Changes the Pandemic Has Had on CDPs


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2020 saw a global pandemic, extreme weather, political instability, and the accompanying budget cuts that come with times of uncertainty. While many businesses’ initial reaction was to pull back on spending, forward-looking organizations quickly realized prioritizing the digital experience across the full customer journey was now an imperative for survival.

According to the CDP Institute’s July 2021 Industry Update, “The first half of 2021 saw a flurry of growth, funding and acquisitions as the Customer Data Platform industry reconfigured itself during the COVID pandemic. Over-all demand for CDPs recovered from freeze in the early stages of the pandemic as marketers across all industries recognized that unified data is the foundation of digital customer experience.”

Organizations overall were forced by the pandemic to accelerate their existing digital transformation plans in order to react to the fact that most of their customers were now primarily interacting with them through digital channels. “The pandemic caused consumers to make a big shift towards digital channels, whether shopping, ordering, researching products, or consuming content. This required many companies to quickly re-tool their experiences and processes to add new capabilities,” said Tom Treanor, CMO of Treasure Data.

All of this new digital-centric behavior has increased the volume, velocity, depth and variety of customer data across all channels.

“With the increase in data volume from all of these touchpoints, it has become even more critical for companies to build a customer data foundation using a CDP that can connect to all customer-facing systems, ingest and unify the data, make it available for analytics, and allow companies to create data-driven, personalized customer journeys,” Treanor said.

Regardless of what stage an organizations digital transformation may be at, any successful transformation relies on good data to help inform decisions and develop data-driven processes. “Everybody kind of froze last year when things first came down. But it turned out there’s a lot of demand for this stuff because everybody’s doing digital transformation, and digital transformation requires good customer data,” said CDPi founder David Raab.

Related Article: Understanding What a CDP Is and Why Your Business Needs One

Campaign and Delivery Overtake Data CDPs

One of the main changes the pandemic has had on the industry is the types of CDP platforms that are being adopted and deployed.

Currently CDP platforms are organized into four groups:

  • Data CDP: These gather customer data from different channels, links data to customer identities, assemble unified customer profiles, and store the results in a database.
  • Analytics CDP: Thesehave the features of a Data CDP with analytics features. Typically includes customer segmentation, predictive modeling, revenue attribution, and journey mapping.
  • Campaign CDP: These provide data assembly, analytics, and customer treatments.
  • Delivery CDP: These have data assembly, analytics, customer treatments, and message delivery.

While Data CDPs were popular with early adopters, since the pandemic there has been a significant increase in the deployment of campaign and delivery CDPs. According to the CDPi July 2021 Update, campaign and delivery CDPs now account for 67% of CDP companies, 71% of employment, and 71% of funding. This is a big change as the data CDP, which used to be the most popular CDP, now only accounts for 13% of companies and 15% of funding.

This has been driven by the need of organizations to do more than just manage data. Today companies need to be able to build trust and provide value to their customers, so they need to be able to affect the overall digital experience while being supported by advanced campaign management tools and delivery options.

Related Article: What’s the Road Ahead Look Like for CDPs?

CDP Adoption Affects Hiring and Support

While the pandemic initially saw layoffs and uncertainty about future business, many experts are predicting increased budgets and improved hiring trends in marketing operations and marketing support roles. This is mainly due to the influx of new technology platforms like the CDP making its way into many marketing departments.

“There is a shortage of engineering talent due to increased demand. This is a result of accelerated digital transformation,” said James Meyers, Head of Martech Strategy, ActionIQ. “This creates a need for quicker training and development of junior talent to become more skilled.”

“What we saw during the pandemic was that, obviously, a lot of jobs got cut, and people were afraid,” said Tim Parkin, President of marketing consulting firm Parkin Consulting. “It’s going to be Black Friday levels [of spending] for about five months at the end of 2021. Companies that invest will be successful, and companies that can’t will fail.”

Companies need to be better equipped to serve pent-up customer demand by scaling their marketing programs. They will need technology platforms like the CDP to both understand their customers behavior over time, and deliver valuable personalized communications and offers to them. This investment in a scalable technology platform like the CDP will require trained and skilled professionals who can operate them.

As a result, CDP vendors have added 6% more employees in the first half of 2021, compared with 1% employment growth in the second half of last year. Investors pumped 11% more venture funding into CDPs in 2021, while there was only 3% funding growth in the second half of 2020.

Related Article: Customer Data Platforms Market Guide

Conclusion

The initial pull back on spending and deployment of CDP systems from the shock of the pandemic was followed up with significant growth, funding and acquisitions in 2021 as companies were forced to accelerate their digital transformation plans to react to changes in consumer behavior. This acceleration has led to an increased need for both technology and the accompanying skillsets to run and maintain it.

“The pandemic has accelerated digital transformation, which in turn has broadened the appeal of CDPs,” said Meyers of ActionIQ. “Companies need more channels to operate through, so they need that data, and they need to unify it and make is actionable.”

Campaign and delivery CDPs have been pushed to the forefront by the pandemic as data CDPs have fallen back to be a more specialized solution being developed by newer CDP vendors. Look for an increased need for marketing operations and support personnel as more companies adopt CDPs to help tailor their overall digital experience across the full lifecycle.



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