO). This person has the power to push the organisation in the desired direction and the best position to oversee the entire operation.
- Common issues with DMPs
Sometimes a DMP can be looked upon as the holy grail of marketing, but there are a number of challenges and issues that you will encounter. You can find the most common issues below:
- Data Quality. Data is not always stored with 100% accuracy. There will be data that is corrupted, not delivered in the right format or otherwise not ready for direct use.
- Data unification. When you pull data from multiple sources, you can be almost certain that the data from these sources is not stored in the same way. Data points may differ, but also the way systems communicate with each other.
- Safety data storage. Everything that is online can be hacked. You have to minimise to risk of data leaking. This is just as important for the partners with whom you cooperate.
- Inflexible technology. Multiple systems have to be tied together and this will create a complex ecosystem. This can become a problem when an advertiser is looking to develop new features, add new online partners, etc.
- Spreadsheet based analytics: Flexible reporting and analytics should enable real-time data and optimization possibilities. Data must be updated real-time, otherwise the possibilities of a DMP will be strongly restrained.
We are living in a world where consumers are becoming more digital savvy every day. Millennials for example have a much better understanding of how online advertising works and are showing more and more avoidance behavior towards online advertising. Consumers these days are looking for new and engaging digital experiences. This means that there is a greater need for companies to act on the signals that consumers are giving. Content needs to be more relevant to audiences and better personalized. As an advertiser you need to understand flawlessly where consumers are in their customer journey. Only then you can act accordingly. This means that consumers and advertisers are engaging in an online conversation. Tracking, data storage, data optimization, targeting, all elements have to work in real-time in order to be able for an advertiser to conduct such a conversation. Understanding your customers is now more important than ever because they are more demanding than ever.
- Where to start?
First start with reading chapter three again. If you think you need a DMP than it is time to make a stocktaking. Choose a partner that is able to help you in an earlier stage of the decision making process. This partner can be one of the DMP platform providers, but also your media agency. Some media agencies are already experienced in implementing a DMP, but will also advise you in an earlier stage of the decision making process.
A good idea is to sit down with the important stakeholders from your side and the selected external partner to team up and assess the situation. One way to do this is by using a pressure cooker approach that enables you assess in a short time (e.g. a week) what the investment is in time and resources will be and predict the possible profit from your DMP.
A DMP is an incredible opportunity for advertisers to connect better with customers. But it also difficult and costly to implement. You have to make sure that your organisation will benefit from a DMP and you will need the help of partners who have implemented a DMP before.
If you have any more questions about DMPs or possible partners please contact me via: firstname.lastname@example.org
Author: Maurits van der Does (Senior Consultant Interim Solutions)