MarTech published a report that provides an overview for the Market for Enterprise Customer Data Platforms (CDPs).
In general, the study covers some key questions for the Market for Enterprise Customer Data Platforms (CDPs), including:
- What trends are driving the adoption of CDPs?
- Who are the leading CDP vendors?
- What features do CDP vendors provide?
- Does my company need a CDP?
- How much does a CDP cost?
Market for Enterprise Customer Data Platforms (CDPs) – CDP Market Overview
- The customer data platform (CDP) market is expected to generate $1B in revenue by 2019, according to the CDP Institute, as both employment and the number of CDP vendors doubled in 2017.
- Driving CDP growth is a perfect storm of increasing complexity in the customer journey, the mMarTech stack and data governance.
- Gartner predicts that the average US adult will own more than six smart devices by 2020, making cross-device IDs and identity resolution – the ability to consolidate disparate sets of data into an individual profile – a critical need for marketing effectiveness.
- As the number of touch-points in the customer journey expands, CDPs allow marketers to break down first-party customer data silos to unify and normalize contact information.
- Almost half of marketing executives say they are responsible for enterprise marketing technologies, and nearly one quarter manage their MarTech platforms independently from IT, according to the CDP Institute.
- With marketers exercising more control over technology, there is more focus on adopting marketing-centric solutions.
Market for Enterprise Customer Data Platforms (CDPs) – The Leading Obstacles to Marketing Success
- Single customer view 58%
- Collaboration outside of marketing 49%
- MarTech budget 39%
- Overall budget 34%
- MarTech Staffing 32%
Market for Enterprise Customer Data Platforms (CDPs) – Data Security & Governance
Customer data security and governance have also leapt to the forefront of marketer concerns, as the alphabet soup of data regulations:
- HIPAA (Health Insurance Portability and Accountability)
- HITECH (Health Information Technology for Economic and Clinical Health)
- GDPR (General Data Protection Regulation)
- CASL (Canada Anti-Spam Legislation)
Market for Enterprise Customer Data Platforms (CDPs) – CDP Definition
A CDP is not a CRM, DMP or marketing automation platform
There is still some market confusion about how a CDP differs from a CRM, a DMP (data management platform) or a marketing automation platform.
A CDP provides the following three core features that together make it unique from other systems:
- A unified, persistent customer database that provides data transparency and granularity at the known, individual level. A CDP can identify customers from many different data sources by stitching together information under a unique, individual identifier. The CDP then stores its own copy of the data.
- Marketer control over customer data collection, segmentation and orchestration through native (out-of-the-box) integration that minimizes the need for IT or developer help.
- Data integration of both known and anonymous customer data with any external source or platform, including CRM, point of sale (POS), mobile, transactional, website, email and marketing automation.
CDPs can be used as systems of record, storing both known and anonymous customer profiles in a central hub that integrates data from all of the organization’s various software systems. The data is accessible for marketing analysis, segmentation and insight discovery, with the goal of increasing the velocity and effectiveness of omni-channel marketing campaigns.
Conversely, DMPs focus primarily on anonymous interactions and are used by digital advertisers, marketers and publishers to store and manage audience and campaign data. DMPs rely on anonymous, third-party data to segment and build audiences that look like first-party customers.
Marketing automation platforms, which, like CDPs, are designed for marketer use, focus on collecting digital channel data and executing digital campaigns. Marketing automation platforms do not offer the cross-channel (i.e., online/offline data) capabilities that are native to CDPs.
CRMs compile customer data and are often used as the organization’s centralized data hub. However, CRMs provide marketers with minimal system access and control and can’t identify or engage with anonymous individuals. Similarly, data warehouses store many types of organizational data, but are managed, by and large, by IT departments.
Market for Enterprise Customer Data Platforms (CDPs) – CDP Capabilities
Vendors ranging from tag management solutions to personalization platforms to pure-play CDP providers currently offer CDPs. Virtually all of the CDP vendors profiled in this report provide the following core capabilities:
- Data management (collect, normalize and unify customer data in a persistent database);
- Identity resolution to stitch customer data snippets from disparate sources;
- User interface (UI) and features designed for marketing organization use, without the aid of IT or data science resources; and
- Data access to all external systems on a vendor-neutral basis.
Market for Enterprise Customer Data Platforms (CDPs) – CDP Differentiation
CDP vendors differentiate by offering more advanced capabilities that include – but are not limited to – the following:
- Structured and unstructured data management
- Online and offline data management
- Analytics that enable journey mapping, audience segmentation and predictive modeling
- Orchestration for personalized messaging, dynamic interactions and product/content recommendations; and
- Compliance with vertical industry and international data regulations.
Market for Enterprise Customer Data Platforms (CDPs) – Key Criteria to Evaluate CDPs
Data collection and maintenance is a core CDP function. Virtually all CDPs provide a central database that collects and integrates personally identifiable customer data across the enterprise. From there, however, CDPs vary in their abilities to manage the following:
- Identity resolution: The platform ‘stitches’ together customer data points from various channels into a single customer profile.
- Online/offline data: The platform uses email addresses, phone numbers and postal addresses to clean and standardize customer records.
- Structured/unstructured data: Most, but not all CDPs manage unstructured data (i.e., social media feeds, product photos, barcodes), which may comprise up to 80% of all data by 2025, according to IDG.
- Mobile data: Several CDPs offer software development kits (SDKs) to load data from mobile apps directly into the central database.
The importance of each of these data management capabilities will depend on the organization’s business goals, and whether it has a significant mobile presence, direct mail budget or brick-and-mortar stores and/or agents.
A growing number of CDP vendors offer data analytics that allow marketing end-users to define and create customer segments, track customers across channels and glean insights from customer behavior and trends. The specific tools provided can include predictive models, revenue attribution and journey mapping. The CDP often automates the distribution of the customer segments on a user-defined schedule to external MarTech systems such as marketing automation platforms and email service providers (ESPs) for campaign execution.
A select group of CDPs provide campaign management and customer journey orchestration features that enable personalized messaging, dynamic web and email content recommendations, as well as campaigns that trigger targeted ads across multiple channels. For example, the CDP could deliver targeted content to a web visitor during a live interaction. To do this, the CDP must accept input about visitor behavior from the customer-facing system, find the customer profile within its database, select the appropriate content and send the results back to the customer-facing system. A CDP may also facilitate digital advertising through an audience API that sends customer lists from the CDP to systems (i.e., DMP, DSP, ad exchange) that will use them as advertising audiences.
Market for Enterprise Customer Data Platforms (CDPs) – The Bottom Line
Unified, accessible customer data has become an essential building block for brand marketing success. But as technology continues to grow and evolve, consumers will continue to add new devices and touch-points to their purchase journeys. The result is expected to be a new set of marketing opportunities, as well as data challenges for marketers.
CDPs have emerged as a vital tool for customer data management. CDPs unify and normalize first-party customer data, improving data accuracy, targeting relevance and marketing campaign velocity. CDPs put control of marketing data and technology in marketers’ hands and facilitate compliance with the growing array of data privacy regulations through strong data governance.
As the CDP market matures, vendors are expanding their core capabilities beyond data maintenance to offer brand marketers more analytical tools and orchestration features to build audiences and execute multi-step campaigns across channels. The CDP vendor market is crowded, providing marketers with many choices based on their most urgent business needs. However, strong demand and interest from enterprise marketing clouds will lead to more consolidation in the next 12-24 months