Are DMPs facing Existential Crisis in a Cookieless world?
A Data Management Platform (DMP) is another software platform to find and acquire new customers, through the collection and management of data. Though CDPs and DMPs are quite parallel and analogous to each other, they have different roles. Unlike CDPs which focus on known customers, DMPs mostly work with anonymous data collected from cookies or any other channel. DMPs mostly used 3rd party cookies for storing personal identifiers. It is important to note here that DMPs used 3rd party cookies only because they existed and provided a consistent and scaled approach to access information across websites, not because it was the sole source of data storage. Further, since they mostly used anonymized data, DMPs were unable to create 360-degree customer view like CDPs, thus reducing the extent of personalization.
The first generation of DMPs saw transformation of contextual digital traffic to create customer segments for audience targeting. In audience targeting, digital advertisers created correlation between a prospect’s web surfing activity with his/her behavioral attributes, stored these identifiers in cookies, and used the cookies to target advertisements in websites where the customers hadn’t visited before. But, with the increase in utilization of smartphones and social media, cross-device and cross-channel tracking became imperative. However, ID matching across channels and devices remained a challenge for Data Management Platforms.
The next generation of Data Management Platform tried to integrate 1st party, 2nd party and 3rd party data to provide a holistic view of the customer. However, with the ban on 3rd party cookies and limitation of storage lifecycle of cookies in general, interconnectedness between channels became an issue. Further, privacy regulations enabled customers to control the tracking and usage of their data. Against this backdrop, it became imperative for DMPs to evolve to avoid getting disconnected. The impact of these external changes on various DMP use cases are as follows –
Personalization — There will be a significant increase in use of authenticated traffic data for creating personalized on-site or in-app experiences. Authenticated traffic is based on a collaborative ecosystem where individuals allow publishers to use their data for creation of valuable content and experiences. Through authentication, individuals provide control over their data and can opt out if needed. Authenticated traffic replaces the usage of third-party cookie for tracking and addressability. There will also be a decrease in usage of unrecognized traffic data.
Reaching Known Customers — With the exchange of data via cookies becoming difficult, publishers are creating their own versions of walled gardens with the authenticated audience data they collect when customers access their content. This also acts an alternative to the walled gardens of web browsers which were created to safeguards consumer’s private data and which publishers were forced to cede control of. These walled gardens which are now being formed by alliances will see an increase in demand for segmentation, retention and organic growth of sales from advertisers. The key to surviving in the cookieless world for advertisers is to form tighter relationships with the publishers who collect first-party data which advertisers can leverage.
Prospecting — Publisher direct media buying will regain its lost market share from programmatic buying including retargeting. In a cookieless world, advertisers will want to get specific customer data which could help them form better target segments and increase the conversion rates.
The major challenge for DMPs in the cookieless world is to stay relevant by providing advertisers a consistent, protected and scaled connection between various data sources and platforms. Publishers need to leverage first-party cookie data and innovative sharing models to replace the ban on 3rd party cookies. The new data management platforms will integrate both CDP and DMP use cases to provide a unified governance approach. This real-time CDP or CDMP, as many marketers have termed it, will use both anonymous as well as known customer data.
