CDPs need to evolve beyond just seeing data as data, it’s more than that for a CMO, it’s an audience.
Every decade a new technology emerges and turns into an acronym like ERP, CRM or SaaS, and becomes the solution that fixes business problems across the enterprise.
With the explosion of online advertising, technology made its way to marketing to help make sense of consumer data and how to capitalize on it. That was the birth of martech.
Martech emerged on the scene a decade ago and has been a high-growth market ever since. By 2012, the martech landscape had become so crowded, it needed an encryption key to decode how it all worked.
In 2014, Gartner analyst Laura McLellan predicted that marketing would outspend IT in technology by 2017. In 2018, a Gartner CMO survey report noted that martech became 29% of the Chief Marketing Officer’s (CMO) budget.
The martech floodgates are open, and they paved the way for what has become the panacea of marketing, a customer data platform (CDP).
In 2018, the CDP Institute reported the industry added 29 new vendors and $173M in funding, with the total vendors in the space increasing by 60%. At the close of 2019, the industry was expected to generate $1B in revenue. Research firm Markets and Markets predicts that the global CDP market will grow from $639.0M to reach $3,265.4M by 2023.
David versus Goliath
On one side, there are the legacy data management platform players – SAP, Oracle, Adobe, Salesforce, and Microsoft – who entered the market offering their version of a CDP platform or acquiring an independent firm or buying in pure-play CDPs to catch up.
Their offerings rely on the primary characteristics of their core business and products – data management and doesn’t take the customer-centric view. Data is important but customers are more important. Their way is based on what’s worked for them – coding, IT-expertise for installation and hours, an API, and hours of professional services. They seem complicated on purpose and then charge you to uncomplicate it.
On the other side, there are the independent and well funded CDPs that have defended their turf against the big guys by offering innovative features with more transparent pricing models.
However, this David versus Goliath CDP landscape is fragmented and remains centered on the technology and services versus the needs of the marketing team who need to turn their data into campaigns that engage their customers quickly.
Here’s the thing, despite the growth of the CDP market, the everyday challenges of marketing have not changed. Marketers still need to engage with their customers, decrease their CPA, and not waste their valuable advertising dollars. And, they desperately need to personalize their data to connect with their audience.
In 2018, Gartner reported that advertising spends dominated CMO’s budgets. CMOS invested two-thirds of their advertising budgets on digital channels. They also spent around 14.2% of their budget on personalization efforts.
Yes, they know they have data
Marketers also know they’re sitting on a data gold mine, we don’t need to tell them that. But the numbers show that getting to that data, even with the proliferation of CDP platforms out there, that 74% of company data on average goes unused, and the remaining data is often discarded or lies dormant.
CDP has become more about the fear of missing out on a new martech tool versus how it can help marketing do what it needs to do – onboard and easily segment data to create engaging, personalized advertising campaigns to connect with their audiences.
It’s a brave new world out there. Data is even more critical to marketing because it tells them everything about their consumers. A data scientist sees data, but a CMO sees an audience – people who will want to buy or subscribe to their product or service. This is more than CDP, it’s about the marketer’s need to create and manage audiences.
I believe this means evolving CDP into what marketing professionals really need, audience management. The future of CDP is an audience creation tool that lets marketers uncomplicate their marketing and engage their audiences.
by Marko Maras, CEO, Audiens