More Choices & Functions Make Buying A CDP More Difficult for Publishers
Not so long ago, all publishers needed to know about their subscribers was their name, address, and expiration date. Today, a customer record can include search requests, content selections, email opens and clicks, web page visits, demographics, advertisement history, desktop and mobile devices used, and much more. Traditional fulfillment systems weren’t designed to handle this much information; nor were conventional marketing databases. It’s no wonder that publishers have been among the most enthusiastic adapters of Customer Data Platforms, a new generation of marketing database systems that were built from the start to convert data from all sources into unified, actionable customer profiles.
The Customer Data Platform Institute recently released its semi-annual report on the CDP industry. We found solid growth – employment at existing vendors expanded about 30% over the past year, and total employment more than doubled when new vendors are also counted. The number of vendors in the report also more than doubled, from 24 to 52.
That growth was no surprise to anyone who has witnessed the rising interest in CDPs. But a closer look at the CDP industry report shows some trends that were less obvious, such as the growth of engagement functions.
To learn the basics about CDPs, read about how a CDP is different from other audience data tools and further how publishers are using CDPs to to analyze and act on their data.
Customer Engagement Functions on the Rise
Most relevant to publishers is a shift towards CDPs that offer customer engagement functions such as personalization and campaign management. These firms grew from just 20% of industry employment at the start of 2017 to 43% of employment by the start of 2018. The change was due largely to the addition of new vendors, reflecting both the release of new products and repositioning of existing systems as CDPs. Eighteen of the 28 vendors added since the initial report offered customer engagement functions, bringing the category total from seven to 25.
More Choice in CDP Market
This doesn’t mean that every publisher needs a CDP with integrated engagement functions. Companies that have already invested in state of the art personalization and campaign management tools probably won’t want to replace them. Those firms are more likely to buy CDPs with just data and analytics functions and then connect the resulting database to their current engagement tools.
In fact, this happens quite often: the report shows that demand for data and analytics CDPs has remained strong. Among firms in the report at the start of last year, the data and analytics vendors actually grew faster than the engagement vendors. So what we’re seeing is not displacement of data and analytics CDPs by engagement CDPs, but an expansion of choice as marketers select whichever type of CDP best suits their needs.
(There is, however, movement within the data and analytics category, as firms that formerly offered only database creation have added analytics functions such as segmentation and predictive models. This is a natural progression that adds immediate value to the CDP database. The report found four CDP vendors that added analytics functions over the past year.)
Expanded choice creates its own burdens. Finding the best CDP among fifty-plus options is certainly some work. In practice, most publishers will quickly narrow their consideration to the few products that already have significant publishing industry experience. Many will further limit their choices to products that have already integrated with their fulfillment systems. That’s a reasonable approach, especially for smaller firms that don’t want to invest in custom integrations.
But the continued growth and innovation of the CDP industry means that better options may appear. Publishers should not entirely exclude less experienced vendors whose systems might be better suited to their needs. As with any technology selection project, CDP buyers should define their intended uses, identify the features needed to support those uses, and then look for products that provide those features. Increasing industry experience with CDPs makes it easier to find people who understand how CDPs work and what to look for. Resources including the CDP Institute also provide extensive information. Buying a CDP isn’t easy, but running a modern publishing operation without one is even harder. It’s worth taking a look.
David Raab is a consultant specializing in marketing technology and analytics. His clients include major brands in publishing, retail, financial services, telecommunications, technology, and other industries. His early career was spent in magazine circulation and direct mail continuity marketing. He is founder and CEO of the Customer Data Platform Institute.