CDPs Grow After Slow 2020

Customer Data Platform (CDP) providers saw a growth resurgence of sorts in the past six months. The CDP industry continued to expand in the first half of 2021, adding 20 vendors for a total of 151, more than 1,200 employees and $550 million in funding, according to the Customer Data Platform Industry Update released last month by the CDP Institute.

The growth represents a jump-start to an industry that saw a “brief slowdown” at the start of the COVID-19 pandemic more than year ago, according to David Raab, founder of the CDP Institute.  “Everybody kind of froze last year when things first came down,” Raab told CMSWire. “…The world did not end, and it turned out there’s a lot of demand for this stuff because everybody’s doing digital transformation, and digital transformation requires good customer data.”

Campaign and Delivery CDPs Hold the Lion’s Share

Marketers know that not all CDPs are created equal. There are the pure-play CDPs. CDPs built by large marketing technology providers. CDPs that do different things. CMSWire in its 2021 CDP Market Guide classifies CDPs in six categories:

  • Digital Data Integration: Vendor example: mParticle, Tealium
  • Identity Management: Amperity, Quaero
  • Marketing Cloud Infrastructure: Adobe, Oracle, Salesforce
  • Data Science: Acquia, SAS, Treasure Data
  • Site Personalization: Blueconic, Lytics
  • Smart-Hub: ActionIQ

And, of course, there are CDPs that get acquired: there were seven of those in the first half of 2021, primarily by customer engagement software companies. These organizations were, according to CDP Institute researchers, wanting to do the following:

  • Combine data from multiple delivery systems they already have in place
  • Add new delivery channels
  • Orchestrate customer treatments across those channels

Which kind of CDPs represent the biggest chunk of the market? Well, Campaign (data assembly, analytics, and customer treatments) and delivery (data assembly, analytics, customer treatments and message delivery) CDPs, according to the CDP Institute. Those now account for 67% of companies, 71% of employment and 71% of funding. Data CDPs now account for just 13% of companies and employment and 15% of funding.

Related Article: What’s the Road Ahead Look Like for CDPs?

CDP Pendulum Swinging

It’s pretty remarkable growth for those campaign and delivery categories considering that in the first report by the CDP Institute (2017), half the vendors were from the data and analytics category. Surprising that campaign and delivery have taken off with marketers in the picture? We think not, too.

Data CDPs gather customer data from source systems, link data to customer identities, assemble unified customer profiles and store the results in a database available to external systems, according to CDP Institute researchers. Analytics CDPs provide the features of a data CDP plus analytical applications. The applications always include customer segmentation and sometimes extend to machine learning, predictive modeling, revenue attribution, and journey mapping, according to the CDP Institute.

It doesn’t mean data and analytics CDPs are falling off the map. Most of the newer companies that came into the CDP landscape this year, in fact, are of the data and analytics CDP variety. “The growth in particular has been in that delivery category, and that mostly is companies that were already doing delivery that added a CDP, whereas the data and the analytics companies tend to be brand new companies,” Raab said.

Trends in Customer Data Access/Activation

One of the dominating patterns in the CDP landscape is “customer data access/activation,” according to Apoorv Durga, vice president, research and advisory who covers omnichannel stack technologies, including CDPs, journey orchestration engines, web content management and marketing automation tools for Real Story Group. That pattern is especially significant when there is an existing data ecosystem, or, as Durga calls it, a “data fabric.”

“And we see that happening quite often,” he said. “A lot of customers we talk to already have some elements of this data fabric. A data warehouse, an MDM (master data management) and/or a data lake already exists and so several activities such as data ingestion, data management and identity resolution are already happening as part of existing data fabric. Now when the CDP enters, it doesn’t need to reinvent the wheel, and therefore, the focus of CDP is more on customer data access and activations.”

A lot of CDP vendors are now increasingly relying on external, third-party services for several aspects of data management, according to Durga. This includes, he said, identity resolution and unified profile creation. Consequently, Durga said he’s seeing several CDP vendors partnering with identity resolution vendors.

Related Article: Do CDPs Really Make Marketers Independent of IT?

Are CDPs Inevitably Part of the Martech Stack?

It’s clear larger marketing technology vendors — some call them Digital Experience Platforms (DXPs) — are jumping on the CDP train. Three of the acquisitions in 2021 in particular speak volumes: BloomReach’s acquisition of Exponea (Jan. 26), Optimizely’s acquisition of Zaius (Feb. 22) and Sitecore’s acquisition of Boxever (March 3). With that, most of the larger marketing cloud vendors have CDPs. They join Oracle, Adobe, Acquia and Salesforce, which all, except Acquia (AgilOne acquisition) built CDPs in house.

So vendors like CDPs. What about marketers? Is it time to have CDPs as one of the required checkboxes in the martech stack? Durga called CDPs an “important part of martech stack” that often work in conjunction with other elements of the data fabric to provide marketer-friendly and marketing-oriented views of data as well as services.

“While you can manage without a CDP, a CDP streamlines your marketing initiatives especially for an omnichannel world,” Durga said. “They do this by abstracting customer data as well as individual activation capabilities (e.g. recommendations) away from individual, channel-specific applications. This allows you to execute such activations across channels consistently.”

CDPs do much more than that, he added, but he doesn’t believe there is that one ultimate use case for an organization. For some orgs, it might be to get a single 360-degree view of customers. For another it might be personalization. For still some others, it might be ecommerce recommendations.

CDP Integrations and Skills Remain as Challenges

The road ahead for CDPs will be smoother with better integrations and skillsets among users, according to Durga. Integrations are always a challenge, he said, especially when you need to do real-time data ingestions and activations.

Another challenge is to figure out which capabilities you will include in CDP and which ones to leave out of it. For example, would you do data cleansing inside a CDP or do it as part of your data warehouse and then ingest clean data? Or would you do personalization as part of your WCM or do it within your CDP?

Skills is another major challenge area. Most CDPs use proprietary knowledge, and finding the right resources across all areas — integrations, data science, data analysis, analytics and so on — is a big challenge, Durga said.

“Data quality, and other aspects around data management such as data cleansing, normalization, etc. is an issue, too,” Durga said. “Lots of companies struggle with getting the quality of data right, and that has an impact on their activations. Garbage in, Garbage out.”

Source link

We will be happy to hear your thoughts

Leave a reply

Reset Password
Shopping cart