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Packaged CDP vs. composable CDP (What’s the difference?)
Published on October 11, 2024

Sarah Kelly

When customer data platforms (CDPs) first gained traction, data warehouse adoption was low. Instead of implementing their own cloud-native customer data store, brands purchased an off-the-shelf solution – a “packaged” CDP. Their goal has always been to unify customer data across the stack, so they can reap more benefits from their various martech tools and the valuable customer engagements they drive.
But a lot has changed in recent years, and many brands’ data integration needs have surpassed traditional CDP capabilities. As a result, they’re creating a customer-360 view with cloud-native identity resolution, data integration, and data storage capabilities. This widespread adoption of modern data warehouses has revolutionized the CDP space and redefined how brands handle customer data with a more powerful, warehouse-native architecture known as the composable CDP.
In this article, we outline the differences between traditional and composable CDPs and guide you in determining which one is best for your brand’s requirements.
What is a traditional CDP?
A traditional CDP is a packaged solution designed to collect, store, model, and activate customer data. These platforms operate by hosting and managing the data within their own systems. That last part is a very crucial detail, but we’ll get to that in a moment.
These platforms provide out-of-the-box event-tracking capabilities to collect behavioral data from your web and mobile apps and automatically forward those behavioral events to downstream operational tools. Many CDP vendors provide other capabilities around identity resolution, audience management, and data activation. However, these features come tightly integrated into the platform, which means you’re at the mercy of the vendor when it comes to things like data structure, storage, and identity resolution methods.
What is a composable CDP?
A composable CDP is a more flexible and modular approach to building and managing customer data infrastructure compared to traditional CDPs. Instead of relying on a monolithic, all-in-one solution, brands can assemble and integrate various best-of-breed components to meet their unique needs.
Unlike traditional CDPs, which store a copy of your data, a composable approach collects, models, and activates customer data directly from your existing data warehouse. This eliminates the need to manage and pay for duplicate copies of your data in an external platform. By leveraging your existing data infrastructure, you get all the functionalities of a traditional CDP without being locked into a single vendor’s ecosystem. This gives teams total command of their data, so more teams across the organization are enabled with the flexibility to create and activate audiences using the entire dataset.
Key differences between traditional CDPs and composable CDPs
Here are some key differences between a packaged CDP and a composable CDP:
Implementation
While traditional CDPs are advertised as “out-of-the-box” and “ready-to-use,” they are never straightforward and often take 6-12 months to implement, from signing the contract to building pipelines and training your team. And because you’re locked into the vendor’s platform, migrating to a different solution in the future becomes a challenge.
Composable CDP architecture integrates with your existing tech stack, data warehouse, ETL pipelines, and event collection systems. This makes implementation of the various tools and platforms you choose much easier. You can also tackle implementation one use case at a time for even faster deployment, and there’s no risk of getting locked into one vendor’s ecosystem or schema.
Structure and design
Traditional CDPs are built as all-in-one solutions where all functionalities are integrated into a single platform. While this setup provides a comprehensive package of features and capabilities from one vendor, it often leads to high data storage fees and limited flexibility, as brands are restricted to the customization options offered by the platform.
On the other hand, a composable CDP model allows brands to select and integrate only the components they need, creating a highly customized solution. This modular approach ensures your customer data strategy is tailored to your unique needs without unnecessary features or expenses.
Flexibility and scalability
The all-in-one nature of traditional CDPs means they offer a pretty defined set of capabilities. Customization options are confined to what the platform provides, and scaling the system often requires significant upgrades, which are complex and costly.
A composable CDP offers much greater flexibility. Brands can scale their data infrastructure by adding or upgrading individual components as needed, making it easier and more cost-effective to handle growing data volumes and evolving customer engagement strategies. This modular approach supports rapid adaptation and customization – the options are truly limitless.
Data storage fees
One of the biggest pitfalls of traditional CDPs is the need to store a copy of your data within the vendor’s platform. This duplication often leads to substantial data storage fees that can quickly get out of hand as your data volumes grow. Not only does this drive up costs and diminish ROI, but it also complicates data management, making it harder to efficiently track and leverage customer data.
The warehouse-native composable approach works directly with your brand’s own data cloud, eliminating the need to move or copy data to a separate platform. By sidestepping these bloated storage fees and the headache of maintaining multiple data copies, teams can move much faster with direct access to real-time data while maintaining full control over their data strategy.
Cost efficiency
Beyond duplicative storage fees, traditional CDPs also lead to paying for duplicative features. They require a significant initial investment for a comprehensive package that often includes features not immediately needed or used by the business. The cost structure is typically fixed and based on predefined packages, offering less flexibility in managing expenses.
Composable CDPs are inherently more cost-effective due to their modular nature. You only pay for the specific features and components you use, and you can scale those based on actual usage and requirements. This approach helps brands avoid overspending on superfluous features and ensures they’re only paying for what they truly need. The tech stack consolidation savings can be huge!
Choosing between a composable CDP and a traditional CDP
The emergence of the composable CDP model comes at a time when its packaged counterpart faces scrutiny for its limitations and costs. The composable CDP approach empowers brands to select best-of-breed tools and platforms to create a customized solution that perfectly aligns with their specific needs.
As you weigh your options between a traditional and composable CDP strategy, consider whether you need a predefined, out-of-the-box solution or something scalable and agile that can adapt flexibly to your evolving requirements. To learn more about the composable approach, book a demo with one of our data experts.