Marketing cloud vendors join the customer data platform industry

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Customer data platforms are packaged software that combine customer data from multiple sources into unified profiles that can be shared with other systems. They’re a billion dollar industry, but have been relatively unknown outside of marketing technology circles. One reason is that the big enterprise software vendors have not offered CDP products of their own.

Those days are now officially over. Salesforce this week announced it is expanding its CDP product, Customer 360, to include a persistent database. That’s a big change because the original version of Customer 360 assembled customer data from source systems but did not store the results.

Salesforce thus joins Oracle CX Unity (announced October 2018) and Adobe Experience Cloud Profiles (announced March 2018) in accepting persistent profiles as a core CDP requirement. All three are late to the game: persistent data has long been the standard among specialist CDP systems. It is one of the five essential features identified in the CDP Institute’s RealCDP certification program, a vendor-neutral project that aims to clarify which products truly deliver on CDP user expectations.

The CDP industry is already thriving without participation by the marketing cloud vendors. It will have to survive a bit longer without their help, since none of their CDP products are yet in general release.

But there’s no question that the cloud vendors’ entry will be a gain – if only because they’ll now stop disparaging the concept, something they did frequently before they had their own products to offer. More important, the cloud vendors will draw attention to CDPs outside of CDPs’ current base in marketing departments.

The expanded exposure for CDPs comes at a good time. Nearly every large company has some type of digital transformation project under way and most of those projects require unified customer data. IT departments have been looking at other solutions to house that data, including CRM, data warehouses and data lakes.

Each of these has limitations: CRM systems are designed to capture customer interactions within the system not store data from other systems. Data warehouses are highly structured and struggle to keep pace with changes inputs. Data lakes can ingest almost anything but don’t give non-technical users easy access to unified customer profiles.

By contrast, CDPs are optimized to create and share customer profiles. They are specifically designed to ingest all sources with minimum technical effort, to retain full details of all ingested data, assemble the data into unified profiles, and to present those profiles through end-user interfaces, API connections, and formatted file extracts.

Some CDP vendors have proprietary technology but most use standard connectors, data stores, and other components. Their advantages come from preassembling these components to reduce time, cost, and risk compared with custom development.

CDPs can also fit well with technologies already in place. They often read data from existing warehouses, data lakes, and integration platforms instead of gathering it directly from source systems. Similarly, CDPs often leverage existing data quality and master data management systems to cleanse inputs and match customer identifiers.

Technologists starting to explore the CDP landscape can be overwhelmed by the number of products – nearly 100 at last count. Happily, they fall into a number of categories that can quickly narrow the consideration set. Key differentiators include:

System scope

The CDP industry is increasingly divided between vendors that focus on data assembly (collection, unification, and access) and data activation (assembly plus marketing applications such as analytics, personalized message selection, and delivery). The data assembly vendors tend to sell to corporate IT teams and large enterprises, which use them to plug specific gaps in their existing data architectures. The activation vendors sell more to marketing departments and mid-size companies that are looking to reduce complexity and integration costs.

Industry specialization

A growing number of CDPs specialize in particular industries such as retail, travel, restaurants, financial services, healthcare, and B2B. These systems provide industry-specific data models, prebuilt integration with core operational systems such as airline ticketing, and staff with industry expertise. Some of the largest CDP vendors have vertical industry editions with similar specialization.

Regional and company size specialization

CDP vendors have emerged throughout Europe and Asia. Like industry specialists, they have local knowledge that can simplify deployment at relevant clients. The industry is also beginning to see CDPs tailored to relatively small companies, with price points as low as $1,000 per month. These systems are designed for very simple deployment and operation and typically include both collection and activation features.

Enterprise-wide applications

Although marketing departments have been the main buyers of CDP systems, other departments can also benefit from unified customer profiles. Typical non-marketing users include sales, customer service, analytics, and operations. Corporate IT and compliance teams also use CDPs to help with data governance and privacy regulations. Data assembly CDPs in particular will support enterprise deployments with advanced security, access control, and user management.

Privacy compliance

Privacy rules have been a particular boon to CDPs, which deliver many of the capabilities needed to comply with regulations like GDPR and CCPA. Some CDP vendors have built their own consent management modules or integrated with third party consent management tools.

In an industry as large and varied as Customer Data Platforms, entry of the marketing cloud vendors will not change anything overnight. The major CDP vendors have proven, mature products that will compare favorably with whatever the cloud vendors initially deliver. One of the cloud vendors’ major selling points is tight integration with other modules of their own suite.

But that’s less important in the CDP market, where easy integration is a design goal for all products and where buyers want to use products from multiple vendors. What the cloud vendors’ presence does do is to raise the profile of CDP as a category across the technology community. This will likely increase sales for all CDP vendors as more buyers consider the category, educate themselves about requirements, and explore all options before making a purchase.

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