CDP vs DMP vs CRM: What is the difference?

May 17, 2020
Industry Update

With the surge of online users over recent years, the MarTech industry has become the new frontier for companies to expand globally.

According to Gartner’s CMO survey, MarTech is now the “single most significant area of investment for marketing resources and programs”, occupying almost a third of marketing budgets. This new phenomenon has allowed digital marketing to evolve at an unprecedented rate, with the common presentation of 3 types of platforms: CDP, DMP and CRM.

Now, you might be feeling overwhelmed with the 3 acronyms that I have just brought up. Fret not, let me break it down for you.

Let’s begin with CDPs. What exactly is a CDP?

Visualisation of a CDP (source: Emailvendorselection.com)

CDP stands for Customer Data Platform. David Raab, Founder of the CDP Institute was the first to define what a CDP is — “a marketer managed system that creates a persistent unified customer database that is accessible to other systems.” 

If you haven’t heard about it, it could be because CDPs have only emerged in the MarTech landscape not too long ago. Despite that, they are now the most sought-after data system that almost every marketing team cannot live without.

What’s so compelling about CDPs is that it unifies singular customer profiles by stitching data together. This data is then churned out to downstream tools to prepare offers, promotions and customer emails for advertising purposes and to create customised web content.

CDPs deal with all 3 types of operating data; first-party, second-party and third-party data. First-party data is mostly consolidated, and it contains Personally Identifiable Information (PII) such as bank account numbers, email addresses and full names.

Breakdown of operating data types

One distinguishing feature of a CDP is that it can detect events such as Add to Cart or Purchased items on websites. This acts a bedrock of source and protocols where only useful information for marketing (also known as clean data) are extracted. Unplanned or redundant events are usually blocked or forwarded to another source to be quarantined.

This consolidation and correlation of clean data in real time constantly updates the profiles of audiences. Hence, it prevents companies from wasting AdSpend by allowing them to customise advertisements that increase the website’s CTR (Click Through Rate).

While CDPs have originated from DMPs or CRM data systems, they are vastly different from one another. Well then, how are they different?

 

CRM: Customer Relationship Management

CRM is a method for managing a company’s interaction with current and potential customers. This is through storing and analysing data about past interactions manually.

Since CRM is not received in real time, customer profiles are not updated regularly and can give marketing teams a myopic perspective of their audience. Moreover, an outstanding flaw in CRM data systems is that they are unable to integrate data entirely, projecting a limited view of customers.

On the other hand, CDPs stem from CRMs like customer service, POS/transactional, social media, email and website analytic platforms to formulate an individual customer profile. Consequently, data is unified and federated to downstream tools.

DMP: Data Management Platform

DMPs collect data from different sources and then categorize and classify that data. It subsequently segments the data so that marketers can target customers. Ultimately, DMPs help companies understand which advertising and marketing materials resonate with their audience most.

Unlike CDPs or CRM, DMPs can only store third party data. This means that there is no PII present as all its data are anonymous. Instead, it utilises cookie information (which has a lifespan of 90 days), device information and users’ IP addresses to track its users as a whole.

However, with the strengthening of data tracking software such as Enhanced Tracking Protection in Firefox Content Blocking and Google Chrome’s Online Tracking Protection, third party data regulation is particularly stringent to safeguard the privacy of users.

So, what will happen to DMPs then? They will be negatively impacted as data appears to be more short-lived because cookies will clear more quickly. As such, it will be increasingly hard to stitch together data from visitors who interact with websites.

Overview comparison of the functions of CDP versus DMP and CRM

In conclusion, it is most definitely challenging to decide which platform to leverage on in order to boost advertising in digital marketing. Strategies are needed to be calibrated in detail for companies to capitalise on such intrinsic software.

Overall, it depends on the goal of your company to increase profitability through various market centric strategies. Still unsure of which platform you need to generate the best customer experience? Get in touch with our consultants at Appmonz who can provide insightful advice for platform assessment and implementation! Give your company the digital transformation it deserves!