The Gist
- The evolution of customer data platforms. CDPs arose to solve the problem of siloed customer data. Initially aimed at creating a unified customer view for marketers, their implementation has proven more complex than anticipated, yet the benefits are clear.
- From pure play CDPs to tech giants. The CDP market is highly fragmented, with both pure play vendors and major tech companies like Adobe and Salesforce.
- Data’s inherent complexity. Implementing a CDP is challenging and involves comprehensive contract negotiations, data organization, product management planning, and skilled marketing operations personnel. Successful implementations lead to significant wins in targeted messaging, personalization and omni-channel alignment.
In this episode of CMSWire TV‘s The Digital Experience Show, CMSWire’s Editor-in-Chief Dom Nicastro sits down with Tony Byrne, CEO and co-founder of The Real Story Group, to delve into the intricacies of customer data platforms (CDPs).
With years of expertise in evaluating marketing technologies, Tony shares valuable insights into the evolution of CDPs, their impact on the martech landscape and the challenges organizations face in implementing these powerful tools.
This conversation also touches on the fragmentation of the CDP market, the role of AI and machine learning and the critical steps necessary for successful CDP adoption.
Editor’s note: Check out the Real Story Group’s CDP Symposium next week (June 12), for which CMSWire is a media partner. More details on the show at the end of this article.
Table of Contents
Evolution of Customer Data Platforms
Dom Nicastro: Hey everybody, Dom Nicastro back for another episode of The Digital Experience Show. I’m CMSWire’s Managing Editor, and today we’re with our longtime CMSWire friend, Tony Byrne, CEO and co-founder of The Real Story Group. Tony, what’s going on?
Tony: Hey, good to see you, Dom, as always.
Dom: Yeah, absolutely. We’re going to see you shortly at The Real Story Group CDP Symposium 2024: Unveiling the Future of Customer Data. We’re psyched to be a media partner for that. We’re framing this conversation on CDPs to give you a teaser. Folks, I’m imagining Tony is going to give half-answers because he wants you to go to the CDP Symposium to get the full story from him and dozens of other speakers, right?
Tony: No, I’ll give you some good meat here. You’re just going to want to chop some more.
Dom: Yes, that’s a good way to put it. Okay, let’s get rolling. First of all, tell me about The Real Story Group for those who don’t know. Give me the 30-second pitch.
Tony: We’re an analyst firm, a little different because we only focus on marketing technologies. We also only work with enterprises and never with the vendors we evaluate. We evaluate about 160 different martech vendors and help companies with their stack strategies. One thing we’ve been focused on quite a bit for the last six or seven years now is customer data platforms, or CDPs.
Dom: Yeah, and here we are, all these years later, with symposiums about them. CMSWire has a CDP market guide. Everyone is all in on CDPs. Give us the state of the state on customer data platforms. Just an overview for someone who might be at the beginning of their journey, considering implementing it, and how that impacts the whole martech landscape.
Tony: CDPs arose about eight to 10 years ago to replace the mythical marketing database that everybody tried to build but was really frustrated with. A lot of our marketing data was trapped in different silos with different versions of the customer in a web database, an email database, social channels, and so forth. CDPs were designed to alleviate that problem by having a single place where marketers, DX people, and CX people could get the information they needed about a customer to fuel their marketing ambitions. That was the idea, anyway. It turned out to be more complicated in practice, but hopefully, the benefits are obvious.
Related Article: CRM vs. CDP: Key Differences and Which One to Pick
Vendor Mix: From Pure Play CDPs to Tech Giants
Dom: Yeah, 100%. What I’ve noticed over the years, Tony, is you get a paradox. You have the pure play vendors who were true CDPs from the start, and then you have the big guys like Adobe and Salesforce creating their own CDPs off of their marketing stacks. It’s funny because some of those big vendors weren’t believers in the beginning. There was a famous Salesforce exec quote that said CDPs are a passing fad, and then they rolled one out the next year.
Tony: Yeah, and then they rolled a different one out the year after that, and another one the year after that. But you’re absolutely right. I think this whole market, like many exciting markets including web content management and email marketing, was really defined by a wide variety of different players around the globe. We cover about three dozen different substantial CDP vendors, and only a couple have disappeared off the landscape. So it’s still a highly fragmented market. We believe you need to be careful about the Adobes and Salesforces of this world, whose CDPs are really kind of locking you into their suites, rather than serving as a more independent layer in your stack.
Dom: I was skeptical in the beginning myself too, because I said, wait a minute, a customer data platform? We don’t have that yet? We don’t have something to manage the data we’ve been collecting for decades? Like, what happened? So my question to you is, today, in 2024, how do companies and marketers know they’re CDP ready? What are the symptoms that lead them to consider a CDP implementation?
Tony: I think there are a lot of different symptoms. One is they can’t do the kind of segmentation they need to do. They know the attributes are there about a particular customer, but they don’t have access to all of the different behavioral signals or profile signals they’d like to do much more targeted messaging, which we know is a lot more effective.
Another example is wanting to have some omni-channel coherence so that when you’re messaging someone, that message is picked up on the website when they come in, on the ecommerce platform, and even affects your paid media strategies. If you’re going to do any kind of personalization, you need to have a robust view of the customer as well. All these things typically add up to someone saying, “We’ve got to get rid of all these different silos of customer data and have a single place where we can activate all our plans.”
Related Article: Simon Data Nets $54 Million for Customer Data Platform Growth
CDPs and Artificial Intelligence Integrations
Dom: In our own CDP market guide, we’re finding that a lot of those pure plays are adding capabilities with AI and machine learning. Are practitioners seeing real benefits there with AI integrations, especially in the last couple of years where it’s just gone wild?
Tony: You asked about a couple of things. One is what the vendors are doing, and what about integration. What the vendors are doing is mostly BS, you know, Dom. Typically, a CDP is not a superset of your customer data. It’s the attributes your marketers need. It’s not a great place to do a lot of AI and ML stuff.
Even the vendors themselves, if you have a couple of drinks with them, will tell you that investors or somebody else forced them to say they have this AI capability. It’s really good demo candy. But people who are doing serious AI and ML are doing it against a superset of their customer data, typically living in a data lake or data warehouse. It doesn’t mean there isn’t a CDP story. There is an exciting CDP story, not so much around generative AI, or analytics AI, but more around decisioning AI, where you build a model based on a huge data set, but then you need to do something with that model.
For example, if your model tells you that Boston Celtics fans have a propensity to buy off-brand toothpaste, you might change one of your media buy campaigns. But if you really want to embed that, you’ve got to put that attribute somewhere usable. A CDP can be a useful downstream place to store model data developed by your data science team, but it’s typically not a good place to do that modeling itself.
CDP Implementations: Data’s Inherent Complexity
Dom: And the reality is that the market is going to have to implement this tool. Are implementations pretty comprehensive if you’re starting from scratch and integrating one of these CDPs into your existing marketing stack? What are they up against?
Tony: CDP implementations are difficult because they involve customer data. There are often very difficult contract negotiations and terms that can take three to six months. That was a bit of a surprise. We’ve been advising some of our clients on how to short-circuit that. There are at least three challenges when implementing a CDP for the first time.
First is your data. How much is your customer data house in order? Do you know where all the data is that you want to use? If you’ve been working on that and have a solid single view of the customer at a lower level like in a data warehouse, the implementation will go faster. If you’re still figuring out where all your data is and trying to put it together, the implementation will be long.
Second, not having a true product management plan. You need a product manager defining the whole CDP expansion plan.
Third, not having enough marketing operations people skilled in running the CDP. It can be technical and complicated, and you need people willing to get their hands dirty to make the CDP work for your marketing team.
Dom: So you’re saying that marketers should be the leaders, and someone in marketing operations who has those technical chops should take it on versus IT?
Tony: Yes, you need IT for some integration work and data ops. Data ops are an important partner. They have a different way of looking at the world, but when it works well, they handle identity resolution, data processing, and turning raw data into actionable attributes. It’s an essential precondition to leveraging that data. Once you do that, a mature CDP can have 600 to 800 attributes for any given customer. You need someone on the marketing side, and we’re calling this person a marketing data ops person, who works with the enterprise data ops team but focuses on the marketing side and CDP to manage all that data, create new attributes, fine-tune segments and handle performance.
Where CDPs Win for Marketers
Dom: Aren’t we all data ops people these days, Tony? I feel like I’m a journalist data ops person and an editorial data ops person because all our decisions have to be guided by data. I can give you all my gut instinct on what CMSWire should cover, but the audience tells us every day what we should cover based on their engagement with our content. So, what are some of the wins after getting past the implementation mess? We know it’s a slow slog, but once it’s in the wild, months later, what are some of the wins with CDPs? Where are your clients seeing the most gains? Is it in personalizing experiences, raw data management, collecting more data? What are the big wins and promises of CDPs?
Tony: The big wins we see are better targeting on outbound messaging. Just having more data and being able to do more targeted communications is a win. Second is personalization or customization against big buckets. If you’re segmenting your customer base into six different segments, being able to communicate to those folks in six different ways is useful. Omni-channel alignment takes longer, but we’ve seen big wins in return on ad spend with better ad suppression, look-alikes, and targeting, aligning ad buys with owned and operated activity. Another interesting area is triggered activities, thinking about more one-to-one actions in near real-time, setting up triggers, and having always-on campaigns. This frees up the marketing team to be more creative and optimization-oriented.
Related Article: Understanding the Key Components of a Customer Data Platform
What’s the Road Ahead for Customer Data Platforms?
Dom: What are your thoughts about the evolution of CDPs in a few years? Are we going to see new categories emerging? Sometimes we talk about how the CMS world has evolved over the years, but I’m waiting for CMSes to evolve more. It seems like the same thing I’ve been using for five years. What kind of gains are you seeing possibly coming with CDPs in the next few years? How will they evolve, or will they stay the same?
Tony: I think the marketplace has sorted itself out. It has a spectrum from data management-oriented to data leverage-oriented. There are important architectural differences among them, but the marketplace exists with vague boundaries. You’re not going to see anything dramatic, but there are critical challenges coming up.
First is compliance and consent. Your CDP has to play an important role in that, and many organizations are still dealing with privacy and consent management issues. Data residency at a global level is another challenge. Managing complexity and the role of the marketing data ops person will be critical as more attributes proliferate. Tending your data garden may sound boring, but it will differentiate those who can do this effectively and pivot quickly from those whose CDP is just a mess.
Dom: 100%. Well, The Real Story Group CDP Symposium 2024 is coming soon. What kinds of themes will we hear about, Tony? I should know because I’m speaking at it, but you tell me. What’s the conversation going to be?
Tony: Dom, you’re going to moderate a really exciting panel on AI and CDP where we’ll go deeper into the critical view I gave you. We’ll share some wins and losses. The theme is learning from your peers. It’s a four and a half-hour symposium on June 12 from 10 a.m. to 2:30 p.m. Eastern time. You’ll learn from peers, including a firm that didn’t have a successful CDP implementation.
We’re breaking it into a lifecycle starting with trends and the future, selecting a CDP, rolling out for business success, AI and CDP, and broader trends in customer data management and compliance. You can find all this information at CDPSymposium.com. The symposium is $200 for consultants and integrators and free for enterprise marketing technology leaders. We look forward to having you there and hearing from a bunch of folks sharing their hard-won experiences.
