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what is a DMP and what is it for?

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Data is the great challenge for advertising today. The rapid and continuous evolution of Big Data, Business Intelligence and Machine Learning has "forced" companies to reinforce their technological and analytical environment. We have more information than ever about users, but this same amount of information makes it difficult to process raw data and obtain value from it. One of the solutions to this problem are the DMP or data management platforms.

what is a DMP?

A Data Management Platform (DMP) is a technological tool for managing user data, which aggregates and centralises different types of data that come from actions on different channels, generating information about the right audiences for different advertisers.

The DMP works in a simple way, although its internal processes are driven by complex and innovative technology. In short, the Data Management Platformcollects data from a variety of sources, including both internal and external sources, and stores it in an orderly fashion, according to a set of criteria established at the time of its configuration.

The operation of DMPs is based on three steps:

  • Data collection: This may include data collected directly by the advertiser itself, by third parties, from cookies or from other sources.

  • Data processing: All collected information is sorted to produce consistent audience segments.

  • The audience segments created by the DMP are used to make buying decisions in a matter of seconds.

So the DMP will help us to create a segmented database that can be used later to target specific users, and detect quality audiences, i.e. it will help us to see the commonalities between different audiences and measure the results to impact those who are not yet customers.

At its core is the ability to integrate and centralise data types, coming from various platforms, channels, devices, providing a complete view on users, then select relevant data and classify, organise and segment it, and activate it for its advertising partners.

what types of data are there and who does it belong to?

There are 3 types of data that can be obtained and used with a DMP:

  • First party: data collected by the company itself, the company is the owner: navigation data, data from mobile applications, CRM. As this is the advertiser's own data, it is the most valuable. It refers to its own customers or users who have reached its digital spaces. In addition, obtaining this data is cheaper.

  • Second party: data resulting from cooperation or collaborations between companies. These are data from online campaigns and the customer journey. They are the same data as above but do not refer to your brand but to a specific source. They are obtained when an advertiser gets in direct contact with a publisher and obtains the data from that particular publisher. This type of data is interesting when there are synergies.

  • Third party: provided by data providers, there are markets on this. This is data from sources external to the advertisers. It is usually data that is purchased. Therefore, great care must be taken in its implementation. Depending on the companies, the data will have been obtained with different processes. This type of data is usually more expensive and, moreover, of less value than the previous ones.

As users, we may decide to give our data to a company or platform that we are using, but for them to then send our data to another company to show us advertising is a different matter altogether. This is a perspective that needs to be taken into account when choosing the approach to data management.

If we are doing programmatic advertising we need to be very aware of where our data is coming from and make sure that the DMP informs the owners of the information how it gets the data and who it shares it with.

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Advantages of DMPs and example of use

DMPs can bring multiple benefits to advertisers, such as:

  • The ability to process large amounts of data quickly.
  • A better understanding of your target audience, through behavioural insights from multiple sources.
  • Improved advertising effectiveness- by targeting exactly the right audience, ads achieve more conversions.

DMPs are a very powerful technology that on paper brings very attractive advantages for advertisers and online advertising agencies. A Data Management Platform allows you to leverage programmatic ad buying and apply a layer of automation to the buying of online advertising space.

This is something that many inbound marketers may be tempted to use to improve their bottom line, but it faces an uncertain future due to two major challenges: the GDPR and the ban on the use of cookies.

  • The GDPR has imposed strict limitations on what data can be used in advertising and how it must be collected, limiting the sources of data collection that fuel the operation of DMPs.

  • On the other hand, Google has already announced its intention to ban cookies in its browser, Google Chrome, from 2022. This further limits the possibilities for collecting information about users and may render DMPs permanently obsolete.

are the new digital advertising models the key to achieving benefits for both the industry and the customer? If advertisers manage to create value and offer the customer a product for which they are willing to pay, it generates trust, we will obtain information on the goods or services that most interest them. That is why many Spanish companies are betting on this system to build loyalty and optimise the purchase cycle of their customers, thus guiding them through the whole process.

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