On the Internet today, each action users perform leaves a digital footprint. Every click, website visit, or viewing of content can be recorded, categorized, and analyzed by advertisers to enhance their campaigns and set their customers off on a marketing journey.
For that to happen, however, we need large amounts of data. Collecting and categorizing it manually would take ages, if not decades, so the marketing world has come up with a solution: Data Management Platforms or DPMs for short. Merging the processes of collecting, analyzing, and transferring data, these software tools have become an indispensable asset for both growing and already established companies.
In this post, let’s dive further into the inner workings of DMPs, their additional benefits and features, and various reasons why you should implement them into your ad campaigns and strategies.
What is a Data Management Platform (DMP): The Dissection
“A system that collects and analyzes large amounts of data from given sources to build customer profiles” would be the best DMP definition. Of course, the actual process involved in accomplishing that is much more complicated.
There are a large number of DMPs available, each boasting their own unique features. Still, on a basic level, they all need to go through several steps before becoming the ultimate marketers’ tool.
How Does a DMP Work?
Step One: Feeding The Data
DMPs and data are inseparable; the former just can’t operate without the latter. The more data points available on the platform, the better the results it will produce, and advertisers should take full advantage of every available source they can gather the data from. DMPs encourage all data types, including:
- First-party: The company collects the customers’ information itself. This can include apps, user feedback, surveys, website cookies, website tracking information, subscription statistics, device information, data collected from CRMs, locations, and even social media sources. It is by far the most reliable data a company can provide to its DMP, with the amount depending on how many customers the brand interacts with. This type of data also provides the best insights for targeting and personalization since it is collected directly from your customers.
- Second-party: A brand can form an information sharing agreement with its suppliers or partners to receive their first-party data. Alternatively, second-party data can also be bought from partners to expand horizons and make the DMP more accurate. Either way, this type of information can greatly enhance the data management platform due to the numerous ways of gathering large sets of useful data points. It may not be as perfect as first-party, but it makes up for it in sheer numbers.
- Third-party: Bought or collected from data aggregators like social media platforms, this data is used to patch holes in your DMP’s accuracy or to analyze the potential increase in scale of your campaigns. It is mainly used to either discover new audiences or improve targeting, and it is usually acquired in large uncategorized data sets. Third-party data is still very useful, as information is collected from several major websites at once, giving a perspective on users’ interests and behaviors en masse.
As soon as the data management platform receives the information, it combines it into a simple and organized format. From here, advertisers are able to search for insights and decide on targets, but the journey is still far from over.
Step Two: Splitting The Data
The next logical step is segmenting all of the newly acquired data into categories. Since the data gathered can tell advertisers everything about their customers, including their age, location, interests, and buying habits, DMPs can create user groups with these criteria in mind.
Here is a quick example. If you are trying to target young male gamers from the U.S., a data management platform may help to create that category by taking age bracket, interests, website visits, gender, and geography into consideration. With these parameters all set up, you will be able to see data that corresponds to the target group, make a broad category, and then utilize it to make that category fit into the same ad campaign.
The data can be categorized in all sorts of ways to create targeted groups, and it is up to the organization owning the DMP and its needs to choose the parameters. The segmented data not only helps to create customer groups and understand their needs but can also be further used in DMP’s operations.
Step Three: Analyzing The Data
With the information collected during the first step and sorted in the course of the second, the data management platform can now go on to create entire user profiles by modeling their behavior.
This time, DMPs mainly focus on user activity instead of their characteristics. The task is to analyze users’ interactions with ads, such as clicks, CTR, impressions, conversions, and even reactions to the viewed ad. Compiling that data into one complex block, data management platforms are then able to build comprehensive accounts of customers, which can then be used to personalize the experience and precisely target a specific demographic.
This data can also be used to build theoretical images of potential customers by extrapolating the information received. This is especially useful for advertisers as a means to predict the scale and success of their future campaigns.
Step Four: Sending The Data
DMPs are not something that advertisers or marketers themselves usually build and employ; these are software tools maintained by large organizations that can be accessed to receive customer data for marketing purposes. As a result, even if it collects personal data, it is never shared with advertisers, keeping customer profiles sterile and anonymous to avoid misuse and legal trouble.
Marketers usually receive data from DMPs through middlemen like ad exchanges, digital marketing platforms and channels, DSPs, and SSPs. These services supply advertisers with any data they could possibly need for their campaigns but do not disclose any sensitive information like names or addresses of exact individuals. For example, geolocation tags will allow advertisers to campaign in precise zip codes, but further information will be obscured.
At this point, the information funnel from the data management platform to the advertiser is complete. From now on, the cycle will start over with the DMP collecting, segmenting, analyzing, and sending the data to platforms again, each time providing marketers with even more targeting options and opportunities.
Our DSP platform, BidMind, works only with the most secure and regulation-compliant DMPs on the market to ensure effective targeting. Contact us to learn more about our partners and available functionality.
The Essential Solution: Why Companies Need A DMP
For smaller brands with moderate user numbers, data management is not a huge obstacle. But as your company grows, collecting and analyzing all the incoming data will not only become a complicated task but will also eat away at a significant amount of time that could be used for other projects. A data management platform will take care of it programmatically, solving other issues along the way. The bigger your business is, the more indispensable DMPs become.
Here are several examples of tasks they help solve.
- Connecting the data
A data management platform is the perfect place to accumulate all your hard-earned data and connect it in a straightforward way. Be it from partners, public sources, social media, on- or offline, a DMP will summarize the whole of your campaign and client data for you to explore marketing opportunities. When working with large amounts of information, it can be hard to manually make connections, and DMPs will reduce this workload.
- Preventing data leakage
DMPs also work as safeguards. In digital marketing, data is everything, and malicious actors actively try to steal customer data from companies to use it in their own illicit ways. By storing the user’s information on a data management platform, you are protecting your brand and your customers from fraudsters’ attacks. Since all of a DMPs’ data is centralized in one place, it is easier to implement robust security features and encryption.
- Preventing missing data
Data silos, or, in other words, isolated and inaccessible information, can become a pitfall for growing companies. By connecting their sources to a DMP system, marketers can prevent that from happening and ensure that their data is updated in real-time without missing valuable information. It will also become easier to work with, as no data source will go unnoticed.
- Optimizing marketing campaigns
With large amounts of available customer data, it is easy to see how data management platforms can become a very useful asset in advancing ad campaigns to the next level. Providing knowledge both about customers’ reactions to your advertisements and their needs, DMPs are fundamental to enhancing conversions, impressions, and response rates.
- Scaling the campaigns
The constant feedback loop of receiving and analyzing information allows the DMP to help advertisers increase their reach and see the potential of their campaigns. It can be hard to estimate the scalability of your project manually, but the programmatic solution can instantly provide a large number of customers with profiles that match your target demographic, increasing brand exposure and impressions along the way.
- Managing advertising costs
Data management platforms help to build a user profile that would be a perfect target for the marketing campaign. Consequently, these very profiles provide a great number of opportunities for understanding your audience and personalizing your ads. In turn, successful personalization routinely shows a massive increase in ROI, with 70% of marketers seeing return on investment increase by up to 200%.
- Improving customer experiences
Normally, DMPs are connected to DSPs that serve ads to customers. Since the latter have recently focused on using machine learning and AI algorithms, they can analyze the customers’ behavior to serve them the most appropriate ads at the perfect timing. This not only increases CTR and conversions but also provides users with the best experience without interrupting their everyday flow.
- Adapting your company for programmatic advertising
As we move through 2023, one thing is clear: the future of marketing lies in programmatic advertising. By the end of 2021, programmatic had taken up 72% of all display ad spend, and this number has only grown since then. As machine learning advances and algorithms become more sophisticated, more and more marketers will focus on software solutions such as DMPs. If you want to stay ahead in the marketing world, turning to programmatic advertising is one of the most obvious pathways.
Features That Should Be Included With A DMP
There are dozens of DMPs available for your use, and it may be hard to make the right choice. Ultimately, it depends on the scale of the business and your individual needs, but there are some regular features you should look for in any platform that is worth its salt.
Integrate Your Data
A DMP means data. It relies on constant inputs, and your choice should include getting the data from as many sources as possible. A good DMP will support all first-, second-, and third-party data, as well as offline and probabilistic data, and will be able to sort it into user segments and discover profiles.
Build Your Audience
Modern DMPs can utilize existing data to model prospective user profiles and discover new audiences. With this feature in your hands, increasing brand exposure and finding new targets will become easier, and the performance of advertising campaigns will be greatly improved.
Reach Audience On Multiple Devices
Omnichannel marketing is taking the marketing world by storm, and DMPs should be able to help you take advantage of it. With established user profiles and data points like the devices users use to visit your websites, the data management platform of your choice should be able to provide opportunities for cross-device targeting and reach expansion.
As your brand grows, its data management platform will receive continually larger amounts of data, funneling them through multiple sources at once. All user reactions, events, and clicks must be registered and constantly sent through, but if your DMP breaks under the pressure at the most inconvenient moment, it may spell doom for your campaigns and data. To keep DMP up and running , you should look for scalable solutions, preferably hosted on cloud services that can take on the increased workload indefinitely.
Store Your Data
Similar to the above, being able to store huge amounts of data is one of the cornerstones of DMPs, and an inability to do so will leave you with no live-time updates or precious marketing discoveries. Again, cloud platforms will be the best solution, featuring storage scalability, optimal costs, and regular backups.
Secure Your Data
The more protected the DMP is, the fewer headaches marketers will experience. Since you are working with customer data, any breach in security can be a big reputational and financial hit for your brand. Look for data management platforms that feature multiple layers of protection like multifactor authentication, permanent backups, and data encryption. Since DMPs centralize all data in one place, you should look at them like strongholds that should be protected at all costs.
DMP: The Tool Of The Future
Right now, programmatic solutions are taking over the digital marketing world. It is the primary way to best connect with customers, improve operations, raise conversions, and increase sales. Advertisers are already striving to implement the latest bits of technology, like machine learning and AI algorithms, to reach their customers even more effectively.
Data management platforms are the backbone of this movement. They improve data analysis and operations on every level, regularly rewarding advertisers with even more information to work with. With the amount of customer data doubling every two years, it is already unimaginable that you’ll be able to process all of it without programmatic solutions. With over 20% of the U.S. advertising budget spent on acquiring and analyzing data, DMPs are already in huge demand, and they will only keep growing from now on.
Data management is the future of online advertising. If you want to stay ahead of your competitors, a DMP will become the perfect vessel for you to stay afloat in an ocean of data.