If you insert data field placeholders on master pages, you have advantages that are not available when you insert placeholders on document pages:
The resulting merged document contains the original placeholders on its master pages and includes the merged results on document pages as overridden master page items.
The merged document maintains a connection to the data source, so if records in the data source are modified, you can update the merged document contents by choosing Update Content In Data Fields. This option is especially helpful if you change the layout in the merged document and then need to add new data from the data source.
The settings in the Create Merged Document dialog box are the same as those used in the target document, so you can quickly re-create the current document with the same appearance. You can also use these shared settings to create an identical document with a different data source, or create a new document with a slightly modified layout.
You cannot place data fields on both master pages and document pages. In order to merge properly, you must apply a master containing data fields to the first page of the document.