Customer Data Platforms: Winning And Failing At The Same Time

Tasso Argyros, CEO and founder of ActionIQ

Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Tasso Argyros, CEO and founder of ActionIQ.

The pandemic has disrupted every industry, forcing far too many businesses to shut their doors. But when it comes to digital transformation, COVID-19 has proven to be the Great Catalyst, accelerating digitization and customer experience investment in many industries.

Much of the most recent progress in this vein has been driven by customer data platform (CDP) development and implementation.

Yet when I talk to people in the industry, I often get the question: Are CDPs for real or are they just overhyped technology that will flop in a year or two?

This question reveals a giant problem facing our industry right now. CDPs have a trust issue that will not go away without determined action from respected technology analysts.

Problem vs. solution

I often say that the excitement surrounding CDPs has more to do with the problem they aim to solve rather than the solution itself.

Over the past 10 years, we’ve cycled through several iterations of the big data promise, starting with Hadoop, moving right along to scalable data warehouses, such as Aster Data or Vertica and, more recently, to cloud databases, including Amazon Redshift, Google BigQuery and Snowflake.

Although the tech has evolved, the fatal flaw remains: They all require an army of engineers to get any value out of them. And despite hefty investment in people and tech, marketing technologies, such as email service providers, were still unable to tap directly into the data stored in a data lake because of problems related to scale, data format and data quality.

So, big data let us down.

Let’s move on to the next purported savior in line: the big marketing cloud vendors who promise to easily put all your data in the cloud. That myth was debunked by the marketing clouds themselves – when Adobe and Salesforce announced plans to develop CDP solutions of their own. That was nearly two years ago … we’re still waiting.

The upshot is that the traditional approaches have failed.

But the growing demand for CDPs has supplied a problem of its own: too many vendors muddying the waters, self-classifying as CDPs when in reality they are something else entirely.

Take Segment, which recently sold for $3.2B.

Segment was originally designed simply to send data from a webpage to analytics vendors, such as Google Analytics. In fact, Segment’s first product was aptly called “Analytics.js.” Segment, and a handful of similar “CDPs,” actually have their roots in a different category – that of tag managers. But these self-described CDPs are missing key components of CDP technology, including the ability to provide historical analysis of customer behavior and the ability to easily connect offline data. Both key requirements for “real” CDPs.

There are many more examples of vendors that are purely ID resolution or web personalization tools but prefer to position themselves as CDPs to benefit from the hype. These are usually the same vendors that you hear about when someone has had a bad experience with a CDP, and the reason is obvious. Their capabilities do not match the full package that comprises a genuine CDP.

This leads to an erosion of trust that is damaging to the category.

Analyze this

Which brings us to the people who are supposed to help us with this situation: technology analysts. An analyst’s primary responsibility is to help organizations make informed decisions and shortcut their path to success.

To be fair, the analyst community has put out some great CDP content. Gartner’s “Smart Hub vs. Dumb Spokes” model, for example, accurately describes the customer tech stack of the future with a smart hub CDP at the center. But although Gartner’s description of the different parts of a CDP may be accurate enough to provide a framework, the challenge remains that it’s too easy for vendors to simply “check the box” without truly satisfying the criteria that really matters.

Which begs the question, why aren’t trusted analysts, such as Gartner and Forrester, taking a strong position?

It’s an important question with no obvious answer. What is clear, however, is that this silence is doing a disservice to the market.

If analysts fail to properly classify CDPs for the industry, then their clients – the end-user organizations – will suffer from making poorly informed choices. It’s a slippery slope from there as enterprise companies are able to then delay improvements that would lead to better customer experience, revenue and retention.

The cost of analysts not fulfilling their crucial role is therefore huge, and the impact goes beyond CDP vendors to the reputation of the technology analysts themselves.

They have the power and, I would argue, the responsibility, to preempt further damage. In the meantime, my advice to buyers is to do their research, talk to client references to understand how technologies are used in practice and to demand that their analysts take a position and provide clearer and much-needed guidance.

Follow ActionIQ (@ActionIQinc) and AdExchanger (@adexchanger) on Twitter.