The Winning Hand: How your CDP should help you stack the deck and not just shuffle cards

Two big things are happening right now at the intersection of data and marketing and they don’t have anything to do with AI:?

1. Data privacy and governance standards are forcing companies to focus on their 1p data strategy in a way they haven’t before (this is nothing new)?
2. Marketing technologies at the intersection of data and customer experience are fighting for relevance

I’m not going to spend much time in this piece discussing #1 because if you found this article, you’re either a victim of LinkedIn’s “more viewers than content” problem or you’re in the target audience for this content and already aware of these trends.?

The second trend is a bit more interesting and merits some discussion.?

I’ve touched on this theme as supportive context for other articles like these:?

• Twilio isn’t selling Segment. What does this mean for Twilio and the CDP market?
• The CDP Schism: Salesforce vs. Snowflake in the Battle for Your Data

But here’s the real brass tacks: a SaaS recession and wavering macro environment have both forced enterprises to rationalize software spend and have pushed vendors and enterprises both to value near term ROI vs. long term uncertain payback. Just as higher interest rates focus investors on shorter term profits, the same is happening in the microeconomics of software investment.?

In simple terms “nice to have” software must become “need to have” software. Nowhere does this feel more resonant than in the CDP space, which depending on the context can be either.?

Shuffling cards:

When I started my career in management consulting, over a decade ago, the trends at that time were…drumroll please: big data, 360 view of the customer and…machine learning (which we now just call AI even though they’re fundamentally different things). I’ll leave aside the opportunity to make a joke about how consultants got nothing done in 10+ years (but still mention I had the opportunity and therefore make the joke).

The companies (where I sat in a windowless basement for days) talking about how the intersection of big data and machine learning would change their corporate understanding of a customer are the same companies we talk to now a decade later in search of a “customer 360” or a “single customer view across the enterprise.”?

These companies have spent a decade, for lack of a better analogy, shuffling cards.?

Oracle may have sold a vision of data centralization, and they probably went on a journey with InfoSphere and Unica or Informatica. They may have migrated tooling to a more modern MDM provider and moved from an ESP built by someone wearing pleated pants to one built by an engineer who dresses like a barista, but at the end of the day, they have not net increased their likelihood of winning the hand. They’re running the same campaigns in a splashier UI.?

My main caution regarding CDPs that grew up in the #moderndatastack era is that these tools feel like a continuation of this trend.?

Hightouch might deploy inside of your Databricks environment in a way that Segment does not, and that has real business benefits - in the same way that moving from Responsys to Iterable benefits the sanity of your marketing team - you trade breadth of capabilities for user-friendliness, but will it fundamentally improve your customer acquisition or retention metrics by enough to merit the total cost of ownership??

Stacking the deck:

“If you have to ask, you can’t afford it.”

While this term is typically used flippantly, it’s also an accurate answer to the question of whether or not enterprises should invest in a CDP. “Afford it” is in this context dependent not only on the total cost of ownership (which for the wrong CDP can be massive) but also on the measurable value it delivers in terms of key marketing metrics and efficiency.

In order to deliver measurable marketing outcomes, CDPs are increasing their focus on data enrichment (i.e. stacking the deck) vs. simply data integration and modeling (i.e. shuffling). As stated at the top of this article, this is in response to not only data privacy and governance trends pushing enterprises to focus more on their 1p vs. 3p data, but also has a lot to do with the microeconomics of being a SaaS solution in 2024.?

Just this week, ActionIQ announced a partnership with Acxiom and Zeta Global chose to focus their earnings report on how the intersection of customer identity, data enrichment and AI can help deliver their customers a “winning hand.” These bets have always been core to Zeta’s strategy, and with their recent earnings report, I think they’re on to something. What they’re focused on just simply matters much more to the top and bottom line.?

To show our own hand and torture the analogy a bit further, this has been a core component of Simon’s strategy for years, with our launch of Identity+, Match+, ROAS+ and several other product launches slated for H2 of this year at the intersection of customer recognition and real-time marketing and advertising personalization.?

Conclusions and category predictions:

To be relevant in the current MarTech gauntlet a CDP must not only help you move data around, but it must also help you recognize your customer, help you know things about your customer that you don’t know today, and most importantly, it must do that in the service of measurable marketing ROI.?

While CDPs have been narratively focused on this for as long as the category has existed, as I’ve predicted and warned in other articles , now is the reckoning. Hundreds of companies calling themselves CDPs cannot exist in a sustained fiscally austere environment.?

Infrastructure focused CDPs (Twilio already tried to do this with Segment and Hightouch is next) will build to support marketing use cases in an effort to get closer to business value.

CDPs focused on data management (Amperity already tried to do this by acquiring Custora and ActionIQ’s partnership is more of the same) will both tell a better ROI story around how this impacts downstream customer experience.

Some CDP and non-CDP solutions that charge a toll to move data around will have to experiment with different value-based pricing levers and will be threatened (e.g. Segment, Tealium, Liveramp, etc.).?

Accountability for ROI is shared between the enterprise and the platform, but if the platform doesn’t push your thinking around incrementality or offer capabilities in the "stacking" category, you’re destined to keep shuffling.