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CDP market confusion: How to find the solution you actually need

It can be difficult to know which type of CDP is right for your brand.

With more technologies in the market than ever and new vendors popping up all the time, the martech world has become increasingly confusing and complex. There’s a ton of confusion about what it actually means to be a Customer Data Platform (CDP) and whether that’s the type of platform you need at all. 

Today the market is flooded with ESPs, CEPs, CDPs, etc. and every platform touts the ability to transform data with “real-time” campaigns. All this cross-talk makes it incredibly confusing to know which direction is the right one to take when you’re evaluating your martech stack.

Read on to learn more about how the CDP rose to the forefront of the minds of many data-driven brands, and how you can feel confident in choosing the right platform for your needs.

Why CDPs?

The hype around CDPs peaked around five years ago as brands feverishly searched for new and improved ways to mine their growing stores of customer data for new insights and business value. 

The prevailing theory was that CDPs could help brands centralize all of their customer data into the ever-elusive “360-degree view,” making it easy for marketers to take action on that data, in the process.

Before CDPs, managing customer data posed significant challenges. Not only did brands have to establish internal processes for data collection, but they also relied on their data teams to create and maintain custom integrations and pipelines to ensure data availability across operational tools.

CDPs addressed this challenge by introducing a unified customer database. This database enabled automatic data collection, modeling, and synchronization at scale with operational tools. The widespread adoption of CDPs stemmed from their provision of marketer-friendly tools that facilitated self-service data management.

What makes a CDP a CDP?

As we discussed above, CDP platforms helped bridge the gap between data and marketing teams. Data teams were freed from the burden of managing fragile pipelines, while marketing teams gained the agility to develop and launch personalized campaigns without delays. CDPs offered data teams an interface to manage pipelines and marketers a self-service UI for building and managing audience cohorts for activation.

Most CDPs leverage cloud data warehouses as their underlying infrastructure. While cloud data warehouses primarily serve as powerful computing engines for querying datasets and conducting analytics, traditional CDPs utilize this architecture to offer a comprehensive package for data collection, audience management, and activation.

Traditional CDPs include four integrated components:

  1. Data Storage: All CDPs provide fully managed storage for housing customer data.
  2. Identity Resolution: Traditional CDPs incorporate built-in identity resolution functionalities to unify user actions and attributes across different touchpoints.
  3. Audience Building: CDPs offer a robust suite of audience management tools to facilitate the creation of user cohorts and orchestrate user journeys across marketing channels.
  4. Data Syncing: CDPs come with pre-built integrations with numerous third-party APIs, enabling seamless audience transfer to operational tools.

Should enterprise consumer brands invest in a CDP solution? 

The answer to this question all depends on the campaigns you’re trying to achieve. There are a few reasons that a packaged CDP is not a good choice for most enterprise brands: 

Cost: Packaged CDP solutions are expensive and they’re an all-or-nothing deal. Because each component is tightly bundled within a single platform, you pay for the entire feature set of a CDP, even if you only use one piece. Additionally, companies have to pay big dollars to store and move data. 

Moving data: CDPs depend on moving data between systems, causing latency, synchronization issues, and bottlenecks to get new marketing initiatives up and running. Additionally, marketers don’t have direct access to customer data and strategies and must compete with other teams’ resources and priorities (such as IT).

Real-time… is not real-time: Once data has been moved to a CDP, latency becomes an ongoing problem. There will inevitably be limitations to how often marketers can refresh that data with new information – whether once a day or any other time interval. Customer data, which is always growing and evolving, is stale while stored in the CDP. For many industries, like travel, this makes the data nearly unusable. No customer wants to know their plane changed gates two hours after take-off.

Loss of control: The packaged CDP approach creates challenges that come from disparate data sources and silos. It also gives the IT team yet another tool to learn and support – when they’d much prefer the fine-grained governance enabled by a centralized data warehouse and the self-service capabilities that it enables for marketers and other stakeholders.

Data friction: More touches and more moving parts significantly increase the margin for error. To keep CDP data as current as possible, marketers want to refresh it as often as possible. But this creates an infinite loop of copying and moving data – which introduces more and more opportunities for error that have downstream impacts on your campaigns and other activities. Additionally, the effort to clean up such errors is tremendous.

Is a CDP your best choice?

Your decision to use a new platform should be directly linked to the business value you’re trying to drive.

Still, it can be difficult to see the forest for the trees when it comes to your tech stack. Your brand has marketing use cases you need to solve, but often teams make decisions on tech tools without realizing these tools are taking them farther away from the goals they have in mind. In reality, you just need a way to activate your existing data.

A composable martech stack that’s made up of best-in-breed solutions (i.e., a composable CDP) can help enterprise brands save money, reduce technical debt, and offer the freedom to invest in the approach that makes the most sense for each organization. 

A composable CDP can seamlessly handle all the tasks of conventional CDPs, such as event tracking, identity resolution, and data activation. Meanwhile, its composable architecture allows companies to leverage their current infrastructure or preferred providers for any aspect of the CDP stack, with the freedom to selectively incorporate only the features they need to achieve their goals.

Looking back at the coveted 360-degree customer view, while traditional CDPs claim to establish a singular data source, they typically result in a fragmented replica of customer data. 

In contrast, a composable CDP operates directly from your brand’s data warehouse, enabling you to activate the entire spectrum of your customer data. With the Composable CDP, your brand can harness data from diverse sources like data science models, POS systems, and even offline data to formulate and execute the comprehensive customer 360 strategy you’re looking for.

About the Author

Elsbeth Russell

Elsbeth has nearly two decades of experience helping brands attract and engage audiences through content. For the past six years, she’s been dedicated to helping B2B companies in the email marketing space connect with audiences through community building and social media marketing.