Key Considerations For Marketers Investing In A Customer Data Platform
“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 David Kaganovsky, Global Chief Technology Officer, Wavemaker Global
As the third-party cookie approaches its sunset, marketers are scrambling for alternatives. Could the customer data platform (CDP) be that solution, helping brands to thrive in a cookieless world?
Let’s explore the question.
Learning from the DMP experience
There’s a precedent for the CDP: the data management platform (DMP).
DMPs have been useful in media activation, aggregating first-party cookie data to perform complex matching functions and integrating second- and third-party data to enrich the data pool. Advertisers were able to use this enriched data to build look-alike models that powered demand-side platforms.
The problem is that many enterprises purchased DMPs without developing plans for them or asking some important questions: How would they use their DMPs and who exactly would be putting them to work? What value did they expect to derive from their DMPs? What data sources did they have at their disposal? Advertisers succumbed to the hype that surrounded the DMP, with certain enterprises spending hundreds of thousands of dollars on platforms only to see zero ROI.
The question is if the industry has learned its lesson. As brand interest in CDPs grows fast, we’re seeing these platforms stimulate some of the same questionable behavior that DMPs did. But a change in the marketing ecosystem plus a hot new acronym doesn’t necessarily add up to the solution many wish it would.
Luckily, I think we can do better this time around.
Is a CDP the answer?
A customer data platform enables the collection, normalization and presentation of first-party data: from CRM systems, loyalty databases, email marketing services, mobile apps, social channels, post-office mail databases, ecommerce profiles and transaction and cookie databases.
Then the CDP combines those data sources to create a unified customer profile. When third-party cookies are gone, building a single customer identity is going to be more important than ever.
But marketers will have to invest in CDPs with their eyes wide open—that is, differently from how many of them invested in DMPs. Here are some things that decision makers should do as they consider acquiring CDPs:
1. They should make sure the right parties at their organizations understand—and have accepted—the business case for a CDP. That case must be well-documented. Since a CPD isn’t a marketing-specific tool, advertisers should form cross-functional teams,including technologists,to articulate both the business case and ROI assumptions before the enterprise takes the plunge.
2. They should take fresh looks at their marketing team structures and operating models to see how their organizations can best put a CDP to work. Such a platform’s power is in the data it intakes and integrates—all those prospects and customer So it makes sense now to consult with a range of experts on that data—in IT, in marketing, at the brand’sagencies. (These experts might collectively come to be known as the “marketing technology team.”)
3. Third, they need to control their own platforms. One dynamic that arose during the industry’s enthusiasm for DMPs was that abrand’s own team could lack the skillset to use a DMP to its fullest. The result was that a brand’s partners, consultants, agencies and even vendors could be the only ones capable of operating it. That shouldn’t happen again. To extract the most value from an investment in a CDP, marketers should deploy their own experts—pros who can work in synergy with specialist third-party partners.
4.Fourth, they need to get past the sales lingo, issuing rigorous quantitative RFPs and running pilot programs to vet the assertions that CDP vendorsPartnering with agency and internal IT teams will be critical here.
What agencies can do
Agencies have a big role to play in the CDP acquisition process. More importantly, they have to help their clients by asking the right questions. They should be the ones to start conversations about a CDP’s business case for the client; about the client’s ability to put a CDP to best use; about what connections the client needs to make with other stakeholders; and about how a unified customer profile can support the brand’s growth journey.
CDPs are becoming especially relevant as the third-party cookie fades away. Let’s learn from past mistakes so that brands can use CDPs as effectively as possible in the emerging advertising landscape.