During Customer Data Platform (CDP) and Data Lake discussions, I often come across wild assumptions on Data Lake’s ability to solve every problem while CDPs end up being heavily underestimated. In my opinion, neither CDP and nor Data Lake is replacement for each other but a perfect complement to each other. Data Lakes are a key source of data for CDPs while CDPs can help improve the quality and completeness of data in Data Lake. Another key platform in this mix especially for marketers is the Data Management Platform (DMP). I will like to spend some time to answer the DMP vs CDP vs Data Lake question.
Don’t think DMP vs CDP vs Data Lake but DMP+CDP+Data Lake.
If you don’t have the patience to read through all of this article on the difference of DMP vs CDP vs Data Lake, please skip directly to the summary section in the end.
|DATA MANAGEMENT PLATFORM (DMP)||CUSTOMER DATA PLATFORM (CDP)||DATA LAKE|
|DEFINITION||Data Management Platform (DMP) collects anonymous web and digital data. It comprehends information about prospects psychographics and demographics. |
Manage segments of customers with anonymous profiles.
For broadening marketing reach by building segments, audience mining etc.
Capture targeted audience at the right time in the buying funnel through relevant messaging.
Better optimization programs and smarter media buying decisions can be taken based on audience analysis and latest campaigns.
|A Customer Data Platform (CDP) is a type of packaged software which creates a persistent, unified identifiable customer profile that is accessible to other systems. Data is pulled from multiple sources, anonymized, cleaned and combined with third party data, intent data etc. to create a single profile of a customer. |
CDP enables real time activation of omni-channel experience across. CDP data can be leveraged in real time to provide more personalized content and delivery over web, mobile, Email, ABM, Ads etc. CDP data is accessible by external systems and structured to support digital and marketing team needs for experience management, campaign management, marketing analysis and business intelligence
CDP is always a hot storage meaning easily retrievable and live connected to like customer master. CDP doesn’t need technical skills to manage and operate.
|A Data Lake is a centralized repository that allows you to store all your structured and unstructured data at any scale. You can store your data as-is, without having to first structure the data, and run different types of analytics—from dashboards and visualizations to big data processing, real-time analytics, and machine learning to guide better decisions. |
The key focus of Data Lake is to ensure that highly connected data is available to all enterprise systems and functions.
Data lake can have a combination of cold and hot storage. Cold storage for more older data like over 3 years. Data Lake need very technical resources to build and operate it. Data Lakes don’t offer integration with last mile solutions like MarTech solutions.
Data Lake provides ability to understand what data is in the lake through crawling, cataloging, and indexing of data. It always ensures data assets are protected.
Data Lake allows to run analytics without the need to move data to a separate analytics system. Generate different types of insights including reporting on historical data and doing machine learning where models are built to forecast likely outcomes and suggest a range.
Different types of analytics on your data like SQL queries, big data analytics, full text search, real-time analytics, and machine learning are needed to uncover insights. You can create new business models based on historical data and new financial models based on customer behavior, product categories, market data, risks and opportunities
|USERS||Advertising Professionals Ad agencies Marketing (limited)||Digital Marketing Customer Experience Sales (limited)||Data scientists, Data developers, and Business analysts (using curated data) |
|DATA SOURCES & MANAGEMENT||Data is ingested from various client and media sources like marketing analytics, CRM, ad-servers, publisher partners and point of sale (POS). |
Data is also collected from mobile apps, client’s website, as well as other channels that use native apps.
It is then augmented and enriched with 3rd party vendor data; private data exchanges are established.
|First Party Data:|
Marketing Automation Data
Second Party Data
Third Party DataIntent Data
|Data Lake can connect structured and unstructured data available in: |
MDM (Master Data Management) systems
Multiple other critical backend IT and Data systems in an enterprise
Line of Business Applications
Summary and Recommendation on DMP vs CDP vs Data Lake
So how should we use this information on DMP vs CDP vs Data Lake and apply it to your business? DMP can take care of most of your needs if you are only focused on marketing segmentation and advertising. There are many mature products in the market that you can buy and start using immediately. If you have use cases broader than that (I hope so), then you must look into CDP and Data Lake. If you are a CDO, CMO or CIO reading this, you must look into CDP and Data Lake. CDP and Data Lake are both required by every organization as both provide solutions to different problems. While Data Lake brings the data from enterprise together and makes is useable immediately, CDP focused on doing the same for the use cases limited to teams focused on the customer side. These are primarily digital and marketing teams.
If you have a functional Data Lake, you should build a CDP (light) as data lakes are not built to solve last-mile use cases. Your digital and marketing experiences will struggle as you will not be able to utilize Data Lake to full potential. CDP implementation will be lightweight and primarily focus on
- Append digital and marketing specific data that is not available in Data Lake.
- Create customer 360 and build segments for activation
- Connect with last-mile experience and marketing systems to activate the data
If you only have CDP, you should look into building a Data Lake to solve bigger use cases and enable digital transformation in other areas like Sales, Customer Service, finance etc. Data is the blood for a Digital Transformation.
If you don’t have both, you should start at least with CDP as those can build quickly and you can start hacking growth while you build data lakes that can take years in a large enterprise. As I mentioned above, you will still need a Data Lake. Plan to have that in the long term.
More suggested content from some experts in this space
Some additional content from the post on LinkedIn where I got some good feedback from experts in this field:
Most organizations are looking to add CDP to their MarTech stack as they are getting a data lake stood up, leading to parallel efforts and often times the 3rd party CDP (with speed to market) beating the in-house data lake build initiative. Then it gets to be buyer-beware as all CDPs aren't true and good CDPs. It's all about having laser-focused CDP use cases ready to deliver business value and knowing which vendor to partner with to maximize ROI. - Fauzia Chaudhry (Senior Manager, MarTech, Robert Half)
Today’s customer is on at least 5 or more connected device at any given point in time and with this device hopping the expectation is to have the same intimate moments of delightful and seamless experience on all of the channel of engagement and that is where CDP makes an immense impact, especially with privacy and regulations. - Raphy Mathias (Domain Information Officer, Toyota Financial Services)
CDPs are designed from the ground-up to solve both of these problems using AI to make sense of the data, and automation to active data into individual channels. As channels proliferate and customers move to Digital consumption modes, this combination of activation + automation is a must-have to grow Revenue without adding complexity and cost. - Shashi Upadhyay (EVP, Dun & Bradstreet)