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Customer Data Platform Discussion with David Raab

Watch this discussion on the Customer Data Platform market, from the V12 Next Best Action thought leadership forum. With David Raab, Founder of the CDP Institute; Andy Frawley, CEO of V12; and V12 President, Anders Ekman.

Watch Part II

Below is a partial transcript from the discussion.

Anders Ekman:
Hello, I’m Anders, President of V12, and we have a great segment for Next Best Action today. We’re going to get a broad variety of intel and insight on the Customer Data Platform market with the inventor of the CDP market, David Raab, who’s head of the CDP Institute. We’re thrilled to have David here.

We also have Andy Frawley, who’s CEO of V12 as many of you know, but also has built many marketing technology companies, and has a great perspective to offer on what’s going on in the landscape.

Before we start, let me ask you to give just a little bit of background on yourselves. So, David, if we could start with you.

David Raab:
Good to see you. To be perfectly clear, I coined the term CDP but did not invent the concept. I spent most of my career as a marketing technology consultant and industry analyst, helping marketers to find the right vendors, which could be software or service providers. Before that, I spent time working in the direct marketing industry.

Andy Frawley:
I’ve been involved in marketing technology since the mid nineties when I started a company called Exchange Applications which was a first-generation campaign management / marketing automation platform.

I’ve been involved with probably 4 or 5 different marketing automation, e-mail marketing, CDP-type platforms over the last 20 years. CDPs have really taken the marketing data and automation market by storm.

Anders:
David, in order to help marketers understand what’s going on in the marketplace and help them make good decisions, you founded the CDP Institute. It would be great to hear a little bit of the background of why and what the Institute is doing today.

David:
So the origin of the term is 2013, which is when we first started to see marketing tools that were building their own customer database. I started to see a number of vendors who had tools that were both doing an application and actually building that database as part of the packaged software. This needed a name and Customer Data Platform was the name we came up with. I started to talk about that and write about that extensively.

In 2016, the market took off. I wanted to accelerate that and we came up to the notion of the Institute, which is something that is dedicated to helping marketers do a better job managing their customer data.

With the assumption that if enough people get involved in that, plenty will end up buying the CDP, because that’s the primary tool.

Anders:
Share your progression of the market with us a little bit more, Andy, and how it’s now about more common technologies. I know you were at the very early days of trying to make all that happen.

Andy:
Well, in the mid-nineties to the mid two-thousands, it was really about marketing automation and the software was connected to some third-party database or dataset as well as analytics, campaign management and activation. It was obviously much simpler back then. We didn’t have the digital platforms we have today.

And then as digital proliferation started to happen from a channel perspective, there was a gap in the marketplace. There wasn’t really a great way to integrate everything into a data warehouse or data lake.  The CDP started to bring that all together. It was one platform that could ingest data, analyze data and activate data.

Anders:
There is certainly a proliferation of the kinds of data that marketers have to handle and obviously, that comes with volume and velocity considerations.

So, David, how have CDPs caused new dynamics to happen in the market, and how are they reacting to what marketers need to be able to solve for?

David:
There are multiple data sources today, certainly many more than back in the day when you only had direct mail and email. Now, there is web analytics data, mobile app data and CRM data.

All these sources have been isolated from each other and marketers want to get their hands on all that data so they can get a complete view of the customer. As more data comes in, there are more sources that need to be integrated to create a complete view.

Customers expect you to have that complete view and that you will act on it and personalize. We really just have to solve this data unification problem, which is where a Customer Data Platform comes in. 

Anders:
With the work that V12 is doing, what is V12’s take on all this?

Andy:
Our viewpoint is that activation is an important part of the CDP. We certainly have all the data ingest capabilities across all the channels. Our robust activation engine includes customer journeys and the ability activate natively across different channels, as well as the ability to get performance data back from those channels.

We’re able to deliver a CDP, not just with customer data, but with prospect data as well.

Anders:
David, whenever I talk to marketers, they’re challenged with, what is a CDP? It seems like there’s a whole spectrum of definitions of what a CDP can solve for. What are you seeing in the work that the Institute does and the many partners you have?

David:
Our definition of CDP has pretty much been the same since we started the Institute. It’s software and there’s a persistent unified customer database that’s accessible to other systems. Going back to the origins of overseeing these applications is packaged applications that were building that unified customer database for the first time.

And then what we added early on in the process was the recognition that actually having an application that’s built its own database, has a lot of value to other systems. There is a lot of software out there like predictive modeling and campaign management that can benefit from having access to it.

We’ve switched our focus a little from applications to building a database that is shareable to other systems.

What happens now? Of course, marketers need more than just building a database. They want to actually do something with the data. Not surprisingly. So they need those activation components, analytical components, delivery components and so on. And it’s often very convenient for them to have that in the same system.  

Anders:
We’ve started to see a pretty robust consolidation and M&A environment in marketing technology, particularly in the Customer Data Platform market. What do you see going on with your constituent base and are they connecting with other non-CDP types of applications?

David:
We’ve certainly seen a few interesting acquisitions recently. Just recently, Segment got bought by Twilio and before that, AgilOne got bought by Acquia. Those were two very interesting ones because they were both martech vendors who needed that connectivity, that shared database capability, that the CDP provide.

Andy:
Consolidation will certainly continue in these categories. The other dynamic that I see at V12 is that if you’re a Fortune 500 company for example, you have the resources to integrate 6 or 7 different pieces of tech together to solve your problem.

But if you’re maybe a lower enterprise client, you are shopping for capabilities to get your data and your activation in one package. We’re able to provide solutions to some of those brands that are at a price point that they can afford and a capability set that isn’t 100% of what an enterprise brand would have, but it might be 80 or 90%.

Anders:
David, are you seeing this consolidation as a way for marketers to have it a little easier by getting the all-in-one solution and is that helping the price environment? Are all these different applications and different pricing structures becoming a problem or is that not much of an issue?

David:
Well, I think it’s more of a cost issue as Andy just said. We expect to continue to see more of these integrated solutions, particularly in the mid-market. Because if they are the ones who are most sensitive to the integration costs of slightly less sophisticated demands, there’s still plenty of simple solutions out there. They don’t need the absolute most sophisticated email tool or web personalization tool, and they can compromise on the price tag for the very real benefit of having that integration.

So, that’s why a lot of these companies like Aquia are buying and building out, trying to create more or less a complete one-stop-shop. 

Anders:
Let’s explore the opposite end of the spectrum. Andy, let me turn to you on this, I see that brands are taking more control of their data, big brands. And they are building out capability, technology and data assets, where in the past, they just delegated it to a service provider, or an agency, or something like that. Where does the CDP play into that as one of those technologies that’s getting leveraged at the Enterprise level? And how so is it different than the mid-market?

Andy:
I do think brands are taking more control over their data, from a security perspective, a privacy perspective and an identity perspective. The Customer Data Platform then becomes the tip of the spear to help do that integration.

And then, it branches off. If you’re a big brand with service providers, you may use a bunch of other tools that are very sophisticated. In the mid-market, to David’s point, you’re not getting all of the functionality with sophistication.

Anders:
Data quality is one of those topics that people know they need but they don’t want to learn too much about it. Have CDPs helped bring a level of quality that marketers can count on?

David:
I would say CDPs do a couple of things when it comes to data quality. They expose the problems, which otherwise would have been hidden, and they make it easier to solve that problem. Often data quality is really a matter of governance and fixing at the source and CDPs make it easier to see what’s going on in those source systems.

Depending on the product, they often do provide tools as well. I’m sure you guys do data cleansing and standardization, so when data does in fact get into the CDP, it has been cleaned up. Some CDPs provide tools to do that, but they, by themselves, can’t solve the problems.

Anders:
Andy, do you see organizational gaps and opportunities when it comes to data quality and data governance?

Andy:
In some cases, it’s adjacent to the CDP. Sometimes it’s right in it. It depends a little bit on the type of data. The additional challenge that the Customer Data Platform puts out there, is that the linkage between the source data sets is much more complex.

You may have name and address in one dataset, an email address in another dataset and a mobile ID in another dataset. How you bring together this data in a privacy sensitive way is a data governance question.  Much like data quality, I think CDPs help enable that. 

Anders:
So let’s switch gears a little bit. A lot of marketers have either older generation technologies or just know that they need to have a CDP. There are a lot of choices out there. David, how does a marketer start the process of evaluating what’s out there and finding the right CDP for them?

David:
The correct answer is to start with your use cases. Then, figure out what the right solution is for the thing that you can’t do today, which is to assemble data from multiple systems. You should do that based on the funding requirements as well as specific use cases.

You can then eliminate those that are maybe at the wrong price point. Or some don’t know anything about your industry and you eliminate those. Some are specialists in certain industries. You can filter it down that way, and then you begin to look at the requirements that your use cases have actually come to.

Once you do that first level of filtering, the consideration set at least gets a little more manageable. And then you begin to look for research and talk to folks and do the things that you do with any other technology.

Interested in learning more? Download V12’s Customer Data Platform Success Kit – full of blogs, articles, resources and webinars to help you better understand Customer Data Platforms, how they can provide competitive advantage, and videos showing practical applications of how to use a CDP for a variety of marketing initiatives.

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