Buyer’s Guide for Customer Data Platforms (CDP) Market

The most in-depth, vendor neutral Customer Data Platforms resource available. Orient yourself in a complex and noisy market. Customer Data Platforms are all the rage. This vendor-neutral guide developed by the SMG/Digital Experience Summit team provides you with a detailed overview of the Customer Data Platform (CDP) market, covers the facets of modern CDP functionality and provides a director of CDP vendors in the market at this time.

Buyer's Guide for Customer Data Platforms (CDP) Market

Inside this guide:

  • An overview and history of CDPs
  • A full vendor director with summaries
  • Analysis of CDP development pathways

Content Summary

Overview
CDP Market Overview
The Future of CDPs and Valuable Resource Links

Overview

With the proliferation of customer data across more touchpoints than ever before, the need for marketers to bring it all together into a centralized repository to help create a unified customer profile has become a priority for businesses all over the world. The emerging solution for this centralized data hub is the customer data platform, or CDP.

Since the CDP market is still emerging and being defined, there can be significant overlap and differences between similar technology solutions from various vendors. In this guide, we will help define a CDP, examine what basic elements and functionality you should be looking for from your vendor, and discuss some of the potential benefits and use cases for a CDP.

In future editions of the CMSWire CDP Buyer’s Guide, we will dig deeper and examine the current CDP market overall, provide an exhaustive list of all CDP vendors with full profiles and product information, and look to the future of CDPs and where the market will be headed.

The CDP market is already growing, and is projected to grow, at a significant rate. According to recent data, CDP industry employment grew 76% in 2017, while the number of CDPs included in the study grew from 39 in June 2017 to 62 in June 2018.

There are also a significant amount of mature businesses now repositioning themselves as CDP vendors, with 45% of firms added to the report founded more than 10 years ago. The CDP industry brought in $114 million in new funding in the first half of 2018, a 26% increase from the $90 Million invested during the same period in 2017. The total investment for the CDP industry is now at $1.47 billion.

The CDP Institute projects the CDP market to grow to $1 billion in revenue in 2019. With CDPs now deployed at 2,500 or more companies, and the average price per installation close to $100,000 per year, CDPs are here to stay and are being adopted and put into action in companies all over the world.

What is a CDP?

A customer data platform (CDP) is a data management system that has a unified and persistent database which can be accessed by other martech systems. CDPs consolidate and integrate data from multiple channels and sources into a single repository that allows a business to build a unified profile around an individual customer. After the customer data has been structured and combined, it can then be pushed back out to other martech systems to allow for advanced real-time personalization and targeting campaigns.

Key Elements of a CDP

CDPs need to have three basic elements to be considered a CDP.

  • They need to be a marketer-controlled system, meaning marketers need to be able to purchase and run a CDP with limited ongoing technical support from corporate IT or an external vendor. They may still need internal or external technical support during setup phase initially, but marketers should be able to run the system on a daily basis.
  • A CDP needs to be a persistent, unified database that can collect data from multiple sources and associate that data with an individual unified customer profile. A CDP does not need to store all the data itself or take in every piece of customer data, but it should really serve as a hub for your martech stack organized around providing a single view of each customer.
  • They need to be accessible to external systems, or in other words, all your other martech software. Any data in the CDP should be accessible and easily available to any other system, meaning they should not operate like an integrated software suite, where a system can only interface with other like-pieces of a proprietary software suite.

What a CDP is Not

A CDP is not a CRM system or a data management platform (DMP). While a CRM may have some overlap with a CDP in terms of functionality, a CRM system is primarily for sales, while a CDP helps to deliver a more complete view of the customer, beyond the sales cycle. CRMs are more limited in scope than CDPs as they do not necessarily provide the development environment or integration flexibility to support the full customer experience cycle, as well as being more focused on managing customer interactions, business transactions and process management.

DMPs differ from CDPs in several key ways as well. A DMP is designed to perform one core function for ad platforms — to gather data from multiple channels and categorize and classify it so marketers can target customer segments more effectively. CDPs are about managing an individual customer, not a segment or group, and can help power and customize outbound marketing efforts to specific individuals. CDPs work with first-party data of anonymous and known customers, and can store personally identifiable information (PII) relating to an individual, while DMPs deal with anonymous third-party data like cookies, IP addresses and mobile device data.

In the end, it’s not question of whether to use a CRM, CDP or DMP, but understanding the differences between platforms and functionality, and applying them to specific use cases for your business.

Key Features of a CDP

Look for key features such as a web-based UI and built-in data collection, unification and activation functionality.

  • Data Ingestion / Collection – A CDP needs to be able to load in data from multiple customer touchpoints in real-time. Touchpoints would include sources like websites, mobile devices, server data, CRM systems, payment systems, email, ad campaigns and help desks. While the data it is taking in doesn’t need to live in the CDP permanently, it does need to persist there for as long as is needed to process it.
  • Internal Processing / Unification – A CDP has to be able to prepare that newly collected data for use, which could include profile unification — the ability to consolidate profiles and connect attributes of a single person. You want to look for a CDP that can provide historical data storage so you can build customer profiles over time.
  • Segmentation – CDPs should have a web-based interface that gives marketers the ability to segment customers into custom audiences. A CDP should make it easy to market to these audiences across your martech tools, ad networks, and other apps.
  • Data Output / Activation – A CDP needs to be able to push all that segmented data back out, with instructions on how to activate it and personalize messaging to external systems like email, mobile, social media and web.

Why use a CDP?

The days of the lineal sales funnel are numbered in the digital age. Customers now interact with your brand in countless ways, long before and after, they are engaged in the buying process. They are commenting on your products on your website, talking with their friends about your company on Facebook, leaving reviews on Amazon, clicking on ads on the internet and interfacing with your customer service employees through your call center. All these touchpoints produce tons of data that needs to be made sense of and made actionable.

A CDP can aggregate and unify all that structured and unstructured data across all your customer touchpoints, giving you a 360 degree view of your customer from research phase, through the buying cycle and finally though retention. By understanding your customer more fully as a complete person, you will be able to build trust in your relationship by delivering value to your customers through actionable segments before, during and after the sale.

What Else to Look for in a CDP

Beyond the basic functionality defined above that every CDP must have, there are a variety of features you want to ensure your potential CDP offers.

  • Data Integration – Your CDP should be serving as the hub of your martech stack, collecting all your customer data and activating it for your marketing tools. Getting that data integrated and routed into the rest of your martech stack is the only way you will fully realize the benefit of your CDP. Make sure your CDP has good documentation and can set up new data integrations without software development kits (SDKs) or additional tracking codes.
  • Data Controls – Look for a CDP that has advanced data controls that will give you UI visualization tools and the ability to control what data is sent to which database or integration point.
  • Privacy and Security – With GDPR compliance (as well as additional data privacy regulations) now a requirement for any company who deals with EU citizen data, you want a CDP that has data privacy features built in. A CDP that provides data encryption, single sign-on (SSO) and role-based permissions will have robust security features to help keep your customers valuable personal information secure. •

CDP Market Overview

Marketing technology software has been around for more than 20 years. In comparison, the Customer Data Platform (CDP) market is relatively new, having only been around for the past few years. Here’s what you need to know about the CDP market.

How CDPs Started

Initially, most customer databases were designed to support a vendor’s specific software application, such as website personalization or marketing campaign management. Vendors of these applications recognized the revenue potential in enabling other applications to use their databases for accessing and incorporating customer data.

So, many vendors began adding integration tools to their customer databases and converting them into what we now know as Customer Data Platforms (CDPs). Simultaneously, some web analytics and tag management vendors got the same idea: Modify their systems to create a persistent customer database for other applications to use.

By 2016, the various vendor solutions had converged to form the CDP industry.

The CDP Market is Growing Quickly

Though still nascent, the CDP market is growing rapidly. CDP Institute said it anticipates 2018 industry revenues of $640 million, up 65% over 2017, with the market expected to reach $1 billion in 2019, according to the organization’s June 2018 CDP industry update.

During the first half of 2018, the CDP industry added 11 new vendors and $114 million in new funding, the CDP Institute report says, which represents year-over-year increases of 59% and 27% respectively.

The industry has expanded as marketers have realized the need for unified customer data and the shortcomings for some users of alternative technologies such as data warehouses, data lakes, customer relationship management (CRM) platforms and data management platforms (DMPs), according to CDP Institute.

European CDP Market Growth is Fueled by GDPR

In addition, the CDP market has grown in Europe in part because of the May 2018 introduction of the General Data Protection Regulation (GDPR), which emphasizes consumer privacy protection. CDPs can help companies become compliant with GDPR and other privacy regulations by providing transparency into where customer data came from, where it’s stored and how the information is being used or shared, among other attributes.

According to recent data, the European CDP market increased by 33% more vendors and 42% more employees, compared with 21% and 30% growth in the U.S. as measured by the institute’s previous report.

The CDP Market Has Grown in Stature

Along with revenue growth, the CDP market has evolved in stature as well. “Customer data platforms are the foundation of the emerging, digitally savvy marketing organization that not only has that 360-degree view of customers but also actively engages with customers across the channels of their choice,” Forbes noted.

“There’s no doubt that the industry’s momentum will grow as the benefits of CDPs become more widely understood,” added David Raab, principal for Raab & Associates, Inc. and the CDP Institute’s chief executive.

The Evolution of CDP Vendors

The CDP market consists of vendors that (a) originally developed software platforms for other uses, such as marketing campaign management, and then later evolved their offerings into CDP solutions; and (b), CDP-native startups.

The majority of vendors in the recent CDP Institute report, 45%, were founded between 1996 and 2007, before the CDP market existed. “Older firms are likely to have started in a different market and have repositioned themselves as CDPs,” the report noted. Among current CDP vendors tracked in the report, 18% were founded between 2008 and 2011; 18% between 2012 and 2013; and 18% between 2014 and 2016.

It’s worth noting that CDP solutions have grown in capabilities over the years. In CDP Institute’s first market report, released in December 2016, 46% of vendors primarily offered customer data access, the core CDP capability, with 25% offering analytics and 29% providing customer engagement capabilities. However, the vast majority of vendors since that report offer access, analytics and engagement capabilities.

The CDP Institute’s June 2018 report includes a total of 63 CDP vendors and ranks top vendors in the following categories: Employee Growth; Employee Growth Rate; Employment (total number of employees); and Funding. Vendors that ranked in more than one category include NGDATA and Zaius (Employee Growth, Employee Growth Rate); Segment (Employee Growth, Employment, Funding); Datorama (Employee Growth, Employment); and Tealium (Employment, Funding).

CDP Attributes and Vendor Capabilities: Beyond the Basics

The following are some CDP attributes and focus areas to consider that go beyond the basics, along with vendors that provide them.

  • B2B or B2C focus – Some CDPs are designed specifically for Business-to-Business (B2B)-focused organizations; others are Business-to-Consumer (B2C)-centric; and others are more general. For example, Radius offers a CDP for B2B enterprises; AgilOne is tailored to B2C companies; Lytics is more general, with customers ranging from The Economist magazine to retailer Dr. Martens.
  • Industry focus – Beyond the B2B or B2C focus, some CDPs are geared toward brands in particular industries, such as Marketing G2 (primarily targeted toward media companies); Umbel (sports and entertainment); and Ysance (retailers).
  • Cloud or on-premise – Most CDPs, especially ones from vendors who have only been around a few years, are available only as a Software as a Service (SaaS) platform. But some vendors such as BlueVenn, Celebrus and Piwik PRO offer the option of deploying the product in the cloud or on your own data center hardware, which some companies prefer out of security and privacy compliance concerns.
  • Artificial intelligence (AI) and machine learning – CDPs that integrate some level of AI or machine learning can help market-ers achieve deeper insights into their customers’ behaviors, in order to deliver more personalized messaging and offers. CDP vendors with AI or machine learning capabilities include Blueshift, Datorama, Evergage, NGDATA, Lytics and Reltio.
  • Open source – While nearly all CDP vendors provide integrations with other vendors’ martech tools, some — such as Arm Treasure Data, BlueConic and Jahia Solutions Group — emphasize the open-source roots or nature of their platforms. For example, BlueConic says its CDP features a database architecture built on Apache Cassandra, which Facebook developed and has made open source. Why should a marketer care? “This NoSQL database is extremely scalable, highly responsive, incredibly flexible and is known for its read/write speed,” BlueConic says.
  • Mobile savvy – Ideally, you want a CDP that can leverage data from your brand’s mobile app — which many do. But you should also consider whether a vendor makes mobile app tools available to marketers as well. A few that do include are LeadBoxer, which provides a mobile app that shows users the businesses that visited a site and provides you with ways to contact them, and mParticle. which offers a Mobile Data Activation platform.

In its July 2018 “Market Guide for Customer Data Platforms for Marketing,” research firm Gartner summarized what marketers should take into account regarding the ways CDP vendors are increasingly trying to differentiate their products: “As CDPs seek to stand out, they’re expanding prediction and decisioning features. Some are beginning to offer more robust customer journey analysis and use artificial intelligence to make sense of those journeys. Because of the focus on customer data, CDPs offer varying approaches to recommendations and next-best-action suggestions for each segment or individual consumer.”

Common CDP Usage

So, what exactly can you do with CDPs? Here are 10 use cases for digital marketers.

  1. Achieve a 360-degree view of your customers: Centralize data about your customers across all the channels in which they engage with your brand so you can have one single, unified view of each customer.
  2. Gain actionable insights: CDPs don’t simply aggregate, store and unify your customer data from multiple tools, sources and engagement channels. From the unified customer views you receive, you can get actionable intelligence into customer behaviors, likes, dislikes, patterns and preferences. Those insights can help you develop more effective and better-targeted campaigns and personalized messaging.
  3. Increase new customer acquisitions through enhanced personalization: The wealth of actionable data you get from a CDP can help you gain new customers by targeting lookalikes of high-value customers and automating highly personalized messages based on cart abandonment, website views, or other actions.
  4. Grow your audience: Increase your valuable first-party data by encouraging anonymous visitors to your website to return through personalized content and intent-based marketing and, once they’ve returned, register or make a purchase.
  5. Deliver the right message to the right person at the right time: CDPs, especially those that apply machine learning algorithms to real-time customer data, can help you know exactly when to send a personalized message — such as the moment when a return visitor is actively exploring a particular product page on your site.
  6. Increase the lifetime value of your customers: The more personalized your messaging to customer is, the more you’re likely to earn their trust and loyalty. From there, you’re much closer to increasing their repeat purchases, frequency and average order value.
  7. Optimize marketing campaign ROI: With a unified view of customers across all your channels, you have a deeper understanding of how customers prefer to engage with you, whether it’s via email, social networks, or website visits. From this knowledge, you can emphasize, say, email messaging and offers to customers who tend to engage with your brand mostly through email.
  8. Target customers based on behaviors: A unified, real-time view of customers can help you tailor campaign and offer messages based on customer characteristics, such as price sensitivity, purchase frequency, propensity to churn and more.
  9. Become compliant with GDPR and other privacy regulations: A CDP integrates all customer data across your martech tools, platforms and databases, including CRMs, email, website visits, customer call center interactions and in-store purchases. With a CDP, you know where your customer data is. And that’s critical in the age of GDPR. Compliance, in part, means having a digital chain of custody — a sort of “paper trail” that provides a history of how your customer data came to be and where it came from so you can better protect it.
  10. Predict the future: CDPs that leverage machine learning can analyze your customers’ past behaviors and, based on that information, provide predictive indicators, such as whether a customer will likely buy again from you and if so, what they will buy and when they’re likely to click the ‘buy’ button.

The Future of CDPs and Valuable Resource Links

The Future of CDPs

At the time of this report, the CDP market, its vendors, and the software itself are in an emergent state of tremendous flux and growth.

In just the past 5 years, CDPs have quickly becoming mission critical for companies who are serious about developing data-driven, customer-centric marketing and business strategies. In fact CDP employment grew 76% in 2017, with the number of CDPs doubling in that time. With that kind of growth and accompanying buzz, there are a lot of mature businesses now repositioning themselves as CDP vendors, with a variety of applications that may or may not be true CDPs.

The CMSWire CDP Buyers Guide can help you separate the core native industry players from those that may not meet all the requirements of a true CDP. With CDPs now deployed at 2,500 or more companies, and the CDP Institute projecting CDP market growth to $1 billion in revenue in 2019, it’s not if but when your company will be adding this application to your martech stack.

At this stage CDPs are still a fragmented marketplace, according to Tony Byrne, founder of Real Story Group, but he does expect some vendor consolidation. He advises that due to so many potential applications, the market probably won’t consolidate down to 4-5 vendors, so you shouldn’t be hesitant to invest in an established system today. David Raab, founder of The CDP Institute, expects CDP systems to become more similar over time as well and less divergent from each other, as they all will have the core technical ability to build multi-source customer databases run by marketers. As vendors expand their systems to meet different use cases, and develop for different types of clients, Raab says this will lead to a standard set of CDP features, functionality and applications. With standardization, it will be easier for new competitors to enter the market, and more enterprise software vendors from outside the traditional CDP space will come in with a full range of customer management capabilities.

Getting Prepared for CDPs

  • Data Ingestion and Staffing – According to Tony Byrne, marketing departments and companies who are interested in bringing in a CDP, should be spending their time now getting ‘clean’ data – preparing it for ingestion and getting the right people and skills in place to do that. He tells us that most enterprises still need to map all their siloed data for ingestion into a CDP so this should be a primary concern. And that getting that data ready for ingestions and processing in a CDP is a human, not AI or machine process. Doing a skills and personnel assessment for that data migration process should be first on the list.
  • Integrations – Most commonly you will be looking to do web integrations with your CDP, bringing in web usage data either directly or through tags or tag management systems. Other types of common integration you should be planning for are mobile apps, POS, call center and order processing. Outbound marketing should be top of mind, since your CDP can integrate with outbound marketing tech like SMS, direct mail, email, ad platforms, and CX personalization tools.
  • AI and Machine Learning – One of the biggest challenges for a CDP is unstructured data. AI can help to identify anonymous users across multiple sources by using natural language processing, and machine learning can make data actionable by adding notation features and content classifications. Not all CDPs offer this type of advanced capability, but there are other CX systems that a CDP can work with to get this kind of functionality.

Source: CMSWire