Enterprise

Customer data has never been more valuable. Companies that organize it are getting a second look.

Adobe, Salesforce and Twilio all want in on the customer-data platform space after mobile privacy changes made it harder to gather third-party data. Is there more to CDPs this time around?

Shoppers in line

Customer-data platforms may be a hot new market.

Photo: Adrien Delforge/Unsplash

In the wake of data privacy changes by mobile platforms last year, the enterprise tech world is suddenly very interested in customer-data platforms (CDPs). With Twilio’s acquisition of Segment, Treasure Data’s $234 million fundraise late last year and Salesforce’s push into CDPs, the hot new buzzword is potentially a hot new market.

“The way I think about [CDPs] is, it’s trying to create a 360-degree view of each of your customers to help you more accurately identify what would most resonate with this customer,” said Derek Zanutto, a general partner at CapitalG.

The term first started appearing in mainstream conversations back in 2017. In short, CDPs are centralized places to store all the first-party data a company collects from its customers.

“It’s fundamentally a data platform that unifies the data, and processes it, and then activates the profiles across many channels,” said Treasure Data CEO Kazuki Ohta. The key is not just collecting and storing that data, but making it available to use.

The need for CDPs first arose as companies realized they had this data but didn’t know what to do with it.

“What we're seeing that a lot of brands do is effectively build a data lake or a master data management system, where there's a lot of data coming together potentially,” said Ryan Fleisch, head of Product Marketing for Adobe’s CDP. “But where a lot of brands are looking for further partnership is: How do I make sense of that data, activate it and make a decision off of it?”

“The transformation of the data, the ability to personalize that customer information, I think is a key value prop of the customer data platform,” said Twilio Segment Vice President Jodi Alperstein. “And really knowing that 360 view of the customer and really being able to identify them, and then be able to put it into action.”

It’s also why CDPs are most commonly talked about in a marketing context, because it’s the most natural extension of using data about customers. After Apple and Google restricted the use of third-party cookies in apps and on the web, marketers needed to find new sources of customer information.

“It's taking pieces of different marketing technology [and putting] them together so that as the consumer record exists in all those different systems, whether that's a cookie, a CRM record, an email, whatever it is, we can actually create one profile of that person and then use it more effectively in different marketing,” said Cory Munchbach, COO at BlueConic.

Still, the applicability of CDPs extend far beyond just marketing, into sales, service and any other areas of an enterprise that could benefit from a more complete customer view. “I absolutely think it's critical to extend beyond that,” said Bobby Jania, senior vice president of Marketing at Salesforce. “We're uniting marketing with commerce, with service, with sales, with IT. And that really gives our customers, the brands, a 360-degree view of their end customers.”

CDP vendors include companies such as Segment, Amperity, mParticle and Treasure Data, as well as smaller companies like Lytics and BlueConic. Outside of the focused CDP players, marketing cloud vendors like Salesforce and Adobe can’t afford to ignore this trend. And ERP players like Microsoft and Oracle want to extend customer data into purchasing, products and supply chain software.

That ability to determine and personalize customer interactions across an enterprise is what makes the idea of a CDP so tantalizing. “I do think the vision of the CDP is incredible: Who wouldn't want that, right? Who wouldn't want to have this rich view of every customer so they can better service that customer, leveraging all the data they have at their fingertips?” said Zanutto.

Broken promises

The challenge is that vision hasn’t always materialized. Early attempts at CDPs led to a few false starts and some disillusioned customers, and the appetite for CDPs almost threatened to fizzle out.

“We were hearing a lot about CDP probably two and a half years ago,” said Valoir principal Rebecca Wettemann. “And then things sort of went quiet.”

Part of that silence was due to the lack of big successes in the industry. “If you roll the clock back two or three years ago, there's a lot of buzz around CDPs, and how it's played out has sort of underwhelmed a lot of folks in the industry, at least on the investment side of things,” said Zanutto. Investor enthusiasm has since dimmed. Back then, “the level of enthusiasm would have been a 10 out of 10, and now it's probably much less than a 10 out of 10, because there hasn't been a number of big breakouts,” he said.

"Have I seen any kind of large-scale deployment of a CDP where it works as advertised? No."

But what prevented CDPs from having their breakout moment three years ago? A combination of over-promising and under-delivering, and bad market timing, according to industry practitioners and investors.

“One of the ways that this category has been very bizarre is massive adoption at a messaging level,” but not as much at the practical level, said Munchbach. The pain points CDPs are trying to solve are very legitimate, which is why a lot of vendors want a piece of the pie, she said, but then “there's this real fall-off between saying you can do it and then actually doing it.”

“Have I seen any kind of large-scale deployment of a CDP where it works as advertised? No,” said Wettemann.

The fault doesn’t entirely lie with CDP vendors, however. Until recently, most organizations didn’t have a mature enough data strategy to get the full value of a CDP. “I think the things that held back the CDP area in the past from having more explosive growth were the fact that it did take a lot of time to set them up and get value out of them because you had to set up a completely new system within your environment to collect and examine data feeds off of customers,” said Zanutto.

Munchbach said she’s never seen a customer example where there wasn’t some sort of data surprise. “There's such an under-estimating of the readiness that they have on the data side of things,” she said.

And as CapitalG and other investors talked to customers, many of them were “disillusioned or dissatisfied” because they’d done all this work to get their data together, but weren’t as ready as they thought. And “when they go to actually use the data in CDP, they realize there's still a big gap and they're not really getting the value they were hoping for,” said Zanutto.

When it comes to getting value out of a CDP, Twilio Segment’s Alperstein admitted that “there's a value curve for sure,” and that some customers are getting less out of their CDPs than others. But that doesn’t mean all is lost. “I don't think there's anybody using the product who isn't getting some real value from it,” she said.

Second chances

CDPs may have struck out the first time around, but it’s not over yet. Since 2017, the enterprise tech world has shifted dramatically: The pandemic accelerated the need for digital transformation; regulatory changes and mobile platforms forced a shift toward first-party data; and more options arose for companies looking to outsource complex data operations.

At Segment, demand exploded during the pandemic as enterprises were racing to service their customers digitally, said Segment product marketing Vice President Katrina Wong. And “when you think about the digital footprint, understanding your customers, connecting online … that’s what a CDP helps to do, in a nutshell.”

Consumer protection laws such as GDPR or CCPA, along with the decline in third-party cookies, have also made a first-party data strategy not just competitive but necessary for survival. “If you believe consumer behavior is becoming digital and that consumer privacy is becoming stricter, then CDPs will be required in most of the brands and businesses,” said Treasure Data’s Ohta.

Those regulatory changes, combined with the option of outsourcing complex data operations to companies like Databricks or Snowflake, have pushed companies to be more data-ready this time around.

“What could be different this time around is more enterprises are data-ready than they have been in the past,” said Zanutto. “That’s sort of a secular trend, as more people invest in their data stack and into the data warehouses and data lakes.”

All of those forces combined have brought CDPs to the surface again and spurred more competition than ever.

“It's just a matter of when, not if,” said Zanutto. In the enterprise tech market, timing is everything, he explained, and coming to market too late or too early can actually be detrimental. “I think there's a lot of good reasons why now is different, it’s heading in that direction. But is it going to be a year to greatness, or five years to greatness? That's a really hard question to know.”

Policy

Musk’s texts reveal what tech’s most powerful people really want

From Jack Dorsey to Joe Rogan, Musk’s texts are chock-full of überpowerful people, bending a knee to Twitter’s once and (still maybe?) future king.

“Maybe Oprah would be interested in joining the Twitter board if my bid succeeds,” one text reads.

Photo illustration: Patrick Pleul/picture alliance via Getty Images; Protocol

Elon Musk’s text inbox is a rarefied space. It’s a place where tech’s wealthiest casually commit to spending billions of dollars with little more than a thumbs-up emoji and trade tips on how to rewrite the rules for how hundreds of millions of people around the world communicate.

Now, Musk’s ongoing legal battle with Twitter is giving the rest of us a fleeting glimpse into that world. The collection of Musk’s private texts that was made public this week is chock-full of tech power brokers. While the messages are meant to reveal something about Musk’s motivations — and they do — they also say a lot about how things get done and deals get made among some of the most powerful people in the world.

Keep Reading Show less
Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

Sponsored Content

Great products are built on strong patents

Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America's technology leadership.

Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.

From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: "intellectual property protection is vital for American innovation and entrepreneurship.”

Keep Reading Show less
James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.
Fintech

Circle’s CEO: This is not the time to ‘go crazy’

Jeremy Allaire is leading the stablecoin powerhouse in a time of heightened regulation.

“It’s a complex environment. So every CEO and every board has to be a little bit cautious, because there’s a lot of uncertainty,” Circle CEO Jeremy Allaire told Protocol at Converge22.

Photo: Circle

Sitting solo on a San Francisco stage, Circle CEO Jeremy Allaire asked tennis superstar Serena Williams what it’s like to face “unrelenting skepticism.”

“What do you do when someone says you can’t do this?” Allaire asked the athlete turned VC, who was beaming into Circle’s Converge22 convention by video.

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

Enterprise

Is Salesforce still a growth company? Investors are skeptical

Salesforce is betting that customer data platform Genie and new Slack features can push the company to $50 billion in revenue by 2026. But investors are skeptical about the company’s ability to deliver.

Photo: Marlena Sloss/Bloomberg via Getty Images

Salesforce has long been enterprise tech’s golden child. The company said everything customers wanted to hear and did everything investors wanted to see: It produced robust, consistent growth from groundbreaking products combined with an aggressive M&A strategy and a cherished culture, all operating under the helm of a bombastic, but respected, CEO and team of well-coiffed executives.

Dreamforce is the embodiment of that success. Every year, alongside frustrating San Francisco residents, the over-the-top celebration serves as a battle cry to the enterprise software industry, reminding everyone that Marc Benioff’s mighty fiefdom is poised to expand even deeper into your corporate IT stack.

Keep Reading Show less
Joe Williams

Joe Williams is a writer-at-large at Protocol. He previously covered enterprise software for Protocol, Bloomberg and Business Insider. Joe can be reached at JoeWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

Policy

The US and EU are splitting on tech policy. That’s putting the web at risk.

A conversation with Cédric O, the former French minister of state for digital.

“With the difficulty of the U.S. in finding political agreement or political basis to legislate more, we are facing a risk of decoupling in the long term between the EU and the U.S.”

Photo: David Paul Morris/Bloomberg via Getty Images

Cédric O, France’s former minister of state for digital, has been an advocate of Europe’s approach to tech and at the forefront of the continent’s relations with U.S. giants. Protocol caught up with O last week at a conference in New York focusing on social media’s negative effects on society and the possibilities of blockchain-based protocols for alternative networks.

O said watching the U.S. lag in tech policy — even as some states pass their own measures and federal bills gain momentum — has made him worry about the EU and U.S. decoupling. While not as drastic as a disentangling of economic fortunes between the West and China, such a divergence, as O describes it, could still make it functionally impossible for companies to serve users on both sides of the Atlantic with the same product.

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

Latest Stories
Bulletins