Identity Resolution and CDP (Customer Data Platform)


In the world of MarTech, virtually every roadmap and investment strategy includes a CDP (Customer Data Platform) capability. But, not all CDPs are alike. One of the foundational and most coveted functionalities is a persistent and consistent view of the consumer, says Derek Galier, Vice President/Partner, Strategy Consulting at Merkle.

Customer data platforms (CDPs) are clearly growing in popularity. In the world of martech, virtually every roadmap and investment strategy include a CDP capability.  But, as we already know, not all CDPs are alike. Many are designed to perform differing functions. However, one of the foundational and most coveted functionalities is a persistent and consistent view of the consumer.  To create this capability, the CDP must have some ability to resolve and manage the consumer’s identity. Several different approaches are being offered by CDP vendors, each with its own gaps – and opportunities – for the marketer.

Overview of the CDP

Before reviewing the identity considerations of the CDP, it is important to understand the CDP itself. In working with clients, I regularly find myself explaining the differences between a CDP, a data management platform (DMP), and a marketing database (MDB)/customer relationship management (CRM) platform. There are many commonalities across these solutions, but at their core, they all have the following attributes in common:

  • Collect data about the consumer
  • Resolve as much intelligence as possible about the consumer and/or the consumer’s segment
  • Use the intelligence to make informed marketing decisions
  • Activate the consumer in varying marketing channels for conversion measurement

Also Read: 

Top 10 Identity Resolution Software Companies for 2020Opens a new window

To better understand identity resolutionOpens a new window for the CDP, it is important to also understand two key factors of these platforms:  1) the “grain” of the consumer and 2) the methods for collecting the data (see table). For a deeper and more thorough comparison of these marketing platforms, see “Understanding Marketing Data PlatformsOpens a new window ” by Peter Rogers.

Types of CDPs and the need for identity resolution

At the time of this article, the CDP Institute has 67 CDP providers listed within its directory. Of these providers, there is a large variety of capabilities and value, depending on the need and the current state/maturity of the marketer’s martech capabilities. Stated another way, there is no easy method for comparing the CDPs, due to their vast differences and the requirements of the marketer. The following are some simple examples of differences:

  • Some CDPs only offer their software as a service (SaaS), whereas others have an on-premise option
  • Some CDPs are designed for certain industries (e.g., retail, communications)
  • Some CDPs have native campaign management capabilities to activate audiences that are managed within the CDP

As mentioned earlier, one of the most valuable functions of the CDP is to maintain a persistent view of the consumer. This ability to create and manage the persistent identity is common to almost all CDPs. As a result, the method(s) used to establish the identity are critical to ensuring trust and confidence in this identity. But **to evaluate the completeness and equity of the identity processing, the marketer must first understand the role of the CDP within the organization and the martech architecture**. To assist in this process, I generally classify CDPs into two broad categories – each defined by differing identity capabilities:

CDPs that activate exclusively on digital behaviors

Often, a marketer’s interest is based on recognizing and understanding the events that are established with online consumer behaviors. In these scenarios, it is critical to understand the real-time activity of the consumer by recognizing predefined events that will assign the individual to an audience segment. Once this consumer is defined and segmented, an action can immediately take place within the CDP. Activation examples include assigning a next best offer, a personalized Web experience, pushing a mobile message, or sending a marketing email. 

This is the most common CDP use case; and, in this scenario, the identity is most often processed by a deterministic match, which is commonly a website tag, provided and managed by the CDP.  This is also the scenario that drove the rise to CDPs from organizations that traditionally provided tag management capabilities. In other words, these organizations had deep expertise in site tagging and event recognition. Because these CDPs are limited to deterministic matching capabilities, they are also limited in their value to the marketer. As such, organizations that typically consider these types of CDPs are those with an online-only business model or only want to create consumer experiences from digital events. These CDPs are also valuable to organizations with limited martech budget or low martech maturity.

CDPs that establish complete identity graphs

Other CDPs offer a deeper capability to recognize consumer profiles and attributes from a variety of sources. This includes data that may be collected from operational systems, data warehouses, websites, call centers, etc. In this scenario, the CDP is matching data that requires a mix of PII and digital signals and will likely require both deterministic and probabilistic identity capabilities. In these scenarios, the CDP is often responsible for performing traditional CDI (Customer Data Integration) functions as part of the identity resolution process, including name and address hygiene, match scoring/thresholds, and supporting processes.

Although these CDP vendor choices have been limited due to their deeper capabilities, they are starting to become more common, due to both continuous investments and acquisitions by other large martech platform providers.

These CDPs are exciting to marketers because their deeper identity solutions are often paired with more mature audience management capabilities, campaign functions, and direct integration with activation channel leaders. Many of these CDPs have native partnerships with device graph platforms to extend the identity resolution capabilities. 

Organizations that typically consider this type of CDP are those with the need to connect data from many sources beyond just digital channels. These marketers want mature identity resolution and marketing tools but also want the ability to act on real-time data from website events.

It is important to note that there are still limitations to these CDPs. To some organizations, they are perceived as easier solutions for a complete marketing platform, because of the enhanced identity graphOpens a new window . However, there are many requirements that prevent this promise, including broad systems integration, advanced analytics, omnichannel attribution, enterprise business intelligence, and advanced decisioning, to name a few.

Also Read: CDPs: Yet Another Acronym That Lets Marketers DownOpens a new window

Identity resolution and choosing a CDP

When choosing a CDP, there are many factors to consider, including the functional capabilities of the CDP, how the CDP will create and manage consumer experiences, the current martech maturity of the organization, and total cost of ownership for the solution. However, it is equally important to understand and plan for how the CDP will represent the consumer within the solution.

  • Is the objective to represent all consumers regardless of channel and source?
  • Is the goal to store both known and unknown consumers?
  • Will the CDP only influence digital channels and experiences?
  • Will PII play a critical role in the identity process?
  • Is there a need to augment identity processing with other solutions?

Also Read: Do I Need A CDP? What Kind?Opens a new window

The answers to these questions point back to identity resolution and the critical role it plays in the CDP and the martech blueprint. This must be balanced with other considerations before a well-established CDP buying decision can be executed.