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The Customer Data Platform Market is Unsettled. Should you be?

By Rob Brosnan | March 16, 2022 | 0 Comments

Customer data platforms (CDPs), as a category, has served digital marketing and marketing analytics leaders for more than a decade: a fine time to take stock. What’s the state of the CDP market? What’s its impact? What forces are propelling it forward? How might the space evolve?

“Let a thousand flowers bloom” captures some of the typical headiness of the early CDP market, with hundreds of providers and billions of dollars in venture capital investment. Often as early markets mature, the number of providers shrinks as the problems addressed standardize and dominant providers emerge. Mergers and acquisitions (M&A) are a sign of a maturing market, as those dominant providers move to acquire scale and market share. The early car market followed this pattern: between 1922 and 1925, the number of U.S. auto manufacturers dropped vertiginously, from 175 to 70, eventually reducing to the Big Three (Chrysler, Ford, and General Motors) in the 1950s.

In some ways the CDP market has matured. Use cases have standardized on data collection, profile management, segmentation, and activation. High performing brands deploy at least one CDP and attest to the value they provide (Gartner subscription required). We’ve witnessed a number of CDP acquisitions over the last two years. Large enterprise tech providers, like Salesforce and Adobe, have entered the market. So have CDPs fully arrived, a pillar of any worthwhile martech stack?

Yes, clearly…and yet the market is anything but settled. CDP sub-categories, like Smart Hub CDPs, have emerged as providers specialize on use cases, like journey orchestration. M&A did not reduce the number of CDP providers, but instead served as a way for vendors in adjacent markets, like digital experience platforms (DXPs), to enter the CDP market. And Salesforce and Adobe? In a turn from the early Marketing Cloud era, each built their own CDP, rather than relying on the acquisition of an established provider.

If anything, this unsettled CDP market is unsettling. CDPs entered the trough of disillusionment in 2021 (Gartner subscription required). CDPs do bring marketers value but with reduced cost efficiency, duplicating capabilities found in longstanding marketing and data management tools. They enable marketers with more and better data, yet they egg on the chase for a 360-degree customer view, which in turn creates downstream friction in resourcing, governance, and consumer trust.

CDPs are a vibrant and valuable part of most martech stacks. The future of the market? Positively kaleidoscopic. CDPs are attracting more stakeholders, from sales to customer service to data engineering teams, and driving more interest and inquiries from CIOs. This growing tangle of use cases and business leaders acts as an expansive force, pushing the CDP market in new directions, perhaps not all in marketing’s favor. Marketing and analytics teams also need new capabilities in or integrated with their CDPs — from support for new personalization strategies to privacy-preserving capabilities (Gartner subscription required) — to power the first-party future. 

With so broad a remit and so many directions to expand, it’s not hard to imagine a future where CDP is less a category than a capability, diffusing much like CRM has. The danger of “let a thousand flowers bloom,” despite its elegance, is exponential growth: a meadow overgrowing into a jungle. New research from Gartner can help digital marketing and marketing analytics leaders:

  • Understand the CDP Market. Gartner’s updated Market Guide for Customer Data Platforms (subscription required) disentangles market drivers and direction, and can help you connect your use cases with the right type of CDP provider.
  • Find the Right Technology. In the revised A Guide to What Is — and Isn’t — a Customer Data Platform (subscription required), you can find a catalog of CDP capabilities and a guide to help determine whether a CDP or an alternate technology is best for your needs.
  • Select a CDP Vendor. With the Toolkit: RFP for Customer Data Platforms (subscription required), organizations that rely on formal vendor request processes can save time and ask sharper questions of vendors using a customizable questionnaire and vendor comparison tool.

Even if the state of the CDP market is unsettled, you can develop powerful strategies around CDPs that cut through the chop. Use this new research on CDPs or schedule an inquiry to drive performance from your martech strategy.

Want to go even deeper? Join Ben Bloom at Gartner’s Marketing Symposium for an in-depth analysis of the CDP market.

The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.

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