Are CDPs Having An Identity (Resolution) Crisis?

are cdps having an identity resolution crisis

Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media. 

Today’s column is written by Joseph Enever, senior director analyst at Gartner.

Customer data platforms (CDPs) are facing an identity crisis: just like marketers.  Although marketers have spent lavishly on martech to support personalization, brands face a regulatory and technology landscape that forces them to reevaluate their investments.  In 2020, we predicted that by 2025 80% of marketers who have invested in personalization will abandon their efforts due to lack of ROI, the perils of customer data management or both.

Can CDPs save the day by helping marketers confront gathering and governing data with rigor, or must they wean their ad tech and mar tech off silent but efficient data harvesting tactics? Of the four vendor types in the CDP market, 2020’s two major (to date) CDP acquisitions validate separate CDP types: Data Integration CDPs and Smart Hub CDPs (the other two are the marketing cloud CDPs, and CDP toolkits).

Segment is a marketing data integration CDP, and the acquisition by Twilio is all about integration. If headless commerce – which separates the front end and back end of the experience – is here to stay, will headless customer data be far behind? Data Integration CDPs like Segment can be effective in combination with other mar tech, but most CMOs want unified customer data to anticipate what happens next – not as an end in itself.

are cdps having an identity resolution crisis

Smart Hub CDPs, however, were designed to replace the aging segmentation and activation machinery in the modern mar tech stack. Far too many mar tech dollars have been invested in a vision of 1:1 personalization at scale, with marketers struggling to prove ROI outside of digital commerce use cases.

Salesforce’s acquisition of Evergage – which functioned as a Smart Hub CDP and Personalization Engine prior to being rebranded as Interaction Studio – improves the marketing cloud’s predictive analytics and real-time decisions for personalization. With the launch of its internally developed CDP this fall, Salesforce is building a bridge to a more flexible and channel-agnostic orchestration approach than has been available to date.

Seventy nine percent of marketers either have or will have a CDP within the next three years. This may come as no surprise given the intense demand that the category has seen in recent times, but marketers’ perceptions around the principal use cases for CDPs continue to develop and change.

Take for example that 51% of marketers with a fully deployed CDP, when asked about the main way in which their CDP services their organization, stated that their CDP was their CRM system. And many have widely varying expectations of the ROI those CDPs will deliver – with customer understanding, journey insights and behavioral observations at the top of the list and identity resolution ranked a lowly 6th (Figure 1).

are cdps having an identity resolution crisis 1

Do marketers simply not understand fully what the core proposition of a CDP is in terms of capability, or is this a reflection of both what marketers feel is most valuable to them, and of the diversity of technology verticals purporting to offer CDP capabilities?

Most likely it is a mix of the latter two. After all, CDP-like capabilities emerge across personalization platforms, multichannel marketing hubs, customer journey analytics tools, mobile marketing platforms, alongside the aforementioned CDP types. It is no wonder that marketers have such a varied set of use cases and expectations. As marketers grapple with understanding the changing landscape of CDP technology, the category’s target customers are also evolving.

The accelerating trend of digital transformation, spurred by the impact of the COVID-19 pandemic, is driving organizations to evolve their customer data management practices, which span the entire customer journey and encompass marketing touchpoints and activation. Marketers are now realizing that their digital presence is in no way connected to the rest of their ecosystem and have highlighted gaps in data connectivity across their organizations’ touchpoints.

In turn, the office of the chief data officer (CDO) is gaining more focus, which forces marketers to address their model of engagement with the wider organization such that they can show the value and business impact of digital transformation. This necessity will impact marketers’ involvement and influence on customer profile management. In fact, many of the largest enterprises’ marketing analytics teams more commonly report into the CDO, as opposed to the CMO.

Part of the CDO’s remit is to organize data and analytics within the organization – and marketing is one of the biggest organizational investments and opportunities to show value. This occasion makes it important to clarify the difference between master data management solutions and CDPs, because data and analytics leaders will want to assess the market options. With these shifting focuses within organizations, and the unquenchable thirst marketers have for reaching the promised land of real-time, unified customer data and intelligent orchestration, CDP vendors must continue to refine their products and positioning to cut through the hype and clarify their identity.

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