Demystifying CDPs, Composable CDPs, ReverseETLs and Hybrids ????

There has been a lot of online chatter recently on what is a CDP versus some of the other new category terms, leading to heated (but entertaining!) arguments on social media and, worse, market confusion. So I wanted to take a step back and present our point of view since things should really not be that complicated!

First, if you haven't checked it out already, please read the a16z's blog post on the Rise of the Composable CDPs. It's a good starting point and among other things it offers a clear definition of what is versus isn't a Composable CDP. We believe the broader trend of Composability is extremely powerful and, for those CDPs that do evolve to become Composable, the benefits to them and their customers are enormous.

But here's where the confusion comes in. Most of the "Composable CDP" vendors are really ReverseETL vendors that repositioned as CDPs late in the game. Early on, ReverseETL vendors explicitly avoided positioning as anything like a CDP, and in fact they were making many grandiose claims ("Friends don't let friends buy a CDP!", "You don't need a CDP! Use us and your Data Warehouse will become your CDP!"), which at some level were entertaining and rooted in those vendor's lack of understanding of what a CDP does versus doesn't do. Thankfully people do learn, and we rarely hear similar arguments these days.

On the other hand, from the core CDP vendors only ActionIQ has evolved so far to meet the Composable CDP definition. Moreover, we offer the only Hybrid solution in the market, meaning an Enterprise leveraging ActionIQ can have their CDP deployed in a Composable way (meaning, using their data warehouse/lake/lakehouse for storing and processing their data) but also they can have some data stored and processed in ActionIQ, as needed. That's totally a choice we leave up to our customers and it's transparent to the ActionIQ business user, making it a very powerful deployment tool.

In addition, ReverseETL vendors, showing up late in the CDP game, lack a lot of standard CDP functionality. For starters, those vendors have admitted that they don't meet the CDP Institute's definition of a CDP. And despite the ChatGPT hype, software still doesn't write itself! So having had a late start, they lack several critical CDP features, from Journeys to Real Time CX, to true model-based Identity Resolution and much more. Not to mention the low maturity of what they claim they do have, most being recently released features or upcoming roadmap.

Moreover, the orthodoxy of ReverseETL products being only a push-down tool, versus having a Hybrid option like ActionIQ, looks benign on paper but removes much needed optionality in many real life situations. Especially in large Enterprise environments, it's highly unlikely that all the data you need is neatly formatted in just one place across the whole enterprise (IYKYK... ??). Also having the Hybrid option is critical to power certain CDP capabilities like RealTime CX and acquisition / DMP replacement use cases, to name just a couple.

By the way, why do we know these things? Just go to actioniq.com and check out the long list of Global 2000 logos we have there. These are brands that we are proud and humble to call customers, most have partnered with us for many years now and together we have delivered outstanding business results with their ActionIQ investment. In fact, many are transitioning to a Composable or Hybrid deployment with ActionIQ so we have a lot of experience in terms of what works versus doesn't.

So given the above, we can now summarize the confusion. Most Composable CDPs, specifically the ReverseETL vendors, are not CDPs, per the CDP Institute's objective definition and what, in my experience, has historically been considered core/essential CDP functionality. But also, most CDPs except for ActionIQ (and whomever else is willing & able to truly evolve their core architecture in the future, which is not trivial) are not Composable CDPs despite the term similarity. And to make things worse, the same ReverseETL vendors who essentially renamed themselves to Composable CDPs after claiming "CDPs are dead" will sometimes quietly drop the "Composable" part... and even let some of their friends buy a CDP, as long as it's them ??

And to make things worse, the same ReverseETL vendors who essentially renamed themselves to Composable CDPs after claiming "CDPs are dead" will sometimes quietly drop the "Composable" part... and even let some of their friends buy a CDP, as long as it's them ??

At the end of the day, there may well be use cases where a ReverseETL tool can succeed, perhaps smaller/simpler environments with simpler data environments and fewer business user/CX/orchestration requirements. However, as the market tries to understand what tools is best for which job, it's good to keep in mind that calling yourself a CDP is cheap, but evolving a product's architecture and building core category capabilities is hard and takes years to get there. And while ReverseETL folks are smart and evolving, the rest of the market is evolving as well, making it harder to close the gaps. So I find it unlikely that Composable CDPs will also be CDPs anytime soon... unless those vendors redefine what CDP means, of course ??.

All that being said, we absolutely love the energy and debates in the space! And I look forward to continue seeing the broader category grow, proving all the early CDP skeptics wrong ??????!!