Data Management Platforms (DMPs) are declining in effectiveness and efficacy. But the DMP’s diminishing usefulness is not so much a problem with the technology itself; rather, it’s a reflection of the changing landscape where DMPs operate. DMPs began as an essential tool for marketers to help them gain insights into unknown audiences, which they can still do well. The problem is the rise of privacy concerns, changes in data regulations, and original equipment manufacturers (OEM) lockdowns have made available audiences and insights much more challenging to find. And when these limitations impact functionality to the point that they're no longer effective, brands naturally turn to other solutions. Customer Data Platforms (CDPs), which use first-party data to create a single source of customer truth to fuel data strategies, are emerging as the solution that makes the most sense in the new data environment.
Of course, the decline of DMPs is wrapped up in a much larger story about wider changes to the marketing world: the deterioration of third-party data and the rise of first-party data.
DMP vs. CDP
The biggest difference between DMPs and CDPs is that the former deals more with third-party data, and the latter is built to focus on first-party data. Both technologies can work with both types of data, but it's a matter of which kind it works with best. In practice, this means that DMPs are tied to a deteriorating asset, since they collect a large part of their data by scraping cookies across the web. Although third-party cookies haven't been fully retired yet, the quality of their signal for identifying and reaching customers is steadily decreasing.
And while DMPs can incorporate first-party data, they rely on onboarding processes that take days or weeks to bring offline data into the platform (for example, from point of sale transactions), so there's always a severe lag between customer interaction and media reaction.
As mentioned above, DMPs also work best for marketing to unidentified customers. But nowadays, collecting first-party data is much easier and more common than it was before, which means companies are more likely to deal with known customers. So, understandably, more people are turning toward CDPs, which are better suited to that task.
The DMP final countdown
In the early days of online commerce, people didn't pay as much attention to data privacy or the potential invasiveness of digital marketing. But as consumers grew more aware of their data rights, they started to take issue with the non-consensual collection of their data. In response, OEM and browsers like Apple and Mozilla started to limit and disallow cookies on Safari and Firefox before heavyweight Google announced in 2021 that Chrome would phase them out (the date has since been pushed back to 2024). To put into perspective how wide-reaching privacy concerns are now, every iPhone now asks that every IOS app request permission to track user activity.
Then the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR) were introduced, along with data privacy laws in Virginia, Colorado, Iowa, and Utah (to name a few.) These give customers more control over their personal information and regulate how organizations collect and use data. Unfortunately, these restrictions, coupled with users growing savvier over the use of their customer data, have begun to affect the third-party ecosystem tech stack, heavily impacting ROAS. (Despite these worrying challenges, 88% of brands still use the third-party cookie ecosystem.)
All these changes are having a massive effect on the effectiveness of DMPs.
And it’s worth noting that DMPs are not the only technologies impacted by the declining fidelity of third-party data. To put it plainly, any tool that heavily relies on third-party data or other consumer-focused data collection mechanisms, like data service providers, on-boarders, and identity graphs, has been affected by the increased regulation and consent-driven approaches.
The hottest party of the year: First-Party
These landmark changes mean technologies running on third-party cookies or other collection mechanisms will soon be hobbled, leaving brands dependent on third-party data scrambling to find alternatives to fill the data void. A workable alternative to the eroding third-party data ecosystem is first-party data, functionally the new currency for consumer brands. With third-party data’s decreasing accuracy, data directly collected and owned is the most trusted and reliable source to fuel growth. First-party data doesn’t only charge up marketing and advertising; it also powers analytics, customer care, data science, and more. Brands are also growing more aware of the rich opportunities that come when they invest in first-party data and work with a tool purpose-built for it, like CDPs — specifically platforms with powerful identity resolution capabilities to solve the essential targeting and insights piece of customer data, instead of only focusing on campaign orchestration. (Side note: That’s why we built Amperity that way!)
Boosting acquisition with highly accurate data Quality data will boost audience reach, match rate, and help identify the most valuable customers for building lookalike audiences.
Removing time lag Direct connectors to the ad ecosystem reduce reliance on third-party platforms, giving marketers more autonomy and agility while cutting costs and risk.
Direct activation to ad platforms Allows brands to connect directly to top advertisers and send audiences without the need for a DMP or onboarder, cutting fees by 50-60%.
Reducing wasted ad spend When brands target real people, not customers anonymized by a code, they can suppress audiences with lower return and save dollars.
Future-proof your data
Get ahead of the erosion of the third-party ecosystem by working with a first-party data provider. Brands should have complete control over their customer data and access a unified customer view they own, not rent from a third-party system whose results they can’t trust. All the cool kids are stepping away from DMPs and reducing reliance on their onboarders. Don’t get left behind! If you need more convincing, here are some incredible results brands who’ve implemented a first-party data strategy with Amperity have achieved:
Brooks Running: 49% increase in conversion rate in paid social
Wyndham: 60% increase in conversion rate due to personalized communications both in email and paid media for the first time
Seattle Sounders: 34:1 increase in ROAS on social media spend by using targeted first-party audiences and personalized offers
If you’d like to learn more about what Amperity can do for you, get in touch.