A CDP is Vital to Your Marketing Success, But It's No Silver Bullet. Why?
Now that the marketing industry is shifting away from intrusive third-party identifiers, and embracing identity-based first-party data, Customer Data Platforms (CDP) are on everyone’s lips. There are more than 150 CDP vendors on the market today, according to the latest industry report by the CDP Institute, and annual sales are expected to grow at a 20% to 30% clip for the next several years.
For marketers looking to invest in a Customer Data Platform partner, the job has become incredibly difficult. Large software vendors (like Adobe and Salesforce) have entered the fray now, and consolidation is all but inevitable. The average marketing stack is already very complicated, and with interoperability at stake, many companies are understandably nervous to add yet another piece to the puzzle. While some are making the jump and investing in a pure-play, independent CDP solution today, others are trying to develop their own, or waiting around for existing technology partners to develop CDP-like capabilities.
What are the risks of waiting around? Do all brands need a CDP? And what else needs to happen in your marketing organization to make your CDP and marketing campaigns successful? We asked the experts. For the Brave New Worlds thought-leadership series, Neustar’s Head of Product, Customer Intelligence Ryan Engle recently hosted a panel discussion on CDPs with three marketing analytics leaders: Justin DeBrabant, Head of Product at ActionIQ; Kevin Farley, Global Head, Marketing Analytics for Capgemini; and Brian Stavis, Global Category Lead, Digital Customer Experience Solutions at Amazon Web Services.
You can find the full recording right here. What will you learn?
CDPs are still not well defined - Despite all the buzz and early success, there isn’t a single definition of CDP that’s embraced by all stakeholders in the industry. “Every time I speak with a client, I get a different answer," said Engle. The CDP Institute, for instance, refers to four types of CDPs: data CDPs, analytics CDPs, campaign CDPs, and delivery CDPs. Others, like ActionIQ’s DeBrabant, consider that a CDP needs to come with a broader mandate to centralize data, build intelligence, and even orchestrate that data and intelligence to all connected downstream channels. “I don't think there's ever been a category with this much momentum that’s remained so undefined for so long,” DeBrabant noted. “The analysts are starting to get into it, but there's no [Forrester] Wave, no [Gartner] Quadrant. There's still a lot of confusion in this space.”
Every brand needs a CDP - Small brands that operate in very narrow markets might be able to get away with channel-specific solutions, but for how long? They may connect with their customers exclusively on Instagram, for instance, or only via direct mail. But it won’t be long before they need to run a customer service operation, for example, or launch a loyalty program to remain competitive. As online and offline data sources and activation channels start to multiply, they’ll want to have the right data management infrastructure firmly in place to fully understand the customer journey, along with the ability to quickly analyze that data and customer analytics for growth opportunities. Today, “CDPs have become table stakes,” said Stavis. “There are certainly differences in use cases, but every single company has to have some type of first-party data strategy.”
CDPs should integrate measurement capabilities - “It's really difficult to get the customer experience right on the first pass,” said DeBrabant. That’s why you need robust measurement. “You’ve got to test, learn, and iterate. Not to mention that customer behavior is clearly changing very quickly these days. You might get it right with your marketing campaign today, but it might not be right anymore in six months.” Increasingly, marketers want to see the whole customer journey. “My team is investing heavily in journey analytics measurement,” said Farley. “When we bring interaction data into an identity graph, we want it to be journey data. For me, measurement and insights belong in the CDP category.”
CDPs need a unified identity resolution strategy - “While CDPs give marketers hands-on controls to manage business rules, they don't provide comprehensive identity resolution capabilities,” said Stavis. “You need best-in-class identity partners to provide the connective tissue that makes customer-centric marketing work.” Data quality is paramount. “Too often, companies license a CDP to solve what’s fundamentally a data problem,” added Engle. “If you have a shiny new capability sitting on top of really bad data, you end up with a really bad capability." As the saying goes: garbage in, garbage out.
CDPs require a shift in mindset - “CDPs are not a silver bullet,” said DeBrabant. “You cannot buy this thing and expect that, all of a sudden, you’re going to deliver this great cross-channel experience. If the organization, the brand, the teams are all siloed, and there’s no unified strategy, it simply won’t work.” At most companies, the IT team is very good at data governance, data cleaning, and data security, but it’s not used to marketing use cases. Industry consultants like Farley spend considerable time bringing together the business side and the data side, and making sure they speak the same language. “It's harder for brands to change and become customer-centric than it is to implement a CDP.”
At Neustar, we believe that CDPs are one of three key investment areas for marketers in 2022. But there’s more than meets the eye, and they’re definitely not a standalone solution. Please get in touch with us and we’ll show you how to pick a CDP vendor that fully aligns with your business strategy.