Why DMPs are the keystone of data-driven marketing

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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.



Jeremy Mason
Jeremy Mason June 15, 2012 at 1:39 AM

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!

Rick Castro
Rick Castro June 14, 2012 at 5:55 PM

Great insights, Josh. Seems the space is evolving quickly along with the DSPs.

Mark Patron
Mark Patron June 14, 2012 at 2:48 PM

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

Jonh Martin
Jonh Martin June 13, 2012 at 1:01 PM

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?

David Dowhan
David Dowhan June 13, 2012 at 12:08 PM

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.

Tim Messier
Tim Messier June 12, 2012 at 11:48 PM

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.

Jeremy Mason
Jeremy Mason June 12, 2012 at 10:39 PM

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

Chris Brinkworth
Chris Brinkworth June 12, 2012 at 8:18 PM

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?

Troy Lerner
Troy Lerner June 12, 2012 at 3:22 PM

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