Back to Blogs
CRMS, DMPS, AND CDPS: SOS! WHAT DO I NEED TO KNOW?
By Aqilliz
Published on October 14, 2020
Today’s consumers are disseminating more information across a vast digital landscape through an array of devices ranging from computers, phones, and tablets. In fact, did you know that the average person generates roughly 2.5 quintillion bytes of data per day? With so many entry points for consumers to consider, modern marketers need to harness this data in order to better understand their customers and build relationships with them. In order to keep up with mounting volumes of data and an ever-growing array of digital modes, understanding the systems that help to analyse, connect, and manage customer data is crucial.
Beyond that, to succeed in the competitive and ever-evolving world of digital marketing, marketers need to keep up with the latest tools, technologies, and systems in order to stay a step ahead. Having different acronyms floating around the crowded MarTech landscape today, it can be difficult to remember what each one represents, not to mind understanding how best to harness them. In this blog post, we are going to unpack three: the CRM, DMP, and CDP.
The lowdown on CRMs and DMPs
Let’s take a deeper look at each of these systems. Customer Relationship Management (CRM) tools were created for the purpose of collecting customer details and account information which can be classified as first-party data. Designed to capture, track, and manage details about customers and prospects during the process of a sale, CRM systems are built to engage with customers and speed up processes.
As the online space evolved and internet-based marketing grew to become one of the most efficient and trackable forms for advertising, Data Management Platforms (DMPs) were created to tap into data generated through anonymous customer identifiers such as cookies, IP addresses, and device information. Used primarily to gather and manage third-party data for effective targeting, DMPs mostly collect website traffic and clicks anonymously, then try to layer in other data points such as point of sale, social, and census data. The key differentiator? Unlike CRM tools, DMPs can only store third-party data that has been collected and shared from an external source, which has no direct connection to the consumer.
CRMs are great for keeping track of customer data such as their preferences, habits, and interactions, allowing you to come up with more efficient ways to market to them. However, one major drawback of the CRM is that it doesn’t have the ability to match and integrate data across multiple channels, which creates a somewhat limited view of the customer. As for DMPs, the foundation they were built on makes it difficult to create a unified view of the customer—since they’re mostly full of third-party, anonymised data.
Enter the CDP
With that, it’s important to recognise the existing limitations of CRMs and DMPs and how this feeds into the realities of today’s disjointed and disparate customer journeys. Simply put, today’s consumers have become accustomed to engaging with companies through multiple channels. Many customers, for instance, use different channels to gather information on products and to make a purchase. As such, customer journeys are not simple and linear, but a series of handoffs between traditional and digital channels that can vary significantly from individual to individual. Without a unified customer profile, you won’t be able to develop a true understanding of what your customer really wants.
In order to fulfil this purpose and to bridge the data gap, Customer Data Platforms (CDPs) were developed to consolidate data from a variety of first-, second-, and third-party data sources across multiple touchpoints, creating a truly unified, single view of the customer across the entire customer journey. Even better, CDPs were built with the marketing function in mind. Designed to provide marketers with more intelligent ways to engage, retain, and improve customer relationships, CDPs can help optimise ad targeting and complement your marketing efforts by leveraging things like predictive analytics and machine learning.
With the ability to connect all types of data from multiple sources—including personally identifiable information (PII) such as name, email address, and phone number—CDPs can build customer profiles in a way that allows you to form a much more comprehensive understanding of your customers as individuals. This can help inform consumer behavioural analysis and construct identity graphs, enabling you to market accurately and effectively, with a specific customer in mind.
If that’s the case, does this mean you should just forget about CRMs and DMPs? No, definitely not.
Rather than choosing between these systems, marketers should understand the key differences between each one in order to know which solution would best suit their specific needs. The easiest way to differentiate between CRMs and CDPs is that the CRM is generally used for sales and managing relationships with customers, while the primary purpose of a CDP is for marketing and unifying customer interaction data from a wide range of sources. DMPs are most commonly used to serve advertisements and enable retargeting with the use of cookies, and they focus more on anonymous segments and categories rather than single customers like with CDPs.
Why does it matter?
All of these systems—DMPs, CRMs, CDPs—provide data that underpin marketing campaigns, website ads, website content, and sales funnel activity. Ultimately, they all share the same goal: to collect valuable data from customers in order to know as much about them as possible. But not all data is created equal.
Amidst growing privacy concerns, as well as the increased demand for authentic interactions with brands, third-party data is quickly falling out of favour. On top of that, Google’s plans to phase out the use of third-party cookies in the next two years means that third-party cookies will soon lose the data portability that provides the cross-site tracking and targeting which powers the existing advertising ecosystem. This is a sign that brands and businesses are progressively shifting their priorities to first-party data which, essentially, is the best type of data to collect and use because it comes straight from your audience. The move to first-party data also demonstrates an increased commitment to privacy and the customer experience, with more emphasis placed on personalised targeting and one-to-one brand building.
However, on a broad scale, all of these infrastructures pose a core flaw: the inability for collaborative sharing. Each one is limited to integration within an enterprise, leading to limitations when businesses are working together on the same set of consumers and their data points. This in fact can lead to legal issues further down the line under regulatory frameworks such as the European Union’s General Data Protection Regulation which stipulates that joint controllers (or two businesses working together) are held fully accountable when GDPR violations take place as they both decide the purposes and means of a given data collection activity. According to the GDPR’s article 30 which touches on Records of Processing Activities (ROPA), all processing activities—spanning categorisation, the purpose of processing, as well as the list of data recipients, are subject to stringent documentation requirements. This points to the need for greater transparency, provenance, and accountability in future infrastructures.
As first-party data continues to come to the fore, brands and publishers need to work together as a collective whole, in order to fully maximise and harness the potential of consumer data. Rather than operating within closed ecosystems and data silos, we believe that collaboration needs to be at the core of the future of the digital marketing industry. To bridge the gap across different brand and publisher ecosystems, a decentralised data sharing layer needs to exist in order for data to be shared and managed across different brands and publishers.
Aqilliz is doing precisely this through Atom, the underlying hybrid blockchain infrastructure that runs through our suite of offerings. With Atom, brands and publishers can benefit from the security and scalability of a private blockchain, allowing all data processing to take place in a secure environment while benefiting from the accountability and decentralisation of a public blockchain, effectively bringing the walled experience in a trusted environment. For the purposes of reconciliation and provenance, brands and publishers will be able to maintain an end-to-end view of the entire history of given data points with a full view of how, when, and for what they were used, on an immutable ledger.
In 2020, the days of generically using data in marketing are long gone—today’s digitally-savvy consumers don’t just want personalisation: they expect it. As the world grows increasingly connected, advertising has to adapt to become even more customer-centric and laser-focused. With so much data out in the digital universe, the right infrastructures cannot only offer greater efficiency or accuracy—in an increasingly privacy-conscious environment, accountability and compliance now needs to come first.