What is a data management platform?

A data management platform (DMP) is a software tool used to create profiles of anonymous people while also storing and sharing their data with relevant organizations and users. It can be used to collect, organize, and activate first-, second-, and third-party audience data gathered from various sources.

Virtually everything customers do online, either on a website or mobile app, produces data that can be collected, analyzed, and stored to facilitate business decision making and planning. The data can be stored and employed to establish effective business strategies and improve customer conversations using a data management platform. Essentially, DMPs collect critical digital data with customer consent, such as customer data, including cookie IDs, mobile identifiers, and campaign data.

While DMPs are the backbone of many organizational data-driven decisions, they do not independently manage customer data. Instead, they are nexus technologies that link data sources and content delivery and interact with both. Thus, the DMP functions in the “middle” to derive targeted advertising and personalization initiatives, including follow-up ads that involve products related to customers' online activities and interactions.

How do data management platforms work?

Stage one: data collection

The operations of a DMP begin with the help of aggregate data from first-, second-, and third-party sources used to create detailed customer profiles. The compiled information is then organized and formatted into a single view to make it easy for organizations to understand the insights gathered about users and target customers.

First-party data is the data that an organization owns and collects directly from its customers. It can be used to collect data from specific behaviors, actions, and interests. This includes all data collected directly from the customer with their consent. It can be gathered from the organization’s customer relationship management (CRM) system and subscription data. In addition, companies can collect free data from online surveys and customer feedback.

Users can perform various methods to collect first-party data, including:

  • Tags, using tag manager to track website pages
  • Cookies through cookie synching
  • Pixel tracking

Second-party data includes purchased data from a company that directs, owns, and gathers information from its audience.

Third-party data is the data purchased from companies that collect data from various websites and platforms that generate it. In this case, the companies are data aggregators rather than original collectors.

Data management platforms allow organizations to leverage such first-, second-, and third-party information for a range of purposes.

Stage two: data segmentation

The next stage is data segmentation. This involves organizing data according to various classifications. In this stage, organizations use the DMP to divide and group similar data based on various parameters to enhance their operations. An organization's goals determine the segmentation taxonomy, allowing users to focus on specific target elements.

Stage three: data analysis

Data analysis involves data modeling to identify information that may be helpful for business decision making. In this stage, the DMP uses the gathered and segmented data about past user activity on-site, events, and impressions such as clicks, preferences, and reactions to ads. The data in this phase can be processed to create clearly defined customer profiles for personalization and targeting in use cases such as marketing and advertising.

Stage four: data transfer

After gathering, segmenting, and analyzing data, the DMP transfers it to the ad exchanges, Demand-Side Platform (DSP), and Supply-Side Platform (SSP) for implementation by users.

A data management platform supports the continuous discovery and organization of valuable information for more intelligent targeting and personalization.

Why is a data management platform used?

A DMP is used to optimize opportunities created by digital technologies. The emergence and adoption of information processing technologies, such as big data analytics and artificial intelligence, have increased the demand for data-driven decision making and approaches. Therefore, data management platforms are critical tools for leveraging and employing data in business decisions by facilitating an accurate creation of customer profiles.

Use case scenario: marketing and retail

Marketing departments and retail operations can benefit hugely from implementing a data management platform.

Targeted advertising allows organizations to deliver relevant content to specific audiences based on collected user data and digital footprints, including on-site activities, behaviors, and preferences. With data management platforms, companies can collect and analyze data needed to specify the audience and target their interests to increase the possibility for sales and future engagements.

Data management platforms also support organizational initiatives to deliver personalized experiences, with product and content recommendation suggestions for customers. The insights gained using information processing tools enable organizations to focus on the audiences' interests and needs. For example, retailer platforms use a data management platform to recommend products similar to what the customer had previously viewed or interacted with. These personalized experiences are critical in building relationships with customers.

Why an organization needs a data management platform

All strategies generated in a modern business should be based on data, making data processing tools vital for business success and growth. As a company grows, the amount of data collected increases, and its management becomes complicated. A data management platform becomes essential in handling this data and ensuring that it is accurately and effectively integrated into business processes.

A data management platform is a tool explicitly focusing on managing customer data. It is dedicated to processing various data (internal and external) using appropriate algorithms that can be organized into unique profiles needed to segment the company's audience. The processed information is helpful in decision making and ensures that a company's business approaches are customer centered.

A data management platform also centralizes the management of customer data. The centralized data solution makes it easier to access and analyze relevant data for better design, targeted, and optimized business operations. There are multiple benefits associated with storing and managing customer data in a centralized system, including:

  • Increased capability to manage customer information across various devices
  • Integration of all customer data from numerous sources, with no silos or missing information
  • Enhanced capability to prevent data leakage with established partners
  • Maximized data assets across all organizational sectors
  • Optimized business strategies to improve customer experiences

Data management platforms offer multiple opportunities to improve business operations related to engagement and dealing with customers. It enables the employment of data-driven strategies that lead to practical solutions and approaches to business ideas and problems. Therefore, business owners and organizational management should adopt data management platforms to achieve a competitive advantage.

Benefits of data management platforms

Unifies data and brings down silos

Data management platforms allow companies to gather all the data collected from different sources and business partners into a single platform. This unification provides companies and their teams a cohesive view of their customers, facilitating data-driven strategies.

Helps find new markets and customers

The use of second- and third-party data allows companies access to diverse data from various markets worldwide. The data management platform may have audience extension technique features that enable organizations to identify and target new customers and audiences. For example, these features can be used to determine potential customers' general interests, demographic data, and purchasing intentions that can be optimized to expand a company's customer base.

Provides continuous results

Data management platforms are not a one-off solution but a continuous reporting solution. As a result, the tools provide data for constant, long-term strategizing. Such ongoing results identify the campaigns and strategies that are working and those that need additional improvements. Thus, the tool can be used for consistent evaluations and improvements to ensure that a company's plans, systems, business processes, products, and services match consumers' and markets' current needs and demands.

Provides audience insights through the data management platform analytics

Data management platforms integrate big data analytics and machine learning algorithms that collect and analyze data on audience composition, demography, interests, and purchasing intentions. These disruptive technologies match user profiles and fill the gaps to create a 360-degree customer view to create more appropriate campaigns and relevant messages to customers. As a result, the data management platform can be used to enrich the customer relationship management system by using data related to existing and potential customers and audiences.

Challenges of data management platforms


Before the data management process begins, it is essential to ensure that all the needed data sources are connected. The ultimate goal in this process is to provide the steady transmission of data from multiple sources without any disruptions that can undermine the accuracy or effectiveness of the connection. Maintaining this connection across all sources poses a challenge and a significant threat to the reliability of the process.

However, this challenge can be overcome by ensuring that all sources meet system requirements and are compatible with one another. For example, the adopted software applications, such as Data Virtualization or TIBCO EBX, should use similar data formats and have the capacity to work together without being altered to do so.

Dealing with scalability

A data management platform is as good as its scaling capability—data management functions in an interconnected system where data is collected from multiple sources. Therefore, many events and actions happen on sites and apps, and all this data must be managed. If the data management platform is incapable of handling these large amounts of data, trouble ensues.

One potential solution to the data management platform scalability issue is using a cloud platform. Most cloud services offer automatic scaling features that can be leveraged to ease the scalability challenge in data management.

Data storage

While the focus of the data management platform is to manage data, it is critical to determine appropriate storage solutions. The data collected and analyzed must be stored before and after use. An infinite stream of incoming data is constantly gathered, processed, segmented, and transferred across the system. In addition, there is data that is active in use, and other information used and discarded. All these different data types must be stored safely, which can be a challenge.

There are two potential solutions to the data storage challenge: owning a server network or maintaining the data in cloud storage. Cloud storage offers a more cost-effective approach since companies only pay for used space and offer an ultimate backup.

Data management platforms versus customer data platforms

Data management and customer data platforms are used to adopt data-driven strategies. A data management platform captures data from first-, second-, and third-party sources to create a single unified source. Its primary objective is to capture data from different silos of user interactions and analyze it to make it activatable and extensible.

On the contrary, a customer data platform (CDP) is software that gathers and unifies first-party customer data from various sources to establish a single, systematic, complete view of individual customers. A customer data platform (CDP) as a data collector streamlines an organization's data platform and centralizes its customer information infrastructure. For example, it integrates customer data to make it accessible in case of an inquiry.

This means that while a data management platform can expand to new markets due to the unification of first-, second-, and third-party data, a customer data platform (CDP) primarily focuses on unifying first-party data.

Customer data platforms can draw data from data management platforms and customer relationship management systems and send it back. Therefore, the three systems work together to provide valuable functions and data for effective business decision making and marketing. For example, while data management platforms drive new prospects and lead them to the organization, a customer data platform helps connect and engage with these prospects. In addition, the customer relationship management system helps manage and maintain an ongoing relationship with these prospects and customers.

A data management platform could be the business advantage needed

Implementing and using a data management platform is an efficient, streamlined way for an organization to increase sales and improve profitability. Connected, consented data is vital in modern business. A DMP provides this, with the ability to connect organizations directly to their customers across a range of devices and platforms. Enriching customer data using a data management platform is just the beginning of a beautiful relationship that increases sales, while respecting customer data.

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