Guest blog by Nicholas Howe, Associate Director, Data Strategy & Analytics

Customer Data Platforms (CDPs) are becoming vital to fuel first-party data marketing strategies. But the CDP vendor landscape is evolving very quickly. To make a decision on which of the many CDP vendors to work with, marketers should first list what they want the CDP to do, then assess how each different type of CDP can address these use cases.

Expansion in CDP Uses‍

CDPs are designed to collect customer data from all sources, normalize it and build unique, unified profiles of each individual customer. A key factor driving CDP adoption is the increasing importance of the customer experience, which is improved through timely data gathering, segmentation and personalized messaging. At the same time, marketers are facing the inevitable extinction of third-party cookies and looking to CDPs to bolster their first-party data in a privacy-compliant way. 

Rapid growth in the category has led to the commoditization of certain capabilities, forcing CDP vendors to specialize to differentiate themselves. All CDP providers address the core use case of providing a 360 view of the customers. CDPs are now specializing in advanced capabilities such as orchestration, event streaming, tag management and analytics. Some lean towards back-end data management and others towards front-end activation and targeting. This is not to say that CDPs focusing on one capability cannot fit other use cases, but rather, a CDP’s specialty can be used to decide which one is the right fit.

Do marketers need a CDP?

‍Your first question will likely be “do I even need a CDP?”. Our answer is “maybe”, and it depends largely on the amount of first-party data you have. If your organization has–or even just has the potential to have–a large pool of customer data, you should consider adding a CDP to your tech stack.

Your second question may be “if every CDP’s primary use cases are the same, which partner should I pick?” To us, this is the more interesting question and is what this blog post attempts to answer. Below are relevant criteria that can help differentiate partners and ultimately help you decide which CDP is best for your team. 

The Three Main Types of ‍CDP Specialization

‍CDP vendors often claim to support any and all needs an advertiser may have, which can make sifting through vendor RFPs all the more confusing. The three specialties listed below are by no means comprehensive, but they offer a good starting point to narrow down your search.‍

1. Campaign Orchestration ‍

Most CDPs will offer some form of a UI for campaign management. Vendors that specialize in orchestration will provide features such as in-platform A/B testing for messaging, corresponding reporting, and workflows for more advanced first-party data segmentation to trigger and/or automate campaigns across channels. For example, if your organization aims to win back old customers and you want to figure out if showing an Instagram ad after sending them an email is more effective than just sending an email, you would benefit from these advanced features. A CDP specializing in campaign orchestration would allow your organization to create a segment of lost customers, split that segment into two distinct groups, treat one group with an Instagram in addition to an email, and then track the performance of both groups. 

These platforms are best for organizations that have a clearer understanding of their customer journey and want a single platform to unite their messaging strategy across CRM and marketing teams. These can also be particularly useful for subscription-based companies that want to level-up their retention efforts. Vendors with these features include Simon Data, ActionIQ and Salesforce.

2. Event Streaming and Tag Management

One interesting evolution in the space has been tag management companies creating CDP offerings. It is a natural progression for tag managers to adapt to the continuous decrease in cookie strength and offer marketers another avenue through which to send data to ad platforms. CDPs that specialize in event streaming and tag management contain all the core features of a CDP with the additional benefit of being able to deploy pixels on your website, integrate into your app via an SDK, and connect with your site analytics platform. Additionally, these CDPs offer easy set up of server-side tracking and other API connections. For example, if your organization wanted to configure Conversions API in Meta and TikTok Events API alongside pixels for these platforms, a CDP specializing in tag management would allow you to configure both dual tagging setups within a single UI, thereby ensuring consistency of parameters sent to both the pixel and the APIs with minimal reliance on IT or DevOps stakeholders.

These types of CDP are best for organizations that run media across multiple ad platforms and are prioritizing future-proofing their conversion tracking by incorporating alternatives to pixel-based tracking. Vendors include Tealium, Segment, and mParticle.

3. Data Management

These days, customers can engage with your brand across multiple channels and devices, each of which comes with its own set of useful data. As a result, large organizations often face the intimidating reality of dozens of data sources with no reliable means of stitching them together. All CDPs have the ability to ingest data from multiple sources, but some have invested more in managing that ingested data. CDPs that specialize in data management will cater more to IT teams and are often designed to more seamlessly integrate with existing databases. On top of this, these partners will contain data governance levers allowing for flexible customization of how data is ingested, transformed, and ultimately activated. For example, if a marketing team was unable to refresh first-party seed audiences for suppression and targeting because of a lack of data science resources, this type of CDP would be useful. Implementing a data management CDP, while requiring upfront work from multiple technical stakeholders, would ultimately allow multiple teams across the organization to have easy access to data from all of their sources and apply their own organizational logic to their data in real time.

These CDPs are best for larger organizations with vast amounts of first-party data that is difficult to access. Vendors include Amperity, Treasure Data and Redpoint.

‍Other CDP Differences

If after you narrow down the specialty you need, you’re still looking for other ways to differentiate between CDPs, here are a few other criteria to consider.

Back-end vs. front-end: Similar to the specialties listed above, identifying whether a CDP is more catered for use by back-end stakeholders (i.e. IT DevOps, Data Scientists) or front-end stakeholders (marketers, CRM, customer service) can be a good way to figure out which CDPs to include in your RFP process. 

Number of integrations the vendor has undertaken: One of the biggest mistakes we see advertisers make when kicking off a CDP RFP process is to limit involvement to only one team. CDPs are not cheap. So to attain the highest ROI on the tool, it should be evaluated against use cases for a variety of stakeholders. Ensure your chosen CDP interconnects with the other platforms in your tech stack. Most CDP websites will list all integrations with details on the resulting capabilities on their sites. Before arriving at a CDP presentation, read about how that partner integrates with your other crucial tech stack platforms, as integrations may differ in how advanced they are.

Identity graph partnerships: The industry is keeping a close eye on identity resolution partners as third-party cookie alternatives. Given advertisers' need to minimize the impact of third-party cookie deprecation on marketing scale, CDP vendors have established partnerships with big players in the space, specifically to leverage their identity graphs. If utilized effectively, a CDP can take a seed audience made up entirely of first-party data and enrich it using a partner’s identity graph all within the CDP UI, making the platform the single source for audience management. 

‍Picking the Right CDP

These considerations should help provide you with a roadmap for how to evaluate CDP vendors. Narrowing down your list of vendors to RFP is an important step to ensuring that your organization picks the CDP that’s the best fit. You’ll then be able to get more value out of your data and a better understanding of your customers.

If you have any further questions about CDPs we would be happy to help.