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What is the difference between a Customer Data Platform and a Marketing Automation Platform?
14 December 2020 8:36am
Good customer experiences start with good data. Great customer experiences start with great unified customer data. Many moons ago, customer data was recorded on cards and stored in a filing cabinet. When the time came to send information to customers, these records would be taken from the filing system and the addresses of the customers that were to receive the communication were transferred to the envelope or leaflet. Today, in online advertising, essentially this process is the same except that customer data is stored online and the retrieval and application of the data is automated.
Data Management Platforms
The arrival of the third-party cookie resulted in brands being able to identify online consumers and tailor online advertising experiences to maximise engagement and return-on-investment (ROI). This created an enormous opportunity for technology companies to build solutions that collected this data at scale, and enable marketers to personalise advertising based on anonymous demographic and behavioral data. These solutions were termed Data Management Platforms (DMPs).
Alongside the development DMPs came the arrival of marketing automation tools such as Salesforce Pardot, Braze, and Airship. Marketing automation tools enable companies to send customers automated, customised messages through email, websites, social media and text messages. There are many types of marketing automation tools, such as account-based marketing software, analytics for customer relationship management, campaign management, lead management, email marketing and marketing ROI. One of the key benefits of marketing automation technologies is that they plug into a company's CRM system thus the data used to personalise marketing is based on known customers, rather than anonymous data. The major drawback is that the data is rarely collected and processed in real-time meaning that although the messaging is personalised, it can be irrelevant because it is out of date. Furthermore, marketing automation tools often compress data gathered from online sources because of the sheer amount of data. This reduces the effectiveness of the data as it results in the data stored and activated in siloes rather than across multiple channels simultaneously.
Putting the customer first
As the online advertising industry matured we started to see the emergence of Customer Data Platforms (CDPs), that were often confused with DMPs. Broadly speaking, the goal of both the DMP and the CDP is the same - to enable marketers to personalise communications. The difference is that a DMP does this with anonymous data that typically expires after 90 days (the cookie lifetime).
CDPs create a database of your identified customers using a persistent identifier thus creating a persistent customer profile. That means it stores the data and keeps the history. Then by combining it with all the data about your customers comes out with a single record that can be used for more than just advertising. The main advantages of CDPs over DMPs are that CDPs collect and process data in real-time, they ingest first, second, and third-party data, they activate marketing campaigns rather than just segment audiences, and they apply machine learning (ML) to lead scoring.
A match made in heaven
The good news for marketers is that CDPs are easily integrated with marketing automation tools. This creates an environment in which campaign strategy can be orchestrated and activated which makes workflows more efficient, ensures messaging is based on real-time data, and enables marketers to deliver highly personalised messaging to consumers. The CDP collects the data and processes it creating rules using its ML capabilities and pushes these instructions to the marketing automation platform to action. mediarithmics does this through our universal data marketing platform which spans the entire data marketing value chain. We enable brands and publishers to collect multi-device and multi-channel data (the role of the CDP/DMP), apply this data to programmatic marketing activation (the role of the demand side platform), and personalise campaigns based on real-time scenarios (marketing automation).
For brands this means that the adverts they show to consumers are as up-to-date as possible, as well as being personalised, thus creating the best customer experience possible today. From a publisher perspective the marrying of a CDP and marketing automation tools enables them to maximise subscriptions thus increasing their own addressable audience making them more attractive to brands.
Putting the theory into practice
Understanding the differences between DMPs, CDPs, and marketing automation tools is the first step towards creating the right tech stack for your marketing goals. Fundamentally, all businesses will benefit from each one but the level of performance improvement will come down to how they are integrated. Decision making should be based on three, non-negotiable, capabilities: real-time data use, seamless integration, and customisable ML capabilities. When evaluating different set-ups look for proven examples of customer success, transparent explanations of how the technology works, and a clear strategy for continued development.