In today’s digital era, selecting the right customer data platform (CDP) is more crucial than ever before. A CDP isn’t just a tool; it serves as the cornerstone for delivering personalized customer experiences and driving transformational business growth. Your decision will not only affect how well you address your current business needs, but also your ability to adapt and innovate in the future.
So, how can you determine which solution is best for you? It begins with understanding the different CDP types available and how each aligns with your organization’s specific needs and objectives.
The Evolution of CDPs: A Brief History
All CDPs emerged from a common challenge: the fragmentation of customer data across disparate systems and channels that hindered efforts to gain a comprehensive understanding of customers and deliver personalized, cross-channel experiences based on their preferences and behaviors.
Manual attempts to consolidate data from each system into a unified view of the customer proved time- and resource intensive, and legacy technologies like data lakes and data warehouses fell short in providing real-time, actionable insights for effective marketing strategies.
Amid these challenges, the concept of the customer data platform began to take shape. The primary objective of CDPs was clear: to unify first-party customer data from disparate sources, both online and offline, into a centralized repository accessible to marketers and other customer-facing teams. This unified data hub would serve as the foundation for holistic customer insights, enabling organizations to deliver personalized experiences at scale.
Since then, CDPs have gained traction rapidly, fueled by the growing demand for first-party data driven marketing strategies amid deprecating third-party cookies, rising consumer data privacy concerns, and evolving consumer behaviors.
Understanding the Differences Between CDPs
Although all CDPs aim to solve the same problem, there are distinct variations in their functionalities and capabilities. These different types can be loosely divided into three categories: integrated, pure-play CDPs; ‘one-size-fits-all suite CDPs; and ‘DIY’ composable CDPs. Each has its own distinct characteristics when it comes to their underlying architecture:
‘One-Size-Fits-All’ Suite CDPs: ‘One-size-fits all’ suite CDPs — Salesforce, Adobe and the like — are part of larger ecosystems that encompass various marketing tools and applications, such as email marketing, marketing automation, and analytics. These CDPs were built on the premise of integrating the suite of tools provided by the Marketing Cloud.
'DIY' Composable CDPs: ‘DIY’ composable CDPs represent a modular approach to customer data management. They consist of individual components that can be assembled and integrated with a data warehouse according to an organization’s requirements.
Integrated Pure-Play CDPs: Integrated, pure-play CDPs excel at data unification and activation. They are purpose-built to consolidate disparate data sources into unified profiles. The data in these profiles can be easily accessed and activated across various marketing channels and touchpoints to facilitate targeted, personalized, and real-time interactions with customers.
Why Companies Are Investing in Integrated Pure-Play CDPs
Ultimately, variations in the underlying architectural design impacts how effectively each type of CDP can address specific business needs or objectives. This is where the integrated pure-play CDP excels compared to others in space.
‘One-Size-Fits All’ Suite CDPs
While ‘one-size-fits all’ suite CDPs may offer the convenience of a fully integrated marketing suite, they also come with the risk of vendor lock-in. Organizations that choose this type of CDP may find themselves dependent on a single vendor for their marketing technology stack, even if other solutions may be a stronger fit based on their unique business needs. Innovation also comes at the speed of the marketing cloud, despite how quickly a business would like to move.
Moreover, multiple user interfaces for multiple solutions in a given suite create silos that make it difficult for marketers to access and manage their first-party data in a single location – much less learn how to use all the different interfaces.
‘DIY’ Composable CDPs
‘DIY’ composable CDPs can help companies with data warehouses avoid duplicate data storage costs. The architecture allows the CDP to query the data warehouse while teams can build segments and send data to activation platforms.
However, pulling directly from a data warehouse as a composable CDP does, comes with tradeoffs. Business teams will sacrifice real-time engagement with customers and operational efficiencies. For example, campaign updates require updates in the CDP, the data warehouse, and the ESP. This often comes as an unexpected strain on IT resources, increasing complexity and the total cost of ownership while limiting marketers’ ability to deliver personalized experiences in real time.
Integrated, Pure-Play CDPs
Integrated, pure-play CDPs are distinguished from suite and composable CDPs by their unique design. These CDPs are built from the ground up with privacy, neutrality, scalability, and usability in mind.
Pure-play CDPs collect first-party data in a way that ensures it is unified, actionable, and privacy compliant. Collecting and using data within the framework of privacy regulations like GDPR and CCPA enables companies to build trust and deliver valuable customer experiences, while mitigating their customer data risk at the same time.
Their neutrality gives companies the freedom to integrate with the tools, data sources, and channels that best suit their needs, while their scalability empowers organizations to maximize their use of the platform as the volume, velocity, and variety of data grows – all without ballooning data storage costs. And with a marketer-friendly user interface, customer-facing teams can effectively harness the full potential of customer data to optimize customer experiences while reducing their reliance on external vendors, streamlining internal processes, and improving their agility in the process.
Strategic Advantage: Future-Proof Your Business with an Integrated Pure-Play CDP
Suite and composable CDPs may offer some advantages for certain organizations. However, it’s increasingly evident their shortcomings make it difficult to effectively address critical challenges facing businesses today, including third-party cookie deprecation, privacy compliance, and changing consumer behaviors.
Unlike suite CDPs, which fail to deliver on the promise of an ‘all-in-one-solution’, or composable CDPs, which require extensive integration efforts and ongoing maintenance, integrated, pure-play CDPs provide companies with a flexible and scalable foundation for achieving achieve measurably better returns from their customer data – without piling on more resources, more point solutions, or more costs.
