Customer data platforms (CDP) have been making headlines these past months. The larger cloud platforms have announced plans to develop their own in-house CDPs, and more and more companies claiming to be CDPs have crawled out of the woodwork. While there is no official administrative body regulating CDPs, the CDP Institute is a neutral source that strives to stay up-to-date on any updates, changes, or shifts in the industry.
We had the chance to sit down with David Raab, founder of the CDP Institute, to speak with him about the Industry Update he released in July 2019.
EXPONEA: Before we get going, can you give us a quick explanation of what a Customer Data Platform is, and why it’s important?
DAVID: A CDP is defined as packaged software that builds a unified, persistent customer database which is accessible to external systems. In simpler English, it pulls together all of your customer data and shares it with whatever system needs it. That matters because data is fragmented across many systems but you need a unified view to understand your customers and to give them each the most appropriate, consistent treatment.
EXPONEA: In the industry update, you make the distinction between different CDP types:
- Access CDPs provide data assembly
- Analytics CDPs provide data assembly + analytics
- Campaign CDPs provide data assembly, analytics and customer treatments (personalized messages, real-time interactions, recommendations, etc.)
Let’s say I’m starting my business entirely from scratch: what is the advantage of getting a campaign cdp over an analytics or access one? Is there any disadvantage, beyond the fact that an access CDP likely has more available integration possibilities?
DAVID: The main advantage of a campaign CDP for a new business is that you’re filling several requirements with a single system. This simplifies every aspect of your business operations – purchasing, training, system integration, and so on. It also probably saves money compared with running and connecting several systems.
Integration among components within a campaign CDP is likely to be deeper than connections between separate systems; so, more data will be more easily available and any changes in one part of the system, such as a new product attribute, should automatically be reflected in other parts of the system. This isn’t necessarily the case when you are synchronizing data across systems or even have one system directly reading another system’s data. Plus, there’s a good chance you’ll actually get better campaign and analytics features in a campaign CDP than you would if you bought separate components, especially if you’re a start-up with a limited budget.
EXPONEA: Why are we seeing such a shift away from access cdps and toward campaign cdps? What changed to make this happen this year, as opposed to last year or the year before?
DAVID: The trend has been in place ever since we started tracking this data nearly three years ago. It has accelerated because many buyers now realize that they need both campaign and CDP features and would rather buy them in a single system, for reasons already discussed. Vendors have responded to this demand by adding CDP features to campaign systems. These shifts happen relatively quickly because many vendors see the same opportunities at the same time and react more or less simultaneously.
EXPONEA: From the industry report: “Firms outside the U.S. are also much more likely to be campaign CDPs than access or analytics CDPs. This is largely because many of these firms started as agencies or delivery systems. But even new firms now primarily enter the market as campaign CDPs.”
- Why were more firms outside the US started as agencies/delivery systems?
DAVID: It’s more because relatively few firms outside the U.S. are started as software companies. The U.S. simply has a more robust software development industry in general. Without as many local software companies in Europe, there is more of an opportunity for companies in related businesses, such as agencies and delivery systems, to productize their offerings. A separate reason is that European buyers tend to be smaller and have fewer technology resources than U.S. companies, so the value of having one integrated solution is even more important in Europe.
- Why are new firms entering as campaign CDPs? Is it because of the buzz around this idea, or is the buzz created by these new firms entering?
DAVID: Ultimately, companies will position themselves in ways they believe are appealing to buyers. Right now, buyers are asking for CDP by name, so it makes sense for vendors to label their products as CDPs so long as they deliver what a CDP is supposed to deliver. Many of the new campaign CDPs started in related businesses and added CDP features as the demand became clear. It’s important to point out that this is more than simple repackaging: running effective campaigns requires the cross-channel unified data and campaign flows that a campaign CDP provides, so smart vendors would be providing this sort of integration regardless of industry buzz.
EXPONEA: This report discussed two CDP acquisitions made by companies not involved in marketing tech. Do you think this is a trend that will continue? Which industries outside of marketing do you believe will be the largest adopters of the tech?
The main reason is that it’s become so clear that unified customer data is important outside of marketing. Companies in other industries than martech are looking for ways to meet this need and recognizing that CDP systems were designed for exactly that purpose. So it makes sense for them to buy CDP products rather than reinvent them – especially since there are quite a few fairly small CDPs available to be bought. We can expect acquisitions by companies that focus on call center and customer service, and by operational systems in customer-facing industries such as retail, financial services, travel, and healthcare.
EXPONEA: Last question: how many of the newly classed “campaign CDPs” offer all their tools within one integrated platform? Is there a difference in classification for internally integrated campaign CDPs as opposed to marketing clouds stitched together through acquisitions?
The big enterprise software vendors have indeed stitched together their product lines with acquisitions but this is the exception. Most software vendors have a single product that they enhance over time. Even when those firms buy another product, they tend to integrate it closely with their existing system rather than keeping it more or less separate, as the cloud vendors have.
What we’re seeing with CDP is that the big enterprise vendors have recognized the need to unify the data in all their separate components and are building a true CDP in the sense of one that ingests and stores its data separately from the source systems. This lets the enterprise vendors give their clients a unified database to work with, even if the component systems retain their own separate databases.
It’s still a level of added complexity compared with a system that is engineered as an integrated whole from the start. But it’s much better than the previous alternatives, which were to build big custom databases or to read data from the component systems directly as it’s needed.
Separate but related: we are seeing yet another class of CDP emerge, from vendors that provide extensive operational solutions such as CRM, point of sale, and ecommerce. This would include the marketing clouds. We will give this class its own name, distinguishing it from campaign CDPs which still don’t have most of the operational capabilities.
EXPONEA: Thank you for your time, David.
By David Raab’s definition, Exponea is a Campaign CDP. Exponea ingests first-party data from all channels and devices and stores it in a central data hub, allowing for precise segmentations and deep analyses of customer data. Execution layers are built on top: predictive analytics, email and SMS campaign delivery, A/B testing, campaign analysis, and more can be handled within the same platform.
To learn more about how Exponea can help your company grow, please schedule a demo with us today.