CDPs are vital for marketers and organizations today. However, many companies and marketers struggle with extracting the full value of a CDP due to several challenges. Discover how composable CDPs can help and why they may be the future of customer data platforms.
Customer data platforms (CDPs) were both one of the most disappointing investments brands made in 2020 and the number one investment they wanted to make in 2021, according to GartnerOpens a new window . CDP, a software that collects and unifies data, is vital for marketers to build customer profiles, establish personalized experiences, and activate marketing campaigns.Â
Some brands struggle with off-the-shelf CDPs if they are too templated, too expensive, and too â€œclosed,â€ meaning the data cannot be used for use cases outside the CDP or easily contribute output from ML models. CDPs are popular in a martech stack but are often not used to their full potential. In fact, according to the 2021 CDP member surveyOpens a new window , only 58% of companies with a deployed CDP say it delivers significant value, which is low considering the advantages a CDP can provide.
Enter composable CDPs â€“ built directly on existing data architecture to ultimately unite marketing, IT, and data teams to create personalized customer experiences â€” something we all want as decision-makers and consumers.Â
Know Thy Customer
Marketers are busy preparing for a cookie-less world as privacy regulations continue to evolve and digital stalwarts like Apple and Google focus on privacy and safeguarding consumer data. Apple made a move to require consumer permission for advertiser tracking through apps and banned cookies in the Safari browser in April of 2021. Third-party cookies will no longer be stored from Google Chrome starting in Q3 2023 and fully phasing out in the second half of 2024.Â
Companies are looking ahead to prepare their marketing strategies without third-party tracking. The momentum in the market is shifting to focus on CDPs that activate first-party data rather than the legacy models of data management platforms (DMPs) which focus on cookies and third-party data.Â
Every marketing organization worldwide is focused now on life beyond cookies and doubling down on collecting and activating first-party data. Clean rooms are also becoming a significant focus area for safely sharing data that enhances audience targeting and personalization and ensures the effectiveness of organizational investments in CDPs.Â
Common Issues With CDP Solutions
While CDPs are a major area of investment for marketing organizations, most companies struggle with CDPs due to implementation challenges. There is often a disconnect between marketing, IT, and data teams in what they need from a CDP. While marketing teams often drive the decision and funding for CDP initiatives, oftentimes, there is a lack of alignment with IT, which supports the integration of mission-critical workloads like clickstream data.Â Â
In many cases, CDPs are treated as a silo for some consumer data rather than a holistic solution that encompasses every consumer preference and interaction. By treating the platform like a separate system that exists off the side of the rest of the organization’s tech/data stack, issues arise that inhibit the platform’s effectiveness. Issues like data replication, non-scalable data architecture, and a higher total cost of ownership, since replicated systems handle the same functions, make CDPs a poor investment.Â Â
A Customized CDP To Connect Across Departments
A CDP can be an extension of your company’s data strategy, not a stand-alone solution separate from the data lakehouse. Many within the worlds of marketing and data are finding that the most efficient way to use a CDP is by building it on your lakehouse to ensure architectural simplicity, lower TCO, and provide a more effective ability to get to real-time activation use cases.Â
Technologists and marketers realize that a separate stack for multiple workloads does not make sense anymore, and adding tools only increases the complexity of managing data between different platforms. A composable CDP integrated into the company’s data architecture will help marketers communicate more effectively with consumers. It will also drive better outcomes for advertisers while helping mitigate costs and provide a framework where all data can be used to drive more effective personalization efforts.Â
A CDP on Top of Lakehouse Data Storage
Data lakehouses, a data pool that melds data from multiple sources, including warehouses and data lakes, have changed how companies use, compile, and store data. Lakehouses have become vital as they improve data quality, increase productivity, enable better collaboration, and eliminate silos and data lock-in.Â
A composable CDP built on the lakehouse addresses data quality and integration issues. It allows turnkey integration with the martech ecosystem and open-source technologies to share data seamlessly and securely across organizations. A good composable CDP also provides data governance and self-service tools to support BI, AI, ML, and real-time streaming. One of the most significant advantages of a composable CDP is that it allows all departments to work from a single source of truth.
In addition to data storage, a composable CDP features native support for ML. This means, for example, you could calculate the propensity to churn and then use that model as an input for audience segmentation, which is vital for building out customer profiles.
Composable CDPs: The Future Solution
Composable CDPs are built on lakehouses and properly leverage first-party data, allowing for behavioral data creation to personalize the customer experience.Â
The composable CDP extends the capabilities of the company’s existing lakehouse and provides tools to ingest data from common mar/ad tech sources and share it with reverse ETL tooling. The data can then be pushed to activation systems like SMS, email service providers, authenticated web platforms, and more. Furthermore, ML models can be trained to analyze vital streaming data like clickstream data, which is essential for companies in the media and entertainment industries.Â
The takeaway is that a composable CDP provides seamless integration with an organization’s lakehouse and the broader mar/ad tech ecosystem. The result is high-quality, secure, controlled data and various AI/ML tools to analyze that data, helping brands know their audience better and make more informed decisions to reach customers where they are.
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