Do I Need A Data Management Platform?
In this age of data-driven marketing, a data management platform may seem like a logical choice. But we’re not so sure … they can be pricey and there are other ways to analyse your data.
So, this needs further discussion, and we’re happy to oblige. Read on, see what we have to say, then make an informed choice on whether your business needs a data management platform.
What does a data management platform actually do?
This may come as no surprise, but a data management platform (also known as DMP) manages your data.
Admittedly, this is a rather simplistic way of looking at it. Data management platforms are actually a huge part of the data-driven marketing landscape. They’re most commonly used by digital advertising buyers and publishers to manage audience data, including cookie IDs.
So, what do they do? Data management platforms allow you to gather, manage and measure large quantities of data in one place. Think of a DMP as a data warehouse; a central location where marketers can access and manage data from multiple sources to hone their strategies.
Here are a few of the most well-known data management platforms available:
- Adobe AudienceManager
- Oracle DMP
- eXelate (owned by Nielsen)
It makes sense that these data management platforms have been acquired or built by large marketing platform providers (Adobe and Oracle) and data aggregators (Nielsen). These types of organisations can put this technology to use in a way that provides a top-notch service to their customers.
This also means that data management technologies are seeing a lot of investment. In the coming years, we expect to see data management platforms evolve, integrate with AI systems and become increasingly popular. However, they may not always be the right fit for your business – read on to discover why.
How does a data management platform work?
You can break data management platform processes down into three core stages:
- Import – This involves taking information from different systems and organising it at an individual customer level, or a cookie level.
- Find – This stage defines your audience based on the data collected. The data management platform can then find lookalikes by synching cookies from different places. This helps find exactly the right group of anonymous cookies to receive ad or marketing content.
- Distribute – This stage sends instructions based on the ‘import’ and ‘find’ stages to software, such as a Demand Side Platform (DSP), to action findings.
Collecting a lot of precise information from different sources and analysing it effectively leads to greater insights and more effective targeting.
It also enables a much higher level of personalisation for individuals, so it can have a hugely positive effect on an audience.
A key part of this is process is identifying and creating audience segments based on several elements, including:
- customer information
- household income
- past browsing behaviour
- purchasing information
Your data management platform can then analyse segment performance, and optimise a segment’s journey accordingly. The insights obtained can be used to determine which content, offers or information that segment is shown and produce an effective strategy for attracting pre-defined target audiences – hooray!
Nearly three quarters (74%) of online consumers get frustrated with websites when content doesn’t relate to their interests. This is, therefore, a huge step forward in improving the customer experience.
Data management platforms are a popular choice for publishers as they can conduct programmatic ad buying.
As you probably know, advertisers extend campaigns across various sites and apps using ad exchanges, networks and DSPs.
A data management platform brings data from all of these sources together, analyses it and optimises the ad approach accordingly.
If linked to a DSP (software that executes programmatic ad buys), your system will automatically segment and target your audience members. How? Your data management platform will analyse which audiences are performing well or badly, and feed this back to the DSP for optimisation.
So, the big question: Do I really need all of that?
At FABRIC8, we whole-heartedly believe that marketers, publishers and pretty much everyone else should be embracing the power of data.
Data shouldn’t overwhelm or control and it should be easy to manage. That’s why you might think we’d encourage you to invest in a sophisticated data management platform. However, this decision requires a lot more thought.
Here’s how we think data management platforms could affect your business:
In all reality, if you’re a small or mid-sized business you probably don’t need a data management platform. Why?
- You may not have a huge amount of data coming in.
- You may not have many channels feeding data.
- It's very expensive!
- There are lots of lightweight, cheaper analytics tools to use instead (but more on this later).
The truth is, your business is probably not quite ready for a data management platform. In future, when they’re more readily available and can offer more to small businesses, it might be worth it. However, for now, it’s probably best to seek an alternative.
Bigger businesses may have the capital to fund a data management platform, and the traffic to justify the expense. So, it can be worth doing.
However, you need to ensure that the data management platform you choose offers advanced analytics and management services. You will also need to dedicate a team to understanding and utilising this data. Without these elements, you’ll be collecting data for no reason and it’ll just sit there burning a hole in your budget.
What does FABRIC8 say?
If you’re thinking about using a data management platform, build up to it gradually.
You don’t need the full platform first. See what insights you can glean from lightweight alternatives like Mixpanel, Kissmetrics and Amplitude!
Better still, get an agency to manage the process for you! At FABRIC8, we have years of experience analysing user behaviour.
We understand the data and combine it with behavioural psychology to guide business insight. Everything we deliver is actionable, easy to understand and accessible - things most data management platforms are not.
What have we learned?
We like data management platforms. They can really benefit your marketing or advertising strategy.
However, they may not be the right option for your business. Do your research and you’ll almost certainly be able to find alternatives that are cheaper, just as effective, and easier to understand!
You need to seriously consider whether implementing a data management platform is worth the disruption and expense to your business. Ask yourself, do you have the time to run it and the money to fund it?
If not, it’s worth trying something else first. You can always set a data management platform up later if it doesn’t work out.