The Downfall of Data Management Platforms (DMPs)

We’re in an era where privacy matters to customers more than ever, and cookies are on their way out. This shift is shaking things up for everyone in the advertising industry.

77% of industry folks and 75% of publishers say they’re ready for a world without cookies and identifiers.

IAB, State of Data

But actions speak louder than words. Advertisers are ignoring the almost empty cookie jar and continue using outdated tools like data management platforms (DMPs).

Breaking Free from DMPs

DMPs, once the rock stars of the digital world, have become obsolete because their heavy reliance on third-party identifiers and digital signals has rendered them ineffective and unreliable. The market has already taken a hit with a 50 to 60% drop in signal fidelity from third-party identifiers, thanks to moves by other players like Apple (iOS & Safari) and Firefox.

That is to say; if companies are still clinging to their DMP, they are being left behind. Already, major brands are sunsetting their DMPs, and even industry-leading DMP vendors such as Adobe, Salesforce, and Oracle have started phasing out their DMPs due to these industry changes.

Best Practices in a Post-DMP World

Sunsetting DMPs is not just a trend but a necessary response to the evolving data and consent-first landscape. It’s time to embrace new strategies that save time and resources, prioritize data privacy, and comply with new regulations. In doing so, companies can position themselves for long-term success in the new privacy-first era. 

Build a First-Party Data Foundation

Brands that continue to depend on third-party (3P) vendors for activation will find it difficult to navigate the post-cookie world. Cultivating direct customer relationships—that is, capturing consented first-party (1P) data—is the only way forward.

Establishing a first-party data foundation allows brands to gather valuable information, including customers’ behavior, actions, and interests, directly from their website visitors with their permission. This data collection involves obtaining personally identifiable information (PII), like a person’s name or email address, and durable identifiers, like device IDs, which enable consistent user recognition across platforms and devices, allowing brands to convert these anonymous browsers into known customers. Simply put, first-party data helps marketers tailor their content, services, and products to meet their customers’ needs more precisely.

Additionally, there’s a level of control and compliance that comes with focusing on first-party data. In a landscape that’s increasingly aware of and sensitive to data privacy concerns, first-party data is gathered with direct consent from customers. So, companies not only satisfy regulatory requirements but also foster a higher level of trust with their consumers.

Embrace Alternative Data Management Solutions

Tailored to the changing landscape, the below data management solutions focus on using customer data to enhance marketing efforts, improve segmentation and personalization, ensure compliance with privacy regulations, and provide valuable analytics and actionable insights. These solutions empower companies to better understand their customers, optimize their marketing strategies, and drive business growth in a privacy-conscious manner. 

Here are a few potential solutions advertisers can use today:

• Customer data platforms (CDPs) integrate various online and offline data—be it from a loyalty program, point-of-sale (POS) system, or email tool—and consolidate customer data to help brands gain valuable insights in the post-DMP era. Companies can access a complete view of the customer base, giving companies a better overall picture of their customers. Advertisers can then target audiences across channels and campaigns and improve personalization capabilities for websites and campaigns. As a result, companies enjoy improved returns on investments (ROI).
• Customer relationship management (CRM) systems manage interactions with customers and prospective customers. Unlike DMPs, which track both registered and unregistered audiences of a company’s digital media and advertising, CRMs strictly monitor registered audiences (prospects, loyal, and churned), making them more compliant with privacy regulations.
• Data clean rooms (DCRs) are controlled environments that allow companies to match their first-party data with anonymized data from another company or platforms like Google and Facebook. Because DCRs allow companies to view only aggregated data, it provides a privacy-conscious way to find and use customer data for targeted advertising and analytics.

Understand Primary Activation Channels

Most companies use social media platforms like Facebook, Instagram, and TikTok or search engine advertising through Google or even direct email marketing campaigns for advertising to customers. By understanding the channels commonly used by the companies, marketers will know the type of datasets preferred by these platforms, allowing them to optimize the data collected, managed, and used. Understanding these channels will also help them know where their customers are most active, enabling better targeting.

Explore Cookieless Media Buying

Much of the media space still heavily relies on cookies for media buying; however, the industry is gradually exploring alternatives to provide more effective and privacy-conscious ways of reaching audiences. These include:

• Contextual targeting targets ads based on the context of the website or content instead of relying on individual identities. This way, advertisers can deliver relevant ads to consumers without relying on cookies for personalization.
• Identity-free or cookie-free audience targeting is an emerging solution to enable audience targeting without relying on cookies or individual identifiers. These solutions aim to provide effective audience segmentation and targeting while respecting user privacy.
• Walled gardens, such as Meta or Tiktok, have their own robust data sources. Brands can leverage the data within these closed ecosystems to target and engage with their audiences effectively.
• Retail Media Networks (RMNs) are advertising platforms owned and operated by retailers that allow other brands to promote their products or services directly within the retailer’s digital websites or mobile apps. Using first-party customer data, retailers offer targeted advertising opportunities to brands, facilitating effective engagement with a relevant audience. Retail media networks provide a measurable and targeted advertising channel for brands while enabling retailers to monetize their digital assets.

So, What Does the Future of Data Management Look Like?

Google recently reiterated its plans to deprecate cookies and further said 1% of Chrome users will no longer have cookies beginning in Q1 2024, which means advertisers cannot sit back and relax. Being proactive rather than reactive is key. Looking ahead, the future of data management necessitates a shift towards embracing a first-party data strategy, innovating new media purchasing approaches, and understanding the implications that will surface with the phasing out of third-party cookies.