News Analysis
The Gist
- Acquisition overview: Contentstack acquires Lytics, signaling renewed M&A activity in the CDP industry.
- Strategic impact: Analysts see this as a move to give Contentstack a competitive edge in DXPs through integration and incremental value.
- Advancing personalization: Real-time activation of first-party data aims to deliver hyper-personalized digital experiences.
The world of DXPs and CMS meets CDPs, again.
Contentstack, a provider of a composable Digital Experience Platform (DXP), announced today the acquisition of Customer Data Platform (CDP) provider Lytics in a transaction that closed last month. The merger creates a 500-customer and 500-employee new company.
The acquisition also wakes up a quiet CDP industry when it comes to mergers and acquisitions. It has been a long time since any of the mid-tier CDPs were bought, with the exception of ActionIQ last month, according to David Raab of Raab Associates, Inc., and, founder of the CDP Institute.
“We may be seeing the start of a new acquisition cycle as companies that have held out through the past two years of diminishing demand finally cash out,” Raab said.
Contentstack’s acquisition of Lytics is evidence of a trend in CDP market consolidation and contraction, according to Gartner VP Analyst Lizzy Foo Kune.
"The CDP market itself has reached a state of commonly accepted capabilities," Foo Kune said. "Buyers in the market are looking for evidence that their CDPs will be able to develop features in a dynamic, ever-changing market. We expected to see consolidation in the CDP market as it settles into a stable one with a number of viable providers, including 'megavendors' with longstanding diversified offerings. In addition, about half of the vendors surveyed for our Magic Quadrant for Customer Data Platforms 2024 indicated that they too saw market consolidation on the horizon."
Table of Contents
- DXPs Have Met CDPs Before
- Activating First-Party Data for Personalized Digital Experiences
- Tale of the Tape: Examining Contentstack and Lytics
- Contentstack-Lytics Integration Process and Customer Experience
- Data Fuels, But Could Stall, True Personalized Customer Experience
- Contentstack-Lytics: First Composable Platform?
- Contentstack-Lytics Comes as No Surprise for DXP-CDP Industries
- Core Questions Around the Contentstack-Lytics Acquisition
DXPs Have Met CDPs Before
Where DXP meets CDP, this isn’t a unique acquisition. Acquia acquired AgilOne in 2019; Bloomreach acquired Exponea in 2021; and Sitecore acquired Boxever in 2021.
It could, however, make Contentstack stand out in one department when it comes to the world of digital experience software: If it can seamlessly integrate into any current enterprise stack, gradually enhancing value through elements of its composed solution, according to Chuck Gahun, principal analyst of Forrester.
“This acquisition is about solving the data layer that powers personalized experiences, while also giving Contentstack’s Personalize Product differentiated stature in the headless CMS marketplace,” Gahun said. “However, the north star isn’t differentiation, rather challenging the long-standing platform incumbents that there is a new category of SaaS DX solutions in town. One that can weave itself into any modern enterprise stack and start adding incremental value — through components of its composed solution.”
Activating First-Party Data for Personalized Digital Experiences
Why Lytics and why now?
Neha Sampat, founder and CEO of Contentstack, told CMSWire the acquisition of Lytics addresses a critical challenge for Contentstack's customers: the ability to activate and act on first-party data in real time to deliver hyper-personalized digital experiences at scale.
“While Contentstack has excelled in managing and delivering content, the integration of Lytics' real-time customer data platform capabilities bridges the gap between content and actionable data,” Sampat said. “This empowers brands to create dynamic, personalized experiences by combining behavioral insights, audience profiling and data activation with Contentstack’s composable architecture.”
Further, this move aligns with Contentstack's broader vision of building the world’s “most modern and composable Digital Experience Platform."
By integrating Lytics, Contentstack offers a unified solution that combines content management and real-time data activation, Sampat added.
“This,” she said, “not only differentiates Contentstack from legacy monoliths and pure-play headless CMS vendors but also enables customers to deliver faster, smarter and more impactful digital experiences, fulfilling the promise of personalization at scale. This fulfills our objective of putting our customers in the driver’s seat of delivering the world’s best digital experiences.”
Specifically, Contentstack officials said the acquisition brings:
- Real-time engagement data and audience insights for both known and unknown visitors.
- The ability to create audience profiles and segments out-of-the box.
- A data activation layer that enables users to access and understand customer data and send it across preferred channels.
Related Article: Can AI Transform Your Digital Content Strategy
Tale of the Tape: Examining Contentstack and Lytics
What Is Contentstack?
According to the CMSWire DXP Market Guide, Contentstack is a privately held and funded Delaware Limited Liability Company based in Austin, Texas. The company as of about a year ago had 400-plus employees and operates in North America, EMEA and APAC with a location-neutral policy in place.
Contentstack was originally self-funded and part of digital transformation group Raw Engineering. The Contentstack offering was first commercially available in 2014. In January 2018, Contentstack was spun out as an independent venture.
Since then, Contentstack has received three rounds of funding:
- October 2019: $31.5 million in Series A funding led by Insight Partners with participation from Illuminate Ventures and GingerBread Capital.
- June 2021: $57.5 million in series B financing led by Insight Partners. Existing investors Illuminate Ventures and GingerBread Capital also participated, as did new investor Georgian.
- November 2022: $80 million in Series C funding co-led by Georgian and Insight Partners with participation from Illuminate Ventures.
MACH Roots: Microservices, API-First, Cloud-Native, Headless
Contentstack was built in response to the challenges experienced by the company’s team of CMS and MACH experts when they used traditional CMS suites. It is a headless platform that aims to deliver a modern architecture specifically built for enterprises enabling marketers to manage content and deliver digital experiences to their audiences across any digital channel and any digital touchpoint. These include web, mobile, kiosk, wearable tech, voice, bot and AR/ VR.
Contentstack saw early traction among large global brands across industries as diverse as technology, manufacturing, financial services and sports. Today it is used by global brands across a wide number of industries. Contentstack positions itself as a pioneer in the headless CMS space and is a founding member of the MACH Alliance.
Contentstack did not crack the Gartner Magic Quadrant for Digital Experience Platforms in 2024 but was named a "strong performer" in the 2023 Forrester Wave for Digital Experience Platforms.
Forrester: Strong DXP Vision, Limited Portfolio
Forrester recognized in that Wave report Contentstack's strong vision for a flexible digital experience platform, highlighted by its advanced features like generative AI and a personalization engine.
However, it faces challenges due to a limited portfolio and reliance on partners for essential components. (Perhaps the Lytics acquisition can fill this gap). Feedback from customers includes concerns about the rapid pace of updates and the need for more accessible documentation. Contentstack is best suited for enterprises focused on tailoring their digital platforms to specific strategies.
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What Is Lytics?
According to the CMSWire CDP Market Guide, Lytics is a "Campaign CDP." Based in Portland, OR and founded in 2012, it raised more than $58 million since launching in 2012. Some customers include ancestry.com, General Mills, Penguin RandomHouse, Time, Universal Music Group and Yamaha Community.
Particular strengths include real time processing, targeting and personalization, while challenges include dashboards that aren’t user friendly and limited segmentation tools.
Lytics did not make the Gartner Magic Quadrant for CDPs in 2024 nor the Forrester Wave for B2B Customer Data Platforms last year.
Related Article: Digital Experience Platforms (DXPs): What to Know in 2024
Contentstack-Lytics Integration Process and Customer Experience
The integration of Lytics into the Contentstack platform will be executed in phases, according to Sampat:
- Immediately: Lytics is now a Contentstack company, and its products remain available as standalone offerings. Contentstack customers and prospects will be able to access Lytics through standard integrations and plug-ins, leveraging its real-time customer data platform capabilities independently.
- Enhanced integration: In the coming months, Lytics’ capabilities will be deeply integrated into Contentstack’s composable Digital Experience Platform. This will include embedding Lytics’ real-time audience profiling, segmentation and data activation features directly into Contentstack’s workflows. This integration will enable brands to seamlessly combine content and data to deliver hyper-personalized digital experiences at scale.
According to Sampat, Contentstack is integrating Lytics products by immediately offering them to existing customers through standard integrations and a free developer tier, aiming for a unified pricing and packaging model over time. Existing Lytics customers will have incentives to upgrade and receive support through Contentstack's comprehensive support programs to facilitate a smooth transition. New customers can access both Contentstack and Lytics offerings right away, with a future vision of merging products and pricing into a cohesive Digital Experience Platform framework.
Expected Outcomes of Tool Adoption
The combined Contentstack-Lytics solution is delivering on the enterprise’s quest to deliver personalization at scale, Sampat said. As such, the expected outcome is the delivery of truly personalized experiences, which Sampat said will result in:
- Increased audience engagement (both digital and in-store/sales-led)
- Improved conversion rates
- Shorter buying cycles
- Brand differentiation (i.e. being able to differentiate against competitors through delivering a personalized experience)
- (Ultimately) increased revenues
Scalability and Reliability of Features
One common concern among practitioners is the scalability of new features. How is Contentstack addressing this to ensure long-term reliability?
Part of the rationale for acquiring Lytics was rooted in its technical choices, and the alignment of technologies between both companies, Sampat said.
"As such," she added, "we have an iron clad plan to continue to invest in the underlying technologies that support our combined offerings and migrate/streamline where appropriate. Both companies have invested heavily in enterprise scale, and as such, will continue to uphold these standards in the future."
Data Fuels, But Could Stall, True Personalized Customer Experience
What are the consumer trends in terms of consuming digital experiences at play here?
Personalization Disconnect Between Consumers and Brands?
Gahun noted Forrester’s 2024 consumer pulse data shows that consumers are becoming more wary of sharing more personal data, with 33% stating that they would never like to receive personalized interactions from companies.
Subsequently, Forrester's 2023 CMS research also reveals that companies are passing the buck to software vendors, criticizing personalization as the least valued capability by enterprise businesses.
"To help bridge this gap, in 2024, we saw a few pivots in the headless CMS market for tech stacks that are built from an amalgamation of point solutions (aka ‘composed’)," Gahun said.
He cited a two headless vendor product roadmap examples:
- Contentstack announced its Personalized Product to deliver personalized experiences on the edge.
- Contentful acquired Ninetailed, a personalization vendor that worked with several headless CMSes, including Contentstack.
Adobe and Optimizely further continued building market momentum around their platforms, which incorporate data as a fundamental component to drive personalized interactions and more conversions: Adobe’s Gen-Studio for Performance Marketing and Optimizely One.
"The lowest common denominator to make personalization successful, beyond tech capabilities, is data," Gahun said. "The lowest common denominator to make personalization unsuccessful, is also data. You can convert and attrit customers at the same time if you don’t do it right."
Are CDPs About Data Unification vs. Personalization?
Raab cited data in the CDP Institute's just-released Member Survey that shows that people still see the main benefits of CDPs as data unification, not personalization:
"So Lytics is complementary to Contentstack," Raab said, "rather than overlapping with it."
Related Article: What Is a Customer Data Platform (CDP)?
Contentstack-Lytics: First Composable Platform?
Contentstack’s acquisition of Lytics is moving Contentstack further down the path of creating the first "composable platform," according to Gahun. Previously, it also incorporated front-end hosting into their package, which made it easier for businesses to move to a headless CMS, contractually.
"At the end of the day, we need to help more businesses solve their data challenges, usually siloed across geographies and business units, to help transform customer experiences," Gahun said. "While this acquisition bolsters Contenstack’s Personalize Product, it will be more interesting to see how Contentstack’s backbone ingests and leverages enterprise data to deliver genuinely, personalized consumer experiences."
Contentstack-Lytics Comes as No Surprise for DXP-CDP Industries
Now, back to the acquisition trends at play here — and what could happen down the road.
Raab of the CDP Institute said it was no particular surprise to see Lytics getting acquired. It is stuck in the middle as a not-very-large independent CDP, which is not a good place right now, according to Raab.
"They have some very interesting strategies related to pursuing small businesses, which is a potentially good move but probably requires more time to develop than they can afford," Raab told CMSWire. "Aligning with a CMS/DXP fits with that, since Contentstack presumably serves a broad range of clients. In general, personalization in a CMS/DXP requires good customer data, so it’s a natural fit."
Lytics in particular has embraced composability, which is another similarity to Contentstack and should make it easier for the products to work together, according to Raab.
"I expect other CMS/DXP vendors will build their own CDPs or set up integrations with other CDPs, and wouldn’t be surprised to see a few more acquisitions by that group," he said.
CDP Overlaps With Enterprise Tech Like DXPs
Indeed, when the CDP craze came to light last decade, big players like Adobe, Salesforce and Oracle jumped on board and started to build their own CDPs. Then, Acquia, Sitecore and Bloomreach began to acquire CDPs, as noted earlier, making Contentstack "late to the party," according to Gartner's Foo Kune.
"Maturing markets tend to be buyer’s markets, as buyers seek to consolidate architectures and eliminate redundancy," Foo Kune told CMSWire. "Because the CDP has long had significant overlap with other common enterprise technologies, including DXP technologies, it’s not terribly surprising to see Contentstack interested in acquiring a CDP. Many of these vendors see value in the CDP as the 'plumbing' of their tech stack, much like the end users of these platforms sometimes do too."
Core Questions Around the Contentstack-Lytics Acquisition
Editor's note: Here's a summary of two core questions around the Contentstack-Lytics acquisition:
Why did Contentstack acquire Lytics?
Contentstack acquired Lytics to address a critical gap in real-time data activation and personalization within its Digital Experience Platform (DXP). The integration of Lytics’ CDP capabilities allows Contentstack to deliver hyper-personalized digital experiences by combining behavioral insights, audience profiling and data activation with its composable architecture.
What does the Contentstack-Lytics acquisition signify for the CDP market?
This acquisition highlights a trend of consolidation in the CDP market, reflecting the industry's shift toward integration with DXPs. Analysts see this as a move to combine content management with real-time data capabilities, offering businesses a unified platform for delivering personalized, scalable digital experiences.
