The best Data Management Platforms (DMPs) compared

Data Management Software Definition: What is a Data Management Platform (DMP)?

A Data Management Platform is essentially a central database. Here, predominantly personal information or user data is collected, analyzed and stored in the long term. Corresponding facts can then be used for different processes. The focus is often on optimizing online marketing campaigns. The use of data can be divided into the following three segments.

1. Processing of First-Party Data: First-Party data are information that companies collect or own independently. This includes facts that are available on their own website, in an online shop or in a CRM system.
2. Processing of Second-Party Data: These are data owned by other partner companies with whom one's own company cooperates or exchanges information.
3. Processing of Third-Party Data: This refers to information that is acquired from specialized agencies or other third-party providers. These data include, among other things, facts about search queries or information from market research analyses.

By centralizing such data on a Data Management Platform, a uniform and holistic view of (potential) customers is provided. A good data management program continuously collects relevant information, evaluates it and compares it. Based on corresponding reports, marketing and advertising strategies can be planned more effectively and new customer groups can be discovered and precisely addressed.

In addition to customer acquisition and retention, a Data Manager tool can also process important information for sales, product development and human resources.

Why should companies use a data management tool?

Data are valuable raw materials today: Just like the earth, the online world has a lot to offer. Companies can gain real treasures from user activities there, which can then be further processed for driving different processes. In this case, it is not oil, copper or sand - it is information that we all leave behind when we use the internet on a daily basis.

These are of great importance especially in marketing. Without them, or in case of a deficiency, production processes or engines, such as lead generation or digital advertising, do not run at full power - to continue the raw material analogy. Who are our customers? What are their expectations like? What needs, challenges or even more serious problems do they have? Companies that have detailed answers to these and similar questions can make perfectly tailored offers to their target customers. The term "offers" can be applied here to a wide range of services - from product recommendations, support in the purchasing decision and support services, to product adjustments or specifically coordinated job offers. Data processing is becoming increasingly relevant for companies in all sectors. A Bitkom survey of more than 500 German companies with 50 or more employees provides very interesting figures on this:

• 85 percent of the companies surveyed say that the use of data is of great importance today.
• 91 percent are convinced that data will have significantly more relevance in the future.
• The vast majority of companies use data in some form internally - only eight percent refrain from it entirely. However, the information is mostly used exclusively for simple analyses.
• A good 48 percent analyze data to assess existing customers. But it is only 35 percent who try to win new buyers with the help of information.
• Product development is based on data for 18 percent (both in terms of goods and services).
• Only 12 percent use data to develop new business models.

The discrepancy between the requirements and advantages of comprehensive data usage known on the company side and their meager realization results in enormous unique selling proposition potentials in many sectors. In order to be able to use these or comply with the general current must-haves of data processing, companies need a strong technological basis.

As large and diverse as the quantities of data that can be used advantageously today are, so too is their collection, evaluation, and further processing. Data management software greatly simplifies the relevant work through centralization and automation.

How does data manager software work?

There are indeed various types of DMPs with different functions. For example, corresponding platforms can primarily be designed for the processing of first-party data and/or the use for marketing purposes, in publishers or in HR management. Regardless of the focus of a Data Management Platform - in the end, it is always about collecting information and making the most of it.

The commissioning and use of a Data Management Platform usually takes place in several steps, which are similar from solution to solution.

1. First, the system is integrated into the programs or sources through interfaces over which information is to be collected.
2. The data management software can then start with its core work. It queries information and unifies it in specific profiles.
3. The latter are then enriched with all available information and are finally available to other applications.
4. Via the profiles and related analytics and reports, those responsible for different departments can develop precisely segmented strategies and ensure that maximally relevant actions take place in each of the business areas.

There are enormous possibilities for DMP data analytics and direct data transfers from such a platform.

Simply by looking at past purchases, those responsible can capture very meaningful facts about the needs or desires of their target customers. The more data that is included in an analysis, the more detailed the possible insights are, of course: navigation data, search queries, reactions to advertisements, etc. lead to a comprehensive picture of one's own target group(s). This can ultimately greatly boost the efficiency of marketing, sales, support and/or product development.

Direct data transmission to other systems can achieve effects - if desired - also in real time. A typical functional example for this can be found in digital advertising.

Before the bid for the display placement, information on the target group of the respective advertisement is obtained in the Data Manager Platform. The data transmission happens in fractions of a second, whereupon a connected advertisement software (Demand-Side-Platform - DSP) immediately and data-based decides whether to bid on the available media or not.

What are the advantages and disadvantages of a management platform for data?

With the help of a Data Manager Platform, companies can meet the current requirements of competitive data usage in the first place. It significantly supports the efficiency and ultimate effectiveness of corresponding processes.

These are already very substantial advantages. The following summarizes which benefits in detail are associated with this and are also apparent. Since DMPs are mainly used for marketing- and sales purposes, the focus here is on these application contexts. However, corresponding advantages can easily be transferred to other areas as well.

• Maximum Personalization: With a DMP, customer segments can be created based on various information. This includes demographic data, interactions on websites, engagements in social media, or clicks in emails. By capturing and evaluating such facts, perfectly fitting campaigns can be created and played out for certain target groups or even individual customers. With the right software stack, this is even possible automatically.

• Increased customer satisfaction: Various studies suggest that nowadays about 80 percent of all internet users expect a personalization of the online communication. When a company uses data-driven marketing and sales measures and therefore sends advertising, messages, support, etc. to its typical customers, which are perfectly tailored to their profile or their preferences or needs, this normally means a significant plus in customer satisfaction.

• Optimizing costs and improving ROI: The detailed segmentation of marketing- and sales activities increases the probability of purchase because target customers feel better understood and are generally more satisfied. This in turn has a positive effect on the ROI. Corresponding measures, since they are so precisely tailored to the recipients, almost always hit the mark directly. There is hardly any loss of coverage.

• Building Customer Loyalty: By strongly segmenting marketing and sales, typical customers get the feeling that their wishes or needs are really understood by the respective company. This alone significantly increases the chances of increased loyalty towards such brands. Data-driven developed and subtly loyalty programs drive corresponding potentials to the peak.

• Rapid response to changes: Customer expectations and marketing as well as sales must-haves are changing faster than ever today. The reaction speed to such developments is crucial in order not to fall behind the competition. A Data Management Platform can facilitate corresponding tasks by analyzing and applying information in real time. This way, decision-makers have the opportunity to make informed decisions based on the most current status.

• Compliance with the GDPR: An additional but major advantage of a DMP is that the application can help to comply with GDPR regulations around user information. For example, it is possible to subject the collected facts to an anonymization process automatically. Data Management Platforms from Germany, in particular, are strong in such and similar data protection applications.

As with virtually any software, there are also certain disadvantages to using data management tools. The typical challenges are the following.

• Complicated Onboarding: DMPs are indeed quite complex systems. There are many possible data sources, areas of information and functions. This can pose a considerable challenge for teams when learning. Furthermore, DMPs may quickly require additional features in the course of rapid technological change, which then again, and often at very short notice, need to be used securely. All this involves considerable effort.

• Integration of Information Sources: Data Manager Platforms require specific sources of information to function. A DMP is usually not able to collect data completely independently but must be combined with other technologies that then feed information from websites, CRM, social media, etc. This makes setting up a data management software quite complicated.

How do you choose the right software for data management?

Data Management Platform is not the same as Data Management Platform. The market offers various systems for different specialist areas and with numerous functional gradations. This naturally makes determining a suitable solution extremely difficult. The following summarizes the most important selection factors to facilitate the research process.

Data collection One of the primary considerations when choosing a DMP is the processing of the data. Decision-makers should ask themselves what type of data the system needs to be able to collect and how this should be organized and processed? Most Data Management Platforms can collect First-Party data from all possible sources - including online, offline, and mobile content.

If easy access to information from Third-Party data is also desired, a close look at corresponding compatibilities should definitely be taken early on. Also, it needs to be clarified what the onboarding requirements for data look like, with which systems the DMP must be integrated and to what extent automations are necessary or desirable here? The DMP should be able to collect the required data as efficiently and accurately as possible.

Profiling and Analysis Once the data is collected in a DMP, the next step is to gain insights about the target group and carry out analyses. Decision-makers should definitely find out which analysis options the respective system offers before deciding on a Data Manager Platform.

Are there sufficiently detailed reports that users can export to share with other company employees? How finely does the solution create profiles - and can it do most of the work automatically or do employees need to intervene?

Scalability Decision-makers should make sure that the Data Management Platform provider of their choice is able to capture and export data across all channels currently and expected to be used in the future.

Is the DMP flexible enough to send data to any other relevant software? Or are users perhaps restricted only to certain channels chosen by the provider? How flexible are the APIs?

Choosing a system that is not only flexible to use today but also flexible to use in the long term means managing data efficiently and sustainably. It is crucial to avoid having to switch to another solution when requirements change.

Demand-Side Platform Integration A Demand-Side Platform (DSP) allows companies to place bids for ad spaces (Ad-Inventory) across multiple exchanges. Since the integration or the processes available with it represent a special strength of data management software, this is listed separately here.

Practically all companies strive to store user data and segment it in order to push the personalization of marketing and communication with their (potential) customers. The export of data from a DMP to an existing DSP is of crucial importance for the competitiveness of these marketing processes. The combination of DMP and DSP ensures that ads can be played out very accurately and absolutely cost-efficiently.

Therefore, especially entrepreneurs who want to operate (or intend to operate) digital advertising should look for data management software that enables easy exchange of information between the two systems.

What does data management software cost?

The prices for DMPs vary greatly. How inexpensive or expensive a solution becomes depends largely on the respective range of functions.

Open-Source DMPs can sometimes even be used completely free of charge. Even providers who do not rely on an open-source license sometimes offer data management freeware. However, the functionality is often so limited in these cases that these solutions are only conditionally usable in business.

It is not uncommon for the same Data Management Platform provider to have several price plans that can then be selected to suit the respective business requirements. Therefore, the question "How much does a DMP cost?" cannot be answered across the board.

Nevertheless, here are some guidelines: A well-equipped Data Management Platform quickly costs around 1,000 Euros per month. But the prices - depending on the features - reach up to 6,000 Euros monthly and higher. How much needs to be spent depends in particular on the following factors:

• Installation services
• Number of target group segments
• Data usage - First-Party, Second-Party and/or Third-Party data
• Third-Party data sources possibly included in the tariff
• Number of users
• Contract term (monthly contracts - if available - are more expensive)