Programmatic Advertising Overview: What is a DMP?
6 min read
Programmatic advertising is increasingly dependent on data management solutions like DMPs. A successful marketing campaign relies on knowing which users to target and when. Furthermore, publishers can gather more in-depth information about their users using DMPs.
Quick Overview: Programmatic Advertising
In the past, digital advertising campaigns were carried out with a method known as the delivery order method, which proceeds via e-mail between the publisher and advertiser parties. Over time, with the growth of digital advertising volume and the increase in the number of advertisers and publishers, the process became complicated and unsustainable with human power. As a result, the term programmatic advertising came into our lives. Programmatic advertising, which allows the buying and selling of ads to take place faster, more efficiently and more securely, has made a big difference in its lifetime.
What is Programmatic Advertising?
Certain platforms of advertising technology are used for the realization of online advertising buying and selling. It manages the dynamic process transparently, quickly and accurately, supported by algorithms and software. Since the process is performed programmatically, error rates and possible time losses are minimized.
Programmatic advertising collects information from user browsers (cookies, IP, pixel tags), analyzes this information, including behavior and preferences, and enables targeting. The increasing level of relevant advertising enables the ads to reach the most targetable audiences, improves the visitor experience, and offers great opportunities for brands to reach potential customers by boosting engagement rates, developing marketing strategy and creating brand awareness. This greatly increases the market share of programmatic advertising in the digital world.
How does it happen?
It takes place between the publisher which has the inventory and the advertiser or ad network party who wants to buy the online space. The platforms bring together broader audiences of publishers and advertisers. The goal is to provide the perfect match environment for efficiency. In short, it consists of SSP (Supply-Side Platforms), Ad Exchange, DSP (Demand-Side Platforms) and DMP (Data Management Platform).
What is a DMP (Data Management Platform)?
In today’s world, where the number of people actively using the Internet has reached 4.66 billion, a user spends an average of 7 hours and 29 minutes on the Internet a day. This creates millions of potential customer opportunities for programmatic advertising parties. The amount of data generated by people online shopping, browsing the internet, listening to music, chatting, or hanging around on social media is enormous. For advertising parties who want to direct their ads or inventories to certain user behaviors and interests, this data is gold.
These parties use a type of software system called a DMP to access this wealth of information. DMP is an AdTech platform that lets advertisers, brands, agencies or publishers sell advertising by capturing, storing, reporting, organizing, and exporting data from online, offline, mobile, or various other sources alongside improving targeting, finding similar users, and expanding their audience. DMPs are also the main component of data-driven marketing concept.
How DMP Works
There are 3 different types of data that DMPs collect:
First Party Data
Data you collect directly from your target audience or customers. It includes minimum cost as it is collected in house in an organization. The sources of this data can be CRM systems, websites or user behavior analysis tools on mobile applications.
Second Party Data
It is the first-party data of another company. The collected data is obtained directly from the company that owns it as first party. The second-party data is similar to the first-party data, but this time the data comes from a different source, allowing you to reach new audiences. It can be gathered from sources such as social media, websites, and customer surveys.
Third Party Data
It is the kind of data purchased from sources other than the original owner. Data is collected from external sources in the first stage. Following that, the data is divided into many different categories such as age, gender, industry. Each category is once again divided into segments so the buyer can choose the relevant segment to purchase. The pricing is usually fixed for CPM(cost per mille)
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Normalization, Organization and Enrichment
Prior to using the collected data, the data must be organized in a common format compatible with the DMP. Collecting ID from cookies, deleting unnecessary data; enrichment of data with additional aspects such as geographical location, operating system, browser takes place in this step. This process allows tracking, analysis, classification and transfer of data from a single standard location and improves data quality.
Classification and Audience Building
In the classification process, each user’s data is analyzed and divided into different user profiles. The classification can be made on demographic characteristics such as users living in United States or female users between the ages of 18–24, as well as on user habits such as male users who frequently buy shirts online. DMP lets one select users who will be included in an audience, and those who will be excluded. Hence, the grouping of similar and related data creates a crystal clear target audience.
According to independent AdTech companies, this process is much easier on platforms such as Google and Facebook, because the user performs all his activities by logging in with a certain e-mail and password, thus the identity of the user is clear. In DMPs, the purpose of this process is to eliminate duplicate IDs belonging to the same user by adding a common identifier. It is quite common for two profiles to contain the same identifier, the common identifier being an email address or a cookie ID. When this happens, the DMP should merge the profiles.
All 3 interactions are owned by the same user, but DMP doesn’t realize that the first two cookie IDs represent the same user until the 3rd interaction arrives.
This step is basically receiving and storing the collected data. Although the process may sound simple, challenging part is the large size of data stored and preventing data loss.
Data activation means that audiences created in DMP can be seamlessly transferred to DSP and SSP platforms. In short, it is activation by using data. DMP must have the necessary integrations and APIs (Application Programming Interfaces) to facilitate this process.
Attribution is determining which touch points a user interacts with before taking the action determined by the publisher or advertiser. With attribution, advertisers can understand which touch points are most useful and make improvements to their campaigns.
Advertisers can use DMP to target an audience with similar characteristics to a target audience. Look-alike audience modeling is most effective when used with second- and third-party databases, since its main purpose is to find new audiences. Therefore, this modeling is done by DMPs that collect data from many different sources. As an example, look-alike modeling can be used by an e-commerce store selling camping gear to gain new customers. The advertiser can use DMP to create new audiences by identifying attributes that match their existing audiences, such as location, interests, purchase history.
Types of DMPs According to Usage Areas
It is the most common type of DMP used by advertisers such as agency or brands and it allows advertisers to manage first-party data. Thus, it helps to create, optimize and analyze campaigns that reach more accurate users.
Used by website or mobile application owners for the purpose of organizing and managing the data of users interacting with the inventory owned by the publisher. To create new strategies previously obtained user data is reviewed and retargeted. Publishers can open their data to third-party marketplaces for sale, or use it to develop their own campaigns or site strategy.
Data drives every step of the digital advertising process. Programmatic advertising is increasingly dependent on data management solutions like DMPs. A successful marketing campaign relies on knowing which users to target and when. Furthermore, publishers can gather more in-depth information about their users using DMPs.