DMP

277 Comments / Programmatic Advertising / By Content Team

Data Management Platform (DMP):

In today’s data-driven world, businesses are constantly collecting and analyzing vast amounts of information. However, the sheer volume of data can be overwhelming without an efficient system in place. That’s where Data Management Platforms (DMPs) come into play. In this comprehensive guide, we’ll explore what DMPs are, how they work, their benefits, and how they can revolutionize your data management strategies.

What is a DMP?

A DMP is a centralized customer data warehouse that brings together information from all advertising channels, platforms, and touchpoints. It can aggregate data from first-party sources (such as your website, app, CRM, or email), second-party sources (such as your partners or affiliates), and third-party sources (such as data providers or publishers).

A DMP can sort and segment the incoming data based on various criteria, such as demographics, behavior, interests, location, device, or purchase intent. It can also enrich the data with additional insights from external sources or AI models.

A DMP can then activate the data by sending it to other platforms in the programmatic ecosystem, such as DSPs (demand-side platforms), SSPs (supply-side platforms), or ad exchanges. This allows you to use the data to target and reach your ideal audience across multiple websites and apps.

The types of data DMPs collect include:

First-Party Data

First-party party data is information gathered straight from a user or customer and is considered to be the most valuable form of data as the advertiser or publisher has a direct relationship with the user (e.g. the user has already engaged and interacted with the advertiser).

First-party data is typically collected from:

Web and mobile analytics tools.
Customer relationship management (CRM) systems.
Transactional systems.

Second-Party Data

Second-party data is essentially first-party data from a different company and much less common than first- or even third-party data and. The information is initially collected in the form of 1st-party data and then passed on to another advertiser through a partnership agreement, which then becomes second-party data.

For example, a website that sells sporting equipment (let’s call them All Sports) may partner up with a website that promotes sporting events (we’ll call them Half Time). When a user visits All Sports, a cookie is created. This cookie is then given to Half Time and is used to target ads to the user.

Third-Party Data

Over the years, 3rd-party data has received a pretty bad rap, mainly due to the number of privacy concerns it raises.

However, this type of data is still regularly used by marketers to help reach and target their desired audience — even though it isn’t considered as valuable as 1st- or 2nd-party data.

3rd-party data is collected from a range of different sources and sold on to advertisers and used for audience targeting.

How to Use a DMP in Programmatic Advertising

Programmatic advertising is the automated buying and selling of digital ad inventory, using data and algorithms to optimize campaigns and reach the right audience. It offers many benefits for advertisers and publishers, such as efficiency, scalability, transparency, and personalization.

However, to make the most of programmatic advertising, you need to have a solid data strategy. This is where a DMP (data management platform) comes in handy. A DMP is software that collects, organizes, analyzes, and activates audience data from various sources, enabling you to create and run highly targeted ad campaigns.

In the section below we will explain what a DMP is, how it works, who uses it, and why you need it for effective programmatic advertising. We will also share some best practices and tips on how to choose and use a DMP for your marketing goals.

How does a DMP work?

A DMP works in four main steps: data aggregation, data arrangement, data analysis, and data allocation.

Data Aggregation

The first step is to collect data from various sources and store it in the DMP. The data can be either structured (such as numbers or dates) or unstructured (such as text or images). The data can also be either anonymous (such as cookies or device IDs) or identifiable (such as names or emails).

The DMP can use different methods to collect data, such as:

Tags: These are snippets of code that are embedded in your website or app to track user behavior and interactions.
APIs: These are interfaces that allow different platforms to communicate and exchange data with each other.
Batch uploads: These are files that contain large amounts of data that are uploaded to the DMP at once.

Data Arrangement

The second step is to organize and categorize the data in the DMP. The DMP can use different techniques to do this, such as:

Normalization: This is the process of standardizing the format and structure of the data to make it consistent and comparable.
Deduplication: This is the process of removing duplicate or redundant data to avoid errors and inefficiencies.
Segmentation: This is the process of dividing the data into groups based on common characteristics or criteria.

Data Analysis

The third step is to analyze and interpret the data in the DMP. The DMP can use different tools to do this, such as:

Reports: These are summaries of the data that show key metrics and trends.
Dashboards: These are visual representations of the data that show charts and graphs.
Models: These are mathematical formulas or algorithms that use the data to make predictions or recommendations.

Data Allocation

The fourth step is to activate and use the data in the DMP. The DMP can use different methods to do this, such as:

Integration: This is the process of connecting the DMP with other platforms in the programmatic ecosystem, such as DSPs, SSPs, or ad exchanges.
Export: This is the process of sending the data from the DMP to other platforms for targeting or measurement purposes.
Optimization: This is the process of adjusting and improving the data based on feedback and results.

Who uses a DMP?

A DMP can be used by different players in the programmatic ecosystem, such as:

Advertisers: Advertisers use a DMP to collect and analyze data about their existing customers and potential prospects. They use this data to create audience segments and personas that match their campaign objectives. They also use this data to target and reach their audience across multiple channels and devices with relevant and personalized ads.
Publishers: Publishers use a DMP to collect and analyze data about their website or app visitors. They use this data to create audience segments and profiles that match their inventory. They also use this data to sell their inventory to advertisers at higher prices and with more transparency.
Media agencies: Media agencies use a DMP to collect and analyze data about their clients and their target markets. They use this data to create and execute media strategies and plans that optimize their clients’ campaigns. They also use this data to measure and report on their campaign performance and ROI.

Why do you need a DMP for programmatic advertising?

A DMP is essential for programmatic advertising because it helps you to:

Understand your audience: A DMP gives you a comprehensive and holistic view of your audience, based on data from multiple sources. You can learn who they are, what they do, where they go, and what they want. You can also discover new audience segments and opportunities that you may have overlooked or ignored.
Target your audience: A DMP allows you to create and activate audience segments that align with your campaign goals and KPIs. You can use these segments to target your audience across multiple channels and devices with relevant and personalized ads. You can also use these segments to exclude or suppress unwanted or irrelevant audiences.
Optimize your campaign: A DMP enables you to monitor and measure your campaign performance and results. You can use this data to optimize your campaign in real-time, by adjusting your budget, bids, creatives, or targeting. You can also use this data to test and experiment with different variables and scenarios.

How to choose and use a DMP for programmatic advertising?

Choosing and using a DMP for programmatic advertising can be challenging, as there are many factors and options to consider. Here are some best practices and tips to help you:

Define your goals: Before you choose a DMP, you need to define your goals and expectations for programmatic advertising. What are you trying to achieve? Who are you trying to reach? How will you measure success? These questions will help you narrow down your options and select the best DMP for your needs.
Evaluate your data: Before you use a DMP, you need to evaluate your data sources and quality. What kind of data do you have? Where does it come from? How reliable and accurate is it? These questions will help you determine how much data you need, how to collect it, and how to clean it.
Integrate your platforms: Before you activate your data, you need to integrate your DMP with other platforms in the programmatic ecosystem, such as DSPs, SSPs, or ad exchanges. This will ensure that your data is synced and updated across all platforms, and that you can target and reach your audience effectively.
Test and learn: Before you scale up your campaign, you need to test and learn from your data and results. You can use different methods, such as A/B testing, multivariate testing, or control groups, to experiment with different variables and scenarios. This will help you optimize your campaign performance and ROI.

A DMP is a powerful tool for programmatic advertising, as it helps you collect, organize, analyze, and activate audience data from various sources. By using a DMP, you can understand your audience better, target them more precisely, and optimize your campaign more efficiently.

However, a DMP is not a magic bullet that will solve all your problems. You still need to have a clear strategy, a quality data source, a reliable integration partner, and a continuous testing process. Only then can you make the most of programmatic advertising with a DMP.