Data Decisions: DSP vs. DMP

http://www.cmo.com/features/articles/2016/3/9/data-decisions-dsp-vs-dmp.html

As marketers assess their requirements for marketing technology, the question facing many looking for platforms rather than tools and systems will be whether to invest in a data management platform (DMP).

Certainly, “DMP” seems to be the new industry buzzword playing out in the field. According to an Econsultancy study, 68% of marketers believe DMPs are “key to the future of programmatic marketing,” so it is understandable that many would believe that employing one is an absolute essential, and for some companies this will definitely be true. It might not be for everyone though.

A Brief Intro DMP/DSP
While once the overlap between what a DMP and what a demand-side platform (DSP) offered was minimal, today most DSPs also offer some analytics and data management tools. Traditionally, the DMP gathers and sorts data, while the DSP was used to activate insights on, for example, digital media buys. Analyst firm Gartner says that DMPs and DSPs are “codependent.” Before embarking on the process of engaging a DMP, it could be worth investigating if your demand side platform (DSP) partner could step up to the plate and into the DMP’s shoes.

When Is A DMP A Necessity?
There is no one-size-fits-all answer to this question. Whether a DMP is a necessity or not varies from company to company. The key to finding an answer to this question often lies in the volume and type of data that your organisation holds. Broadly speaking, an organisation that holds large volumes of CRM data is likely to require a standalone DMP. On the other hand, companies that mainly rely on behavioural data for marketing campaigns will often find that their ideal setup is to work with an advanced DSP that offers data management and analytics tools at no extra cost.

Looking at two quintessentially British brands, the difference becomes clearer. British Airways gathers huge amounts of CRM data, which can provide insights into their customers past purchase behaviour and influence future purchase decisions. A DMP becomes fundamental in processing this data, in order to segment customer audiences for targeted advertising.

But when you consider a brand such as Cadbury that uses digital channels mainly for branding campaigns, the case for a standalone DMP could be less of an imperative—assuming there will be little to no CRM-type data. In this case, a DSP will typically be able to accommodate the use of first-party behavioural data should it provide material value to the campaign activity.

Broadly speaking, the use of data warehousing and the management capabilities of a DMP are more likely to be appropriate if using CRM and customer purchase history data, which adds significant value to your marketing campaigns.

Making The Choice
In the process of choosing a DMP or DSP with advanced data management and analytics capabilities, it is also important to consider some other factors. Marketers are often led to believe that it’s a good solution to work with several different DSPs (one for mobile, one for video, etc.) and then feed all campaign insights back to their chosen DMP. This can easily lead to data loss, as not all systems talk to each other, meaning the cross-device customer journey could become fragmented and, for example, frequency capping would be inaccurate.

Using a single demand side platform could be much easier and more efficient—impression-level user data is fed back into the system in real time as it doesn’t need to talk to another system. And let’s face it, using one system is more cost effective than using two—but only if it’s right for you.

The questions we have posed provide marketers with a good jumping-off point when considering 2016’s data needs. Assuming you have chosen your DSP partner first, it’s worth making sure that, if your data management needs change in the future and you decide at some point that you do, in fact, need a DMP, all of the information is easily transferred to a standalone DMP.

Marketers need to empower themselves to make the right decision for them and their brand, and to pursue industry buzzwords only when it’s appropriate going forward.