A digital profile of an anonymous face
A digital profile of an anonymous face
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Why “CDP” is the new acronym the marketing ecosystem is jumping on

Simon
Simon
Nov 28, 2019 · 7 min read

The last 24 months have seen the slow and steady growth of an acronym in the digital marketing industry.

The emergence of the CDP (Customer Data Platform) has seen a number of start-ups attract large amounts of investment including the likes of mParticle ($75m*), Lytics ($58m*) and ActionIQ ($45m*)

As the market has continued to grow, we have seen the three major Marketing Clouds (Adobe, Oracle and Salesforce) all announcing that they will be building their variants of the CDP, with Adobe and Oracle’s platforms are already in beta and Salesforce officially launching their variation at Dreamforce last week.

So what is a CDP and why has it grown from just another three-letter acronym to a piece of technology that Adobe, Oracle and Salesforce are all investing hundreds of millions of dollars in, to secure their relevance in the future of digital marketing?

Well, let’s start with that first question.

What is a CDP?

A Customer Data Platform is a piece of technology that promises to de-duplicate and unify all of a company’s customer information within a single platform.

Once there, companies can obtain a single view of their customers to help them understand how best to communicate with them across key channels such as email, call centres, mobile devices and their website.

If you think that sounds remarkably like a Data Management Platform (DMP), then stayed tuned. That article is in the pipeline!

So why is the concept of a CDP so popular?

The CDP isn’t particularly new. A number of these platforms have been around for over five years now which may as well be a lifetime in the ad-tech space.

However, the last twelve months have thrust these organisations into the limelight and persuaded the marketing clouds to climb onboard the CDP bandwagon.

So, why is that?

Well, the simple reason is that there is now a real and rapidly growing market for what the platforms offer and, in my opinion, that’s principally down to the following reasons.

GDPR has arrived in Europe — with similar regulation expected to roll out in the US and APAC

As a Datatech consultant based in Europe, it’s fair to say that GDPR has changed everything.

With fines for companies that break the new regulation starting at ten million euros and reaching as high as 4% of global annual turnover, companies have to get things right or risk a defining moment in their business.

The problem they have though is that very few organisations would feel comfortable that they’ve ticked all of the boxes, should they get audited.

A large part of that is down to the fact that brands haven’t traditionally been collecting permission to use their consumer’s data for marketing purposes. After all, before GDPR came in, there was no need to — so why would they have done?

Therefore, brands are in a position where they’re having to:

  • Ask permission to use their consumer’s data for the first time
  • Find a reliable piece of tech to store those permissions across a multitude of consumer touchpoints
  • Continue with their data-driven marketing efforts in the meantime.

The majority of CDPs will help an organisation tick all three of those boxes for a single monthly licence fee.

That’s because most CDPs will ingest PII (Personally Identifiable Information) as standard. As such, they tend to offer their clients:

  • The ability to ingest data from multiple sources while de-duplicating user data and segmenting consumers based on all of their interactions with a brand
  • Permission collection and management technology as standard wherever and however a consumer interacts with a brand
  • Hundreds of interactions into the marketing ecosystem to ensure that clients are able (in near real-time) to keep communicating with their consumers. as permissions are updated.

3rd Party data is just too risky — 1st Party Data for the win!

There has been an additional reaction to brands being unsure about their compatibility with GDPR.

To avoid a doomsday fine, a “safety-first” policy has been implemented which has involved a blanket wide ban on using 3rd party data because it’s practically impossible to prove that the correct permissions have been collected for its use.

The difficulty in collecting permissions though isn’t just a brand problem. The data vendors themselves haven’t been able to get their own houses in order with the likes of Mopub and Verve both pulling out of Europe because they couldn’t collect the permissions that GDPR demanded of the data that they were selling.

Oracle, who always prided themselves on being one of the largest 3rd party suppliers in Europe, have been forced into decimating their marketplace and closing down services from some pretty large acquisitions (AddThis) after threats to sue them arose from their inability to provide permissions for the data they were selling.

So with 3rd party data being viewed as a ticking time bomb, brands and vendors are being forced to ground extra value from their 1st party data.

This plays directly into the CDP’s sweet spot, given that their focus tends to be. on messaging to known users (through PII data) rather than anonymous users who are typically found through 3rd party data providers.

Privacy updates from major browsers have caused concerns over how long the cookie will be around for.

It’s not too much of a leap to say that the digital marketing industry is built on cookies. 90% of the platforms that are used in the arena rely on cookies to collect data for targeting and messaging purposes.

Therefore, imagine the concern that was caused when, in June 2019, Apple indicated that the next version of their Safari browser (around 13.5% of market share) would limit the data collected from these 3rd party cookies.

This Intelligent Tracking Prevention (ITP) only allowed 3rd party cookies to remain active for 24 hours after a user had visited a website.

After that, the cookie would be allowed for login purposes only (i.e. not for marketing) and would then be deleted entirely after thirty days.

In short, any data generated by Safari-using consumers would only be available for 24 hours.

This would have a major impact on marketing campaigns — even for the fastest moving of business!

An update to ITP released shortly afterwards took aim at first-party cookies, promising to purge them within seven days of a user’s website visit. As such, a variety of ideas to get around the original protocol would be rendered equally useless.

Around the same time, Google announced that they would be releasing a set of privacy tools within their Chrome browser. While these tools weren’t nearly as aggressive as Apple’s stance, they worried marketers more due to Chrome’s dominance in the browser market (57%).

Therefore, with brands potentially unable to collect/hold data for any meaningful time from almost three-quarters of the online universe, marketers started to look for a more reliable and long-term identifier than the cookie.

That played nicely into the hands of the CDP platforms, which tend to tie consumer data to much more robust PII identifiers such as email addresses or Mobile IDs rather than the cookie, which was starting to look more and more fragile.

DMP “hasn’t worked” and CDP is being viewed as the DMP 2.0

Rather predictably, there is a sense in the industry that there is a need for something new.

Given the similarities between the DMP and the CDP, it’s not surprising that a brief look through LinkedIn or industry blogs will highlight the belief that “the DMP is dead” that CDP is “DMP 2.0” etc etc.

I don’t particularly agree with that (that’s another article in the pipeline!). However, I do feel that that belief has come from the fact that a lot of organisations jumped on the DMP bandwagon without the necessary skill-set and resource to manage their investments effectively.

As such, they haven’t seen the ROI that they were hoping for and are now looking for a tool that offers more promise.

Conclusion

GDPR and concerns around 3rd party data have combined with many brands coming to the end of their first DMP contract and realising that they haven’t seen a return on their investment.

A perfect storm for the CDP vendors has been created whereby brands are seeing these platforms as a one-stop solution to a number of their concerns — and typically at a lower price than they paid for their existing tech.

Whether the CDP becomes the “silver bullet” solution that most brands seem to be hoping for remains to be seen.

However, the opportunity within Europe (and with the expectation that similar conditions may be met in other key markets) has meant that the Marketing Clouds have deemed it as a good enough opportunity to invest large sums of cash to provide their solutions.

For that reason alone, the CDP landscape is going to prove a fascinating battleground for at least the next 12–48 months!

One last thing

Thanks a lot for taking the time to view the article above.

I’m a new writer — both on Medium and in general — so it would be really helpful to understand whether this article was useful to you? So, any thoughts/feedback/suggestions that you have would be really appreciated, either directly or within the comments below.

Thanks very much in advance!

* Numbers taken from Crunchbase

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Simon

Written by

Simon

New writer based in the U.K. Looking to find my feet on here by writing about Tech, Marketing, Finance and Productivity.

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