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Customer data platform market heats up again

As companies plan for the post-pandemic reality, customer data platforms are expected to be a bigger part of marketing workflows and other emerging use cases.

Customer data platforms will remain a priority for users' marketing tech stacks in 2022, if the biggest-ever funding rounds for CDP vendors are any indication.

2020 was tumultuous for CDP vendors, with employment growth at a standstill, according to CDP Institute research. During that time, some medium-sized CDP vendors hit their growth ceiling and sought to be acquired by companies that could grow their business, said CDP Institute founder David Raab. Several of those companies were acquired by the likes of Twilio, SAP, Upland, Sitecore and Optimizely. On Jan. 5, Vista Equity Partners acquired a majority stake in BlueConic.

While CDP acquisition activity quieted down in 2021 and few startups joined the sector, employee counts at existing vendors went up 6% in the first half and an additional 11% in the second.

That growth more than offset a lack of new vendors entering the sector, which typically accounts for expansion. Four CDP vendors, Amperity, mParticle, Totango and Treasure Data, also reported $100 million-plus funding rounds; only one other $100 million funding round had been reported since the research group's founding in 2016.

While things have been relatively quiet on the CDP merger and acquisition front since 2020, with the exception of BlueConic last week, Raab sees those big -- at least for CDP companies -- funding rounds as possible harbingers of more to come. Money is also easier to come by while tech stock rides a bull market.

customer data platform graphic
Customer data platforms are in integral part of an organization's data-handling application stack.

"We haven't really seen much consolidation, but that seems to be where we're headed," Raab said. "There are some market leaders, but they've never really separated themselves from the pack. Now they really seem to be raising a lot of money and getting ready for that 'elimination round' where they try to set themselves up as substantially ahead of everybody else. We'll see how that happens for them."

New CDP uses emerge

The CDP Institute also released the first report based on responses to its CDP Use Case Generator, an ongoing survey of CDP users. Three-quarters of the first 73 respondents came from retail, financial services and insurance, media, healthcare and education companies, and they overwhelmingly used CDPs for data assembly, the core feature of the platforms.

While marketing teams remain the most frequent users of CDPs, other departments within organizations are beginning to tap into the platforms, opening the door for more use cases for legal/privacy officers as well as customer service, sales and data analytics teams.

Beyond that, some users indicated they use CDPs for more sophisticated data tasks such as analytics, predictive modeling, outbound marketing campaigns, as well as what CDP vendors hold up as an aspirational goal -- real-time customer interactions and cross-channel journey orchestration.

We haven't really seen much consolidation, but that seems to be where we're headed.
David RaabFounder, CDP Institute

But it takes data from many sources to make CDPs effective tools in the CX stack. The most common data types users put into their CDPs are personal customer identifiers, transactional data and web behavioral data. Other popular data types include marketing messages data, buyer intent data and demographics and location data.

It's still early days for CDP adoption, Raab said. As companies begin to use CDPs and understand their value outside of marketing -- such as helping manage privacy compliance -- some users will push to employ more features and capabilities.

"You start out small and you do the relatively simple things," Raab said. "Some companies just stop there, but other companies add more and more and more. They'll start using additional features over time as they learn what the CDP can do and as they add in new departments."

Don Fluckinger covers enterprise content management, CRM, marketing automation, e-commerce, customer service and enabling technologies for TechTarget.

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