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Why DMPs are the keystone of data-driven marketing

Why DMPs are the keystone of data-driven marketing Josh Dreller

Marketers, hear me now. The data management platform (DMP) will soon become the most important piece of technology you own. It is not another new shiny object among all of the clutter of shiny objects in this rapidly innovating industry. The DMP is truly the gateway to the next step in the evolution of digital marketing. It is a layer of technology that will literally touch and enhance every part of your business. I don't say this lightly -- you owe it to yourself to read this article so you can ensure that both you and your career stay relevant in the data-driven marketing era that is already completely transforming your industry.

DMPs, a year later

Last year, I wrote an introductory piece to DMPs which had begun to appear in the technology stacks of data-driven marketers. In that article, "Data management platforms and why you need one," I spoke with several industry experts who explained that in the new world of biddable ad buying, the key to success was being able to identify the most valuable impressions based on knowing as much about the anonymous users on the other side of the screen as possible.

The common use case for the DMP last year was a centralized spot to manage all of the audience data you can access as a marketer. From this data, marketers can build audience segments, which are groups of "cookied" users based on behavior. Some of these segments are first party -- meaning that advertisers can tag their own web properties and build user clusters such as "home page visitors" and "shopping cart abandoners." Pre-built audience segments from data vendors, called "third party segments," can also be purchased and ingested by the DMP. For example, from data vendor Exelate, a cooking site might purchase an audience segment such as "food and wine enthusiasts" to bring into its DMP.

These first and third party segments are then trafficked to various biddable buying systems (i.e., trading desks, DSPs, exchanges, etc.) so that an advertiser can bid for impressions the moment those users appear in these auctions. Right now, there are literally hundreds of thousands of ads flying through these inventory systems every second. This type of transactional buying (usually called RTB for real-time biddable) of display impressions has blossomed quickly. In fact, many experts agree that most ad impressions will be purchased this way very soon -- not just banners, but mobile, video, and even offline when addressable television and digital-out-of home really take-off. If you haven't heard about them by now, you might be living under a rock.

That was a year ago. Today, the community of clients and vendors around DMPs has a vision that greatly eclipses the singular focus of a segment manager role for these platforms. The DMP of the future will literally be the centerpiece of data-driven marketing. Companies will be able to use their DMP to warehouse and leverage huge amounts of data coming from many different sources -- CRM, web analytics tools, ad servers, search marketing efforts, mobile apps, Facebook pages, census data, and offline data. Hell, for some advertisers, being able to know what the current weather is at the user's location will impact how much they're willing to bid for that individual impression.

And DMPs won't be just used for buying ad impressions. DMPs will finally help us realize the long awaited goal of scalable personalized messaging and content. Once the DMP is tied into all aspects of your ad operations, it will not just help marketers to buy the right ads, but it will put the right creative in front of that user. It will also remember those things when that consumer visits the website weeks later.

As David Jakubowski, CEO of Aggregate Knowledge, explained to me, "It's all about end-to-end audience management where the user experience is front and center to the core success of the advertiser. Think about multi-channel campaigns with search, display, social…users are exposed to multiple ads with multiple messages across multiple channels, but when they get to the website, none of those offers are there. The user experience is broken. Our data is telling us that upwards of 20 percent of your campaigns are actually creating negative experiences for your customers. You're not just failing to take advantage of the opportunity to reach users, you're turning them off and driving them to your competitors."

The key to why DMPs are going to be so crucial to marketers is that it will be the connecting platform to all of the previously siloed technologies. "We're building the pipes to all of the most commonly used technologies in the digital marketing industry. DFA, Omniture, trading desks, etc. -- a lot of folks say they can connect the dots but you need a DMP like ours to actually do it," Jakubowski said.

For someone such as Nick Jordan, director of product management at Adobe Systems, integrating Adobe's DMP, the Adobe Audience Manager, to the in-house suite of marketing solutions is a very exciting prospect for advertisers. Current clients already using their flagship analytics product, SiteCatalyst, will find amazing synergies when connecting to the DMP. "Before this integration," Jordan said, "marketers had to architect their audience strategy and them implement. Now, with a platform that can not only bring data in, push data out, and then also bring back feedback in to reset the tactics, there's a new level automation that can bring exponential power which advertisers have never had before."

There's also a huge need to analyze and evaluate the data that marketers can access. Jordan says Adobe is tackling that problem. "Helping to score and vet data to make sense of it all is also very important to the future of the DMP. With our 'Algorithmic Segments' product, for example, you can analyze the visitors who have completed an action and then figure out the unique data points against the general population to find what attributes make up that kind of user. This helps marketers find the next set of users who are like their most important customers. The kind of ROI you can generate from this depth of analysis is off the charts."

Not just for marketers

AudienceScience is a company that has been providing DMP-like services for publishers before the acronym even existed. Jeremy Mason, VP of strategic operations, took me through the history of his company's deep relationships with publishers over the last decade. Audience Science has helped its clients segment and sell behavioral targeting (a term they coined) to advertisers in order to generate more revenue. But the appetite has grown tremendously in recent months.

"Right now, publishers are learning what data can really do," Mason said. "There are sales teams out there that have only focused on the inventory but meanwhile, they haven't tapped into this. So this discussion has really brought to surface the core value that AudSci has been doing for years. A lot of our partners realize with the competition growing fierce, they need to get involved. They're thinking, 'if we can get efficiency out of this then we can make more money.'"

Mason thinks that the rise of popularity of the term DMP has actually been a great catalyst for the industry to move faster towards a data-driven mindset. "Yes, we've been acting as a DMP for literally hundreds of well-known publishers for almost a decade, but only recently have marketers had direct access to this technology. As more clients use their DMPs, there's more of a market for data. With more of a market for data, it funds more product development for DMPs to manage that data. It's an interesting cycle that is snowballing into everyone in our industry -- brands, agencies, vendors, publishers -- to start leveraging data more and more. There's a bright future for what the digital channel is really right for and that's data-driven marketing."

Why agencies should care

One of the most passionate DMP experts I interviewed for this piece was Andy Monfried, founder and CEO of Lotame. For many reasons, Monfried shocked the industry last year when his company shed its longstanding ad network business to focus completely on the technology side. Lotame's DMP, CrowdControl, "offers innovative publishers, agencies and advertisers the most intuitive, user-friendly and feature-rich technology to unlock the value of their audience data."

"Agencies have not done a fully great job of educating data to marketers and they're leaving the door open to tech vendors to teach data to clients," Monfried said. "A lot of time agencies don't have a model in place to handle the imminent intersection of data and media. They don't have the skill set nor the appetite to move in this direction and they could find themselves in a bad place very soon."

But he offers an interesting path for agencies to consider. "You've head of the term, AOR (agency of record)? I use the term TAOR (technology agency of record). These are very different. A TAOR can work in conjunction with an AOR or agency and can feed them tons of intelligence and great audiences interacting with the brand and help the brand win. Agencies are not equipped and do not have the technology to win in this environment. They have bidding engines. They have platforms. Advancement of technology is being sacrificed in trading desks and self-serving for the advancement of agencies."

"When you own a unifying data platform and you bring in a TAOR, it empowers the AOR -- it's okay to have both an AOR and a TAOR -- they're two separate houses." Monfried believes that his company can enable brands, agencies, and publishers to become more data savvy to compete in the new technology driven landscape.

The roadmap

So, where's all of this going? In my article last year, I spoke with one of the recognized thought leaders in this space, Omar Tawakol, CEO and founder of BlueKai. Last year, he outlined the core feature set that made up the basics of a DMP, which at that time was mainly focused on audience segment management. A year later, as the desire for data, biddable ad buying, and DMPs has grown, the scope of how this technology will evolve has become clearer.

"Previously, and still in most cases, the retargeting DMP has been the core business use of these platforms," Tawakol said. "Marketers track and leverage their pixels to buy impressions based on previous behavior of online users. The next step -- and the savviest of marketers have already begun adopting this use case -- is the digital DMP. The digital DMP plugs into many other aspects of the tech stack so that advertisers can drive other things such as dynamic messaging and personalized content. Another example is that they can bring offline data to help guide their measurement methodologies. The DMP begins to become a layer that lets marketers enhance everything they're doing with data."

"What we think the final stage of the evolution will be the Enterprise DMP. This is when companies are able to best leverage data for more than just marketing. Connected intelligence where the answers don't just come from one silo but rather by connecting of all of data you touch -- true business intelligence for large corporations who are competing in a data heavy marketplace. And, to make best use of the data, you need to separate the signal from the noise. To do this, not only are we focused on improving our data modeling algorithms, but we're going to create an open platform to allow our clients to bring in outside, smart algorithms to be loaded in to our system," Tawakol said.


I think most of us thought we were data-driven marketers. But for the most part, what we've really been doing is simply using data as an input for making better marketing decisions. I think a good indicator of that is fact that the 2012 buzzword of the year is "big data." You read it everywhere now. -- everyone's thinking on how best to use big data. Ironically though, the data has always been big. But for marketers, we just haven't had a chance to apply it other than in spreadsheets or individual vendors offering silo'd data-driven solutions.

I'm in agreement with Mason, from AudienceScience, who says this channel is starting to snowball. The business case for the DMP is growing so the product development for the DMP is growing. Data vendors are coming out of the woodwork and a new buying platform seems to spring up every week. The DMP is an important step for the so called data-driven marketers (myself included) to finally put their money where their mouth is and step up to the plate.

Don't be swayed by folks who are telling you this is just a fad. For large advertisers, if you aren't already using a DMP or serious about bringing one in-house, you are simply going to fail at marketing within five years. Your competitors are going to leapfrog you as their media buying and marketing strategies are going to become more integrated, more efficient, and certainly more effective by leveraging data via their DMPs.

Josh Dreller is VP of media technology and analytics at Fuor Digital.

On Twitter? Follow Josh Dreller at @mediatechguy.

Follow iMedia Connection at @iMediaTweet.

"Man posing for sc -fi camera " image via Shutterstock.

As a media technologist fluent in the use of leading industry systems, Josh Dreller stays abreast of cutting edge digital marketing and measurement tools to maximize the effect of digital media on client goals. He has achieved platform certification...

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to leave comments.

Commenter: Jeremy Mason

2012, June 15

For anyone that has any questions about DMPs, or how AudienceScience would answer any of the questions raised in the comments, don't hesitate contacting me. I would be happy to discuss our thoughts and experiences more in-depth!

Commenter: Mark Patron

2012, June 14

Thanks for the great article Josh. Based on how offline developed I'd suggest two types of DMP will develop, prospect and customer databases.

Commenter: Jonh Martin

2012, June 13

but when the data is collected by and based on cookies and clicks, do you really think that's the future? 16% of people are responsible for 80% of clicks on display ads and the average cookie only last 3 days. You're missing out on so much of your audience if this is your only answer. What do DMPs say when someone brings this up?

Commenter: David Dowhan

2012, June 13

Very niece piece Josh. You make a compelling case for needing a DMP to stay market competitive. The future winners will be those companies that figure out how to get the right data into their DMP and apply that critical intelligence layer on top of the data. Competitive advantage will come to marketers who build up highly customized and specific data sets that are directly tailored for their audience segments and the marketing problems they are trying to solve - basic demographics are not going to cut it. Scale and precision of those data assets are the key. DMPs are a critical tool for digital marketing; however a lot of care has to be given to the nature and quality of the data ingested. Otherwise we end up just shuttling a lot of big data from point A to point B, with no real insights, actionability, or results.

Commenter: Tim Messier

2012, June 12

Good article, Josh ... thank you. What often gets overlooked when talking about DSPs is the complexity that arises from trying to leverage multiple disparate data and technology platforms. It's simple to see the power of infusing undifferentiated (secondary premium?) inventory with a marketer's rich audience data. It gets more complex when you put yourself into a publisher's shoes. Publishers have audience, inventory (typically viewed as premium) and data (usually). Finding the perfect recipe that usually also includes the marketer's data, and can be supported by the publisher's technology stack, can be significantly more complicated.

Commenter: Jeremy Mason

2012, June 12

Great content as always Josh. We're proud to be FUOR's DMP, especially considering your expertise in this space!

Commenter: Chris Brinkworth

2012, June 12

Josh - great piece. One question I've never managed to get my head around - is what if I want to 'change out of' a DMP for another one'. Have you discussed this previously with an advertiser/marketer? Is it hard or simple to do? eg, like moving money from one bank to another - or not quite that simple? Just how portable are these tools?

Commenter: Troy Lerner

2012, June 12

Right, but don't the recent announcements from DoubleClick tell us that Google will give us the DMP-- and it will be free?