WHY ARE MARKETING CLOUDS SUDDENLY PUSHING CDPS?
Over the past months, several of the major marketing cloud vendors have announced either the availability or development of their own customer data platforms (CDPs). For some, this represents a major change of position. They’ve moved from questioning the need for any sort of CDP to becoming enthusiastic advocates. So let’s unpack the various reasons for this 180° shift of opinion.
1. It’s a chance to make money
The CDP market is growing by between 23 and 29% every year, depending on your source (CDP Institute and ResearchAndMarkets.com). Overall it’s expected to be a $3bn global market by 2023, which is far too big a prize to ignore. No marketing cloud vendor can ignore a growing market segment that’s going to reach such a significant size in the next four to five years. So they have to come up with a CDP offering pretty quickly. Their strategy of dismissing CDPs as unnecessary clearly hasn’t worked; in fact it risks alienating all the potential clients that are now using them.
2. It relieves a significant customer pain point
SFor years, the large marketing cloud vendors have provided their customers with a range of data management platforms to store their data in, so that they can make use of the various solutions within their marketing clouds. However these data management platforms tended to be solution-specific, so customers had to cope with the complication of multiple data platforms and multiple data feeds.
Many customers couldn’t be bothered with creating all the required data feeds, so they didn’t get the expected return on their marketing cloud investment. And this is what has been driving the adoption of CDPs, especially those with good marketing cloud integration (like n3 Hub).
A properly installed and configured CDP allows a marketing cloud customer to bring their data into a single customer view and generate all the required data feeds with little or no effort.
As the trend to use CDPs has gathered momentum, the marketing cloud vendors have cut their losses and adopted the CDP concept themselves. This is allowing them to replace the services revenue that used to come from solving integration issues with recurring CDP license revenue. At the same time, it looks like they’re being genuine about solving a real customer pain point.
If the marketing cloud vendors had failed to solve this pain point, their customers may have started viewing the marketing cloud concept as a failure, which would have resulted in them moving back to best-of-breed marketing stacks involving a number of different vendors.
3. It overcomes engineering and operational challenges
As the marketing cloud vendors grew their offerings, they seldom did the building themselves. For speed to market, they bought existing platforms and integrated them into their clouds. This allowed them to rapidly increase their product offering, but it came at a cost.
Not only did it generate the multiple data platform/data feed problem (see point 2) for customers, it also meant that the marketing cloud vendors had to look after a range of different platforms. Managing and maintaining these different data platforms was a massive engineering and operational challenge, because the amount of data within them was growing at an ever-increasing rate.
The solution was to create their own CDP that would work with every solution in their marketing cloud. However they’re making this move look like a wonderful new service for customers, rather than a way for them to reduce the burden of trying to keep dozens of different data platforms running optimally.
4. It locks clients in
Remembering that the main aim for marketing cloud vendors is to make themselves all things to all clients, it’s understandable why they’re now pushing their own CDPs. It’s a way to lock clients in.
At n3 Hub, CDP is our primary product. We’ve set ours up so that our clients can easily switch between marketing clouds and single function platforms, allowing them to work with solutions that are best of breed. This is in complete opposition to the strategy of marketing cloud vendors, who want all of their customers to use nothing but the solutions contained within their marketing clouds. They want to maximise revenue per customer, reduce customer churn, and relieve the engineering and operational challenges that come with multi data platforms.
In our view, if every organisation or business has a CDP, there’s no compelling reason to use a single vendor marketing cloud. This is good for the market, because marketing clouds will focus on making their solutions better.
Call me a sceptic, but I don’t think marketing cloud vendors strategy is driven by the customer benefits offered by a CDP, which are:
- Consolidate all the data marketing needs in single customer view on a single platform
- Make it easy to segment and share this data with multiple different marketing platforms
- Bring campaign performance information back alongside the single customer view to improve attribution reporting
- Enable marketing platforms to be onboarded and switched between with little to no integration burden
I believe marketing cloud vendors are pushing CDPs onto their customers because it will address their own technical debt, which has been amassed through their acquisition strategies.