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PHOTO: Charles Deluvio

Some say that curiosity didn’t kill the cat, indecision did. The CDP category is teetering dangerously on the edge of the cat’s fate. 2021 will be the year that indecision disappears.

David Raab, founder of the CDP Institute, coined the term customer data platform (CDP) in 2013. By 2016, interest in the category began to take off and by 2018, CDPs went mainstream. As we finish the first week of 2021, the category faces its toughest challenge yet: to prove whether it belongs.

Originally created with the purpose of being a marketer-managed system that creates a unified customer database that is accessible to others, today almost every marketing technology category has a vendor calling itself a CDP. We're not going to try to make sense of this market (we did that last year), but we would like to examine some changes we believe is coming this category’s way.

Prediction #1: CDPs Return to Their Roots as Data Management Solutions

David Raab defined CDPs as “a packaged software that creates a persistent, unified customer database that is accessible to other systems.” But by 2020, everything from personalization engines, to data enrichment platforms, to social listening tools were calling themselves CDPs.

The result is a clearly confused market. One where the value of a CDP is unattainable — not because the technology has no value, but because no one knows what that value should be.

2021 will be the year the CDPs go back to their origin of core data management focus. A few months ago, BCG published an article on how CDPs can lead to one-to-one personalization. The authors broke down the CDP vendor landscape into two categories: those with a core data management focus, and those with a core activation focus.

core mgmt focus

Although the distinction is important, it is time the market (vendors, observers and buyers alike) matures to the point it can clearly state, “activation focus is not a CDP.” 

We define true CDPs as those that focus on solving the data challenge. Meaning they are capable of ingesting, cleansing and unifying customer data in order to distribute it to other systems for those systems to act upon it. True CDPs are not equipped to solve challenges further down the marketing workflow such as message orchestration and last mile delivery of campaigns.

Related Article: Customer Data Platforms: The Truth Behind the Hype

Prediction #2: Marketers Realize CDPs Are Only a Means to an End

A recent survey by Twilio Segment found that 73% of decision makers say a customer data platform will be critical to their customer experience efforts. The same survey found that most respondents (73% of them) will use a CDP for data collection.

Although brands expect CDPs to be central to their customer communications, interactions and experiences, they do so by looking to the CDP for data ingestion, unification and availability — not for driving those interactions and experiences.

For example, early in 2019, David Raab published a thought-provoking article titled, “Why Your CDP Needs a Brain.” The driving message behind it was the fact that many brands want their CDP to improve their marketing automation and orchestration. However, as stated in the article, “smart automation means providing customers with meaningful interactions across channels and at scale. Assembling a beautiful customer database is only part of the solution.”

2021 will be the year brands understand CDPs are the basis for something greater. Gone will be the days a vendor will be able to say they are great at unifying all customer data as well as orchestrating any channel. Or the time when a CDP could claim to also do web personalization.

Brands who purchased a real CDP (a core data management CDP that is) will realize the CDP alone can’t help them reach their goals of improved customer experience or smarter interaction management.

Related Article: Curiouser and Curiouser – Drawing the Line Between DXP and CDP

Prediction #3: CDPs Find Their Ideal Partners Based on Brand Goals

Gartner research found only 58% of marketing leaders said they were extracting full value from their martech stack capabilities. Ben Bloom, a senior director analyst in the Gartner Marketing practice, recently stated that "several combinations of technology products adopted by high-performing brands demonstrate that they don't just adopt technology. They extend it with complementary tools, and build capabilities that advance their maturity and effectiveness."

All this is to say that brands need to find the combination of tools that will create the ideal martech ecosystem for them. One where they can reach their true goals and maximize their capabilities.

A more focused CDP category can lend itself for specific use cases of complex data ingestion, unification and stewardship. These refocused CDPs could coexist side-by-side, while providing organizations with a clearer picture on how to combine and leverage them as part of existing martech ecosystems.

martech ecosystems

For example, large enterprises could combine both a CDP and a multichannel marketing hub (MMH), above their legacy data warehouses. In this setting, the CDP would focus on integrating, cleansing and unifying all the data, with the help of the enterprise’s data engineering team. The cleansed data would be loaded into the MMH, where non-technical marketers would be able to access a single customer view and use sophisticated decisioning tools and algorithms to orchestrate hundreds of segments and campaigns with ease. Some will even venture further in this best-of-breed approach and include point solutions as execution channels (EC) connected to the MMH.

For companies whose data is more “in order” from the get-go, a data warehouse (DW) might not be needed at all. While for companies with a limited number of campaigns and/or channels, which don’t require sophisticated orchestration and decisioning, an MMH might not be required.

Related Article: What Can You Do With a Customer Data Platform?

2021 Will Be the Year Clarity Comes to the CDP Category

By refocusing the category definition, understanding that a CDP is the first stop in a greater path, and discovering the solutions that complement them, clarity will be restored in 2021.

This refocused CDP category might just be able to then fulfill its promise, while marketers will finally be able to make sense of it all. But for this to happen, the market needs to take a strong look in the mirror and decide what path it wants to take.

The first path leads to the death of the category. Just as indecision might have killed the cat, the CDP market might succumb to its inability to define itself. If two vendors at opposite ends of the spectrum delimited by BCG can find themselves at the same table competing for exactly the same RFP, something is broken. Marketers will eventually tire from the confusion and settle on the capabilities their current solutions, such as marketing clouds, provide. Which leads us to a second path.

A seismic shift where the category splits. One half, the core data management focused side, continues to be recognized as a CDP. The second half moves on from defining itself as “only a CDP” to defining itself as a complement that feeds off the unified data a CDP provides to achieve business objectives such as orchestrated communications across channels, improved customer experience, and increased impact from marketing communications.