Op-Ed: Can Anything Just Call Itself a CDP?
This post is written by Dylan Flye, VP of Sales at Simon Data. Dylan Flye has been the VP of Sales at Simon Data for the past five years. He has seen and written about the changes and trends in this rapidly shifting category.
The other week, Klaviyo announced a re-brand. On the surface, they changed their logo and color scheme. However, reading deeper, they’ve repositioned themselves as a unified customer platform with infinitely scalable customer infrastructure. While there have been many CDP entrants recently, this marks an exciting move for Klaviyo and the CDP space. I’ll explore further in this blog post.
Three years ago, I wrote a blog post about trends shaping the CDP space, the different types of players, their origin stories, and their fit within the broader category. In that post, I talk about big marketing clouds acquiring data technology and moving closer to the CDP space. This move is in response to businesses looking for better and more data-driven ways to engage with their customers.
This move has prompted me to revisit that blog and question whether any martech can just call itself a CDP.
Key Trends: An Update
Reflecting on the post three years ago, key trends shaping the CDP space today are essentially the same.
- Brands are more DTC-focused and looking to develop a better 1–1 relationship with customers. Check.
- Stacks are unbundling, and teams are looking for best-in-class technology. See: Twilio, Snowflake, Attentive
- Omni-channel isn’t enough. Businesses don’t need to just be in every channel but understand the customer across all channels. Double-check.
- Cookies will go away. X_X
- Data privacy and regulation will continue to focus businesses on their 1st party data strategy.
What I Got Wrong- The Marketing Cloud Category
In talking about the marketing cloud space and how marketing clouds are moving closer to the CDP space, I wrote:
“Marketing clouds are increasingly under pressure to deliver on the breadth of channels in which marketers want to engage their customers and the data demands of the modern enterprise. It’ll be interesting to see what happens to this space as businesses continue to focus on centralizing data capabilities and increasingly view message delivery (once the remit of marketing clouds) as commoditized (see: Twilio acquiring Sendgrid).”
I wrote this six months after Salesforce acquired Datorama and nine months after they acquired Mulesoft. I anticipated big cloud players would compete further up the value chain from data organization to experience delivery. Specifically, I expected the big clouds to amalgamate (as they don’t build tech these days) something like a CDP. I also expected disruptive smaller players in the multi-channel marketing hub category to develop or acquire CDPs.
To be clear, I’m not surprised that no prominent cloud player has acquired a CDP. The category (excluding Segment) isn’t yet mature enough. Also, Segment wouldn’t have fit with the buyer persona or go-to-market motion of the Salesforce, Oracle, or Adobe sales brigade. Note: I’m intentionally excluding Salesforce’s acquisition of Evergage in 2020. Evergage is a web personalization tool marketed as a CDP, which is now part of Salesforce’s Experience Cloud.
What I didn’t see coming but definitely should have, was Twilio’s acquisition of Segment in 2020. The most mature player in the CDP space with a developer-first angle, Segment fits perfectly with Twilio’s buyer persona. Twilio now poses the greatest outside threat to the big cloud players. They are making a push to become the Atlassian of MarTech (i.e., a developer-first bundle of packaged offerings).
What Surprised Me
I am surprised that the big clouds still don’t have CDP offerings, despite marketing these offerings for years. I expected first-movers in this space would use mature CDPs to win market share in the marketing cloud category. However, despite what these companies market or sell, they still don’t have CDP products.
Another element is that the disruptive multi-channel marketing hubs still lean heavily on CDP partnerships. Surprisingly, they don’t have answers of their own. These players also haven’t made as much of a splash in the enterprise as I would have expected. The reality is these companies continue to double year over year by staying in their lane. Until the “great panic” of 2022, they could achieve mid-double-digit revenue multiples just focusing on their ICP.
The Newest “CDP” in Town
This point brings us back to the catalyst for this post: Klaviyo is calling itself a quasi-CDP. Laggards from other categories have unsuccessfully tried to pivot into the CDP space. Meanwhile, otherwise wildly successful businesses have failed to deliver CDPs. However, this announcement marks a successful ESP’s first attempt to re-brand its core business as a “CDP.”
On its website, Klaviyo interchangeably refers to itself as a data management platform and a customer data platform. I understand the SEO play relative to each of those terms. However, I’m sure Klaviyo’s product team is not investigating building a DMP. For Klaviyo’s ideal client profile (SMB e-tailers), Klaviyo may provide all of the data capabilities the business needs. Therefore, in the eyes of the jury that is their customer, they can credibly call themselves a CDP or DMP. This fact is because they meet 100% of the data needs of the buyer. And, this fact is true regardless of meeting some industry-standard definition or not. No technology can be “infinitely scalable”. That is unless “infinite” in the eyes of the buyer is some measurable amount of scale the technology achieves. I never made it past Calculus I; therefore, my TI-89 had “infinite compute.”
So, Can Anything Just Call Itself a CDP?
Unequivocally, data is the riptide among currents in the marketing technology space. I can’t listen to a podcast without hearing how some company I’ve never heard of “collects all data from any source, organizes it, and integrates with everything in the relevant ecosystem to [do what the business does].”
Closer to the point, enterprise marketing clouds have been marketing their CDP capabilities for half a decade. Yet, they still don’t have a product in the market. SMB marketing tools now market themselves as “unified customer platforms.”
But, in this case, the only jury is the business that applies the technology to their use cases and customers. Can anything call itself a CDP if it meets 100% of the data needs of the clients it serves? I don’t see why not. Enterprise marketing clouds service clients with many use cases requiring deep feature support in numerous areas. When these clients have use cases that involve leveraging complex data, they integrate a CDP into their marketing cloud.
To the extent that they don’t, their marketing cloud collects all necessary and relevant data. It makes it actionable and facilitates the flow of data anywhere the business wants to send it. That workflow sounds like a CDP to me. Klaviyo does the same with primarily e-commerce data and helps small businesses send emails and SMS messages. For example, a company wants to segment by historical and real-time data or leverage data from a customer support tool. In that case, they need a CDP. If they don’t, Klaviyo handles their data needs.
What Does This Mean For the CDP Category?
The CDP space already suffers from a nebulous definition. It’s the only tech category where vendors pay a 3rd party to certify they are part of that category. This process is done without commenting on the quality of the service. As I wrote in my original blog, somewhere near 100 companies are calling themselves CDPs. The fact that more players from adjacent categories call themselves CDPs doesn’t help.
But, the fact is more businesses in adjacent categories are positioning themselves as CDPs or marketing their CDP capabilities. This fact is a testament to the market momentum behind solving challenges at the intersection of data and marketing.
Related to the above is the practical reality- anyone can claim what they want to be, within the boundaries of how buyers could assess them. The CDP category will likely start to see deeper segmentation over the next few years. We’ll also probably see further consolidation and M&A by companies whose alternate paths aren’t doubling year over year or whose business models are fundamentally threatened by ongoing data privacy trends and regulation.
One thing is for sure: we’ll continue to see more companies marketing themselves as CDPs.