Marketing technology consultant David Raab developed the concept of a CDP over a series of blog posts in 2013 and later went on to found the vendor-neutral CDP Institute, which developed the first definition of the term. By 2020, the CDP Institute identified 133 CDP vendors and estimated annual industry revenue at $1.3 billion. While still a nascent, growing marketing technology segment, there’s emerging consensus about what constitutes a CDP.
The research and advisory firm Gartner has identified four such facets that a technology must feature to function as a CDP: data collection, profile unification, segmentation, and activation.
Customers engage with brands over a wide variety of devices and channels. CDPs must not only capture this data, but process and serve it quickly to account for its velocity.
A CDP must integrate this disparate data into a “golden record” or “single source of truth” for each customer based on their personally identifiable information (PII). The figure below illustrates the basic task of profile unification.
Notice that, in this example, two different email addresses are provided. A CDP must be able to integrate this divergent — even possibly conflicting — customer data.
Profile unification is logistically and computationally demanding. A CDP that unifies this data based on exact matches alone risks discarding huge numbers of customer profiles. Many CDPs use sophisticated statistical models to match disparate pieces of PII based on probabilistic evidence. Identity resolution, more generally, is used to integrate identifiers from all devices, platforms, and channels to create a unified customer profile.
Customer segmentation is nothing new. The CDP serves to unify and simplify how marketers perform this segmentation. With all customer data integrated into a customer-level record, segments can be defined using information ranging from media engagement and purchase data to call centre interaction data.
Finally, the CDP should facilitate driving customers to action through brand interaction. Done right, this goes far beyond the targeted advertisements of data management platforms (DMPs): Customers should be driven to action by an omnichannel, cross-journey experience. For example, CDP activation looks like e-commerce showing users different offerings based on their last in-store or online purchases. Or it could be call centre and social media representatives using a particular script based on the identified needs of the customer’s segment.
Consumers today are looking for contextually relevant and highly personalised engagement across all touchpoints and channels. They're open to trusted brands working with their data in exchange for these experiences, so long as it's done transparently. Ultimately, the CDP offers a marked shift from “interruption marketing” to “permission marketing.”