CDPs and DSPs helps businesses optimize advertising efforts, leveraging comprehensive customer profiles to inform real-time ad purchasing for more personalized, effective campaigns, and enhanced business growth in the competitive digital landscape.
In the time it takes to read this paragraph, most Demand Side Platforms (DSPs) will have analysed billions of bid decisions, selecting the perfect ad to display to the right person at the right time and on the right device. Intriguing, isn't it?
In the early 2000s, 1:1 marketing was an exciting vision. Today, it's a reality. However, for many companies, this reality is built on a shaky foundation due to the over-reliance on third-party cookies. Twilio research conducted last year found that roughly two-thirds of Australians believe consumers should completely avoid websites that collect cookies.
In this setting, the value of zero and first-party data, and how this data is used to create meaningful and personalised customer experiences, becomes all the more important. Around 92% of marketers in APAC are already collecting zero-party data, and three quarters have an understanding of the positive value of first-party data.
Two powerful tools, Customer Data Platforms (CDPs) and DSPs, have emerged to facilitate best use of these two data sources, to predict what advertising actions to take for a specific person at a specific moment in time. When used together, they can significantly enhance a company's advertising efforts, providing a more personalised and efficient approach to customer engagement.
Understanding CDPs and DSPs
A CDP is software that aggregates and organises customer data across various channels, including websites, apps, data warehouses, CRM, and more. It creates a comprehensive and unified customer profile, enabling businesses to understand their customers deeply and tailor their advertising efforts accordingly.
On the other hand, a DSP is a system that allows advertisers to manage multiple ad exchanges and data partnerships through a single interface. DSPs enable businesses to purchase advertising in real time, ensuring their ads reach the right people at the right time.
The power of integration
When CDPs and DSPs are integrated, businesses can leverage the rich, unified customer data from their CDP to inform their advertising decisions on their chosen DSP. This means businesses can target their ads based on a deep understanding of their customers' behaviours, preferences, interactions, and privacy requirements, both online and in the real world.
DSPs often have AI capabilities that learn and optimise in real-time across all major and local ad exchanges. Some DSPs even provide access to their own user-level data for targeted advertising. When coupled with first-party customer data from your CDP, this opens up opportunities to run highly sophisticated programmatic advertising campaigns that update in real-time or near real-time.
After combining the customer touchpoints across all your owned and operated channels and platforms, CDPs can create dynamic customer profiles complete with ID resolution to ensure consistency throughout a customer’s lifecycle. These profiles, complete with built-in support for cookie IDs, device IDs, hashed PII, and custom external IDs, can be enriched with additional attributes from your data warehouse or other sources.
You can sync these profile traits to a DSP to improve match rates for campaigns, which is currently a major concern in the industry. This ensures that you are matching on trusted and engaged zero or first-party data rather than simply a fleeting third-party cookie drop, which extends the number of data points to increase the likelihood of a match with the user. From there, you can build real-time audiences and orchestrate campaigns using AI-driven predictive capabilities directly within your CDP or DSP.
With modern CDP platforms, you can build an audience once, then send it to your DSPs or other channels including your website or apps for ad personalisation, lookalike modelling, or retargeting use cases. And with possible API integrations across popular ad platforms such as Yahoo, The Trade Desk, Google, Facebook, and TikTok, you can maintain visibility into campaign metrics and effectiveness. Third-party cookies may be going away, but your advertising strategy doesn’t have to.
Let's illustrate this with an example that will resonate with new parents. A CDP might reveal that a particular customer segment frequently engages with content related to baby products. A retailer that stocks baby products can then use their DSP to purchase ads on websites and channels where this customer segment is most active, and tailor the ad content to highlight their own baby products.
Using lookalike modelling techniques, the retailer can leverage their customer data to identify and target new prospects that match the profiles of their existing customer base, further increasing the likelihood to purchase and reducing ad spend wastage. The more new parents engage with targeted ads, the more powerful that organisations’ CDP and DSP becomes.
Australian companies already seeing integration success
Many businesses have already seen significant success from integrating CDPs into their marketing and advertising strategies. For instance, Camping World, a leading outdoor and camping retailer, used Twilio Segment CDP to unify their customer data and gain a deeper understanding of their customers. This allows the organisation to track events like ‘RV model viewed’ and ‘RV added to favourites list’ to create profiles, then utilise this information to craft specific omni-channel messaging.
Using the data from real-time customer behaviour and interactions, Camping World built a personalised ‘cart abandonment’ sequence to re-engage users. First, they send a highly relevant ‘Still interested?’ message to the user, reminding the consumer of RV products they had previously viewed. From there, the customer is offered a discount code specific to the product they had viewed, making the communication touchpoint that much more meaningful. Last, a ‘recommendation’ email is sent showcasing additional products and services the customer had previously engaged with. As a result of this sequence built in the CDP, Camping World has seen a 12% increase in conversion rates.
In addition, Twilio Segment had a big impact on Camping World's paid advertising campaigns. As their teams collected and tracked data with the CDP and sent it downstream to advertising tools, Camping World’s paid advertising channels saw significant improvements, especially in the used RV market category — laddering backup to the company’s north star metric for 2023. Data-driven paid advertising efforts saw a substantial 35% increase in conversions, defined as a lead submission. Additionally, they saw a 16% decrease in cost-per-lead due to cleaner and properly implemented data collection allowing Camping World’s ad algorithms to perform better.
In the era of data-driven advertising, the integration of CDPs and DSPs offers businesses a powerful way to understand their customers and optimise their advertising efforts. By leveraging the comprehensive customer profiles created by CDPs to inform the real-time ad purchasing capabilities of DSPs, businesses can deliver more personalised, relevant, and effective advertising campaigns. This not only enhances customer engagement but also drives business growth and success in the competitive digital landscape.
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