Customer Data Platforms Compete to Define the Evolution of the Category | Street Fight

Customer Data Platforms Compete to Define the Evolution of the Category

Customer Data Platforms Compete to Define the Evolution of the Category

What do tag managers with core data infrastructure, data warehouses for marketing, and triggered email providers all have in common? These disparate types of companies fall under the classification of customer data platform (CDP), a category which has evolved into an umbrella for a number of big-data marketing products.

“The primary challenge that customer data platforms ostensibly all solve is making more data more accessible to drive personalization,” said Josh Neckes, one of the co-founders of CDP Simon Data. Simon Data is an example of a data warehouse built for marketing use.

Above all, marketers aim to send advertisements to the right person at the right time. Signals in customer data can indicate all of these necessary characteristics with extraordinary precision, but classic marketing systems are data-impoverished and often struggle to gather that data within an exact time target, Neckes said. “So, it’s always very hard to get all that data in a place that is usable.”

“You could cross the United states with a horse and buggy, but it’s not going to go super well. … We’re like the car, or the airplane,” he said of CDPs.

Not only are CDPs providing new opportunities for advertising success, mid-market CDPs can be affordable for companies much smaller than Fortune 500s, Neckes said. “Technology of this type is pretty easy to democratize.”

Very tiny companies will not see much added incremental value from CDPs because those small companies often don’t possess large quantities of data or multiple customer segments. But when companies begin to service upwards of 100,000-300,000 customers, their personalization abilities could greatly increase with the use of CDPs.

The CDP category evolved into existence over the last five years on the back of data technology that allows for new forms of digital architecture, architecture which catalyzed the production of tools streamlining the use of customer data for marketing purposes, Neckes said.

“The evolution of the category is a really interesting one,” Neckes said, describing its inception as the result of an aging group of tag managers looking for new ways to add incremental revenue to their bottom line. Since tag managers already possessed large amounts of data, building infrastructure to move data that had already been captured was a straightforward way to evolve and monetize. The CDP mParticle is an example of this evolution, he said.

In contrast, Neckes’ Simon Data and competitor ActionIQ built technology from the ground up expressly for the purpose of data warehousing for marketers. “In fact, with many of our customers, we will be deployed alongside a Segment or an mParticle … despite the fact that we’re both CDPs,” Neckes explained. Segment is a data infrastructure CDP.

Neckes predicts that the category will split into two groups of winners—companies more like Segment and mParticle, and companies like his own, Action IQ, and Zaius. “There’s probably room for two-to-three winners,” and those winners will be determined by characteristics such as feature completeness and pricing, Neckes said.

These companies are now trying to answer two big questions: “What’s the feature set that’s going to really define the future of the space?” and, “What’s the value of the category?” the Simon Data co-founder said.

Anna Kramer is a staff writer at Street Fight.