The CDP paradox in 2023

How to navigate a landscape of abundance

As I approach my 5-year anniversary at Simon Data, I have been reflecting on the significant evolution of the marketing technology space during this time.

Back in 2018, customer data platforms (CDPs) were not yet a prominent concept. In the early stages, we actually referred to Simon as a retention marketing platform, which was a fitting description at that time. Our core focus as a business was to empower brands to leverage their data, with a primary emphasis on enhancing personalization at scale to drive customer retention.

Given that our initial customers were high-growth, venture-backed eCommerce and subscription brands like Bark, Peloton, Allbirds, and Casper, it made sense for us to prioritize these objectives. Essentially, we aimed to enable non-technical individuals lacking SQL skills, like myself, to create impactful marketing experiences fueled by data. This was our guiding principle.

We concentrated on solving real business challenges while simultaneously educating the market about this new category within the already crowded marketing technology landscape. Needless to say, we faced some challenges, but the wins felt good. Just take a look at Scott Brinker’s Martech 5000 from 2018; it was a chaotic sight, and CDPs didn’t even have their own distinct category!

The proliferation of sub-categories within the CDP landscape

As the years passed, our core objective remained steadfast while the category itself evolved. The competitive landscape underwent significant shifts, resulting in a proliferation of sub-categories and vendors with tangential capabilities within what was once referred to as “CDP.” Much of this transformation can be attributed to M&A activities: Optimizely acquiring ZaiusAmperity acquiring CustoraTwilio acquiring SegmentBloomreach acquiring Exponea, and Acquia acquiring Agilone, among others.

Additionally, the growth of the cloud data warehousing sector spawned a new breed of platforms focusing on data movement, or rETL. Companies like Hightouch, Census, and GrowthLoop (f.k.a Flywheel) have entered the arena, many of which are powered by cloud data warehouse partners like Snowflake or Google’s BigQuery.

All of this implies that the marketer’s job has become increasingly challenging, compounded by the existing hurdles presented by iOS updates and the eventual phasing out of third-party cookies. The category’s growth has introduced more nuances, rendering previously effective CDP RFPs obsolete. How could it remain relevant?

There are now customer engagement platforms, composable CDPs, reverse ETL solutions, customer data infrastructure, and connected CDPs: each with distinct core competencies and, notably, different primary end users. Yet, somehow, all these platforms still claim to be the same type of technology – a CDP. Quite perplexing, isn’t it?

Navigating the complexities: five essential questions for marketers evaluating CDPs

Before you distribute a massive RFP comprising over 200 questions to acquire an enterprise-level CDP, marketing leaders should ask the following questions to their team. The answers to these questions should help you zero in on the right category of CDP.

  1. What are the underlying business problems we aim to solve with a CDP?
  2. What is the business impact of addressing those problems?
  3. Which use cases are necessary to tackle those problems?
  4. Based on the answer to question #3, which team should be the primary end users of the CDP?
  5. Depending on the answer to question #4, which buying group has a budget for a CDP?

If the primary use cases revolve around democratizing data and enhancing the customer experience across marketing channels like email, SMS, mobile push, website, and paid media retargeting, it would be logical for marketers to be the primary end users.

Conversely, if the use cases focus on data movement, such as a schema-less architecture that transfers customer segments to various marketing tools and platforms, data teams should take the lead as primary end users.

Often, I come across brands evaluating CDPs and zeroing-in on platforms like Simon Data, Amperity, and Segment. However, apart from being grouped into the somewhat fuzzy and broad CDP category and having some level of segmentation capabilities – there isn’t significant overlap among them.

Needless to say, brands that find themselves in this predicament are rarely satisfied with their decision a year later. Why? It’s because the chosen platform doesn’t align with the answers to the five questions above. They may have selected a platform designed for data teams and instead needed one where marketers are the primary end users. The result is a ton of internal frustration and misaligned resources, blocked workflows, tech debt and more.

As someone who has been operating in this complex space for quite some time, I take great pride in my ability to demystify the CDP category. For marketers venturing into this category for the first time, I recommend taking a look at Scott Brinker’s latest MartechMap below. Based on that you can rest assured that the journey is not getting any easier but I’m always happy to help.


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