CDP vs MDM

25 Feb 2024 » Opinion , Platform

This is a post I have had on my list for quite some time and today I thought it was high time I wrote about it. If you do a quick Internet search, you will see that this topic is very popular, with hundreds of results. I will not repeat what others are saying. Instead, I will provide my point of view with the aim of clarifying what each acronym is and is not. I know there is some confusion about these terms.

Definitions

According to Gartner:

Master data management (MDM) is a technology-enabled discipline in which business and IT work together to ensure the uniformity, accuracy, stewardship, semantic consistency and accountability of the enterprise’s official shared master data assets. Master data is the consistent and uniform set of identifiers and extended attributes that describes the core entities of the enterprise including customers, prospects, citizens, suppliers, sites, hierarchies and chart of accounts.

and

A customer data platform (CDP) is a marketing technology that unifies a company’s customer data from marketing and other channels to enable customer modeling and to optimize the timing and targeting of messages and offers.

I have chosen these definitions as they do not come from a technology vendor, but from a 3rd party that analyzes the market. Each vendor has a slightly different version of the definition to promote their own product capabilities and my hope is that Gartner should be less biased.

Before I continue, I want to highlight two terms: discipline for MDM and marketing for CDP. More on them later.

Similarities

The main commonality between the two concepts is that both relate to data, lots of data. MDMs and CDPs ingest data from multiple sources, stitch it together following a given set of rules, and output the processed data for other systems to use. Within both data sets, there will be customer data.

And this is as much as I can say about similarities.

Differences

As you will see in the next sub-sections, there are many more differences than commonalities.

Concept

I already mentioned it above: an MDM is a discipline, not a tool. Sure, many tools offer MDM functionality, but MDM goes beyond the tool and the technology. A tool on its own cannot guarantee that all users of MDM share the same definitions, for example. On the other hand, a CDP is a tool. You can argue that you still need rules to manage a CDP, and this is true, but those are not part of the CDP itself.

Scope

Just by reading the definitions above, you can probably guess how MDMs and CDPs differ in scope:

  • MDMs are generic, aiming at managing the data for all departments.
  • CDPs are very specific, targeting only the marketing department.

To me, this is the most important difference and the one you should always keep in mind.

Data

As a consequence of the previous difference, the data they manage and store varies greatly.

Since MDM applies to all business units, you can expect to see data from all of them: HR, operations, customers, stores, transactions, purchases, products… Nothing mandates that there should be a single MDM tool; in fact, it is common for different departments to use different tools to manage their data. I am not saying that this is the best practice, but something that happens. Also, the data in an MDM should include every single attribute of the entity.

As opposed to MDMs, CDPs cater only to the needs of the marketing department for marketing activities. This statement includes two constraints:

  • The data in a CDP should only include customer data. Non-customer data, like the invoices from a marketing agency, does not have a place in a CDP.
  • Only customer attributes that are needed for marketing campaigns should be included in a CDP. For example, if you do not personalize based on gender, preferred shop, or number of children, that information should not be loaded into the CDP.

I do not have enough knowledge about all CDPs and MDMs in the market, but my gut feeling tells me that the database technologies will also be very different. If anybody knows more about this point, I would love to read you in the comments.

Why so much confusion?

In my experience, the confusion comes from two sides:

  • MDM vendors. Since MDM tools already have customer data and capabilities, why not use them as CDPs? To me, the answer is very clear: MDMs were not designed to be used for marketing activities. Besides, the MDM solutions I have seen are always batch.
  • IT teams. Using the previous train of thought but from the opposite angle, some people in the IT department may think that, since they already have a CDP loaded with customer data, they could also use it for other non-marketing purposes. A typical example would be a CRM. This is not new: it was common in the past for small companies to use Neolane Adobe Campaign Classic as their CRM tool.

While the temptation will always be there, I strongly recommend keeping MDMs, CDPs, and CRMs separate and using each one for their own purposes. These tools were built based on a set of use cases or business requirements. The fact that some of their capabilities could be reused for other purposes does not mean that the tool will be good at other tasks.

Adobe Experience Platform

To finalize this post, I want to bring this topic to the Adobe stack. You probably all know that the Adobe Experience Platform (AEP) includes an offering called Real-Time Customer Data Platform (RT-CDP). Applying what I have explained about CDP vs MDM:

  • AEP offers a CDP.
  • AEP should not be used as an MDM.
  • Be wary of any MDM vendor trying to compete with AEP; do they have real-time capabilities?
  • Only load into AEP the data that you strictly need for your campaigns.
  • AEP’s backend is not a relational database.

In case of doubt, remember that the Adobe Experience Cloud is all about marketing.

 

Photo by Christina @ wocintechchat.com on Unsplash

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