Last month IgnitionOne, a longtime database marketing/ adtech / CDP vendor, announced it planned to liquidate. The vendor had already shed much of its adtech portfolio over the past few years, so what remained was essentially a CDP with a managedservices business. Unable to secure that financing or find a buyer for whatremained, CEO Will Margiloff told shareholders he needed to shut the doors.
An obvious question ensues: Does this mean consolidation is coming to the CDP market?
I don't think IgnitionOne is a canary in a coalmine, but as an existing or potential CDP customer, you'll want to understand some of the dynamics here.
CDPs and Supporting Digital Ads
First, IgnitionOne was more of an adtech play, at least before selling off its demand-side platform andother ad-related tech and service offerings in the past few years, leaving itwith primarily a data management and intelligence story. Adtech isundergoing major consolidation right now.
Note, however, thatsupporting advertising remains an important CDP use case, especially forearly adopters. But it's only one of nine potential business scenarios for this technology, and likely not enough to win over broad-based enterprise marketing stakeholder support on its own.
In other words, even if IgnitionOne received more financing, the product runway may not in any case have proved long enough.
Fig 1. There are nine canonical business use cases for CDPs. Source: Real Story Group CDP Vendor Evaluations
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A Diffuse CDP Marketplace
The CDP market remains extraordinarily fragmented, and pundits sometimes consider this profusion unsustainable.
Fig2. The CDP market is highly fragmented, with large vendors puttingtheir toes in the water, and well-funded independents swimming alongwith some success. Source: Real Story Group CDP Vendor Evaluations
Yetthe marketplace continues to grow. Most large enterprises thatsubscribe to Real Story Group's research and advisory services have notyet adopted a CDP. But nearly all of them are in some stage ofconsidering it. Nor is market consolidation a foregone conclusion. The web content and digital experience management (WCM) marketplace has remained fragmented for more than two decades now.
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What's the Case for Consolidation?
Even as I don't predict near-term consolidation of the CDP marketplace, let's acknowledge it could happen:
- SomeCDP vendors may pursue roll-up ambitions where they acquire other CDPsolutions and compress them into their own platform or force customersto migrate. This would prove difficult and likely unprofitable given thediverse architectural and information models across the market,however. Noteworthy here is that IgnitionOne looked for — but could notfind — a buyer.
- Infused with venture cash, many CDP vendorsare running in the red today and will need regular access to capitalmarkets that may not remain as flush in the coming years.
- Some vendors are young and not yet well managed, bringing roadmap volatility risk in particular.
- Major MarTech suite vendors have not yet made an impact on the CDP market, though they have all targeted it. Revealingly, none have decided to acquire a CDP; they are all building their own.
Yesterday's news that Acquia is acquiring longtime CDP vendor AgilOne also doesn’t signify consolidation in the marketplace, since the latter isn’t going away — it’s just getting a new owner.So while your CDP vendor couldgo away, I wouldn't overweight this in your strategicevaluations. At RSG we tend to look more closely at other intangibles,like community strength, as an indicator of long-term viability.
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CDP Vendor Landscape: Still a Young Marketplace
Thelarger story is that any CDP vendor and platform — including those fromlarge martech vendors — is likely to remain less mature than offeringsfrom older MarTech / CX technology segments like marketing automation or digital asset management.
Thechart above shows a fairly generic full-market quadrant for CDPs, wherescenario fit against a basket of use cases represents the X axis, andstrategic fit represents the Y axis. In short, it's a "saggy" market,which means that RSG's vendor intangible scores tend to be low —dragging the whole group down — as you would expect for a collection ofmostly younger vendors and solutions. What they lack in technical debtthey make up for in immature customer communities and shallowimplementation channels. 😉
In fact, many CDP vendors will opt touse their own professional services to implement on behalf of customers,and I've seen many cases where the vendor more or less administers theentire platform (manages users, creates segments, etc.) on behalf of theenterprise licensee. Providing these kind of managed services (likeIgnitionOne tended to do) may prove tempting for them, but risky andless productive over time for you.
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Advice for CDP Customers
As an enterprise considering CDP technology, how should you approach this market?
- VetCDP supplier viability carefully, but don't default to the largest vendors thinking that will bring stability. Vendors with strong boundaries, clear roadmaps and growingcommunities are likely to endure, regardless of size today.
- Don't license a CDP from a non-CDP vendor.
- Don'task your CDP vendor to also become your managed services provider. Ifyou suspect heavy consulting or administrative support will be requiredon an ongoing basis for a particular platform, reorient your bearings toconsider simpler solutions and/or build up your internal capacitybefore signing on.
- Prioritize business use cases rather than discrete features to drive your filtering process.
Good luck and let me know how it goes!