Introduction

The Role of CDPs in Modern Marketing

In today's data-driven marketing landscape, Customer Data Platforms (CDPs) have become essential tools for businesses seeking to leverage their customer data effectively. CDPs serve as centralised systems that collect, unify, and activate customer data from various sources, enabling marketers to create cohesive customer profiles and deliver personalised experiences across multiple channels.

The importance of CDPs lies in their ability to solve common data challenges faced by modern businesses:

1. Data Unification: CDPs consolidate customer data from disparate sources, creating a single, comprehensive view of each customer.
2. Data Accessibility: They make customer data easily accessible to various teams and systems within an organisation.
3. Personalisation: CDPs enable the creation of targeted, personalised marketing campaigns based on rich customer insights.
4. Real-time Activation: Many CDPs offer real-time data processing capabilities, allowing for timely and relevant customer interactions.

As the CDP market has evolved, two main types have emerged: Packaged CDPs and Composable CDPs. Each approach offers distinct advantages and potential drawbacks, catering to different organisational needs and technical capabilities. Let’s explore these two CDP types in depth, compare their features, and introduce a holistic solution that bridges the gap between them.

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Understanding the CDP Landscape

What is a Packaged CDP?‍

A Packaged CDP is a ready-made solution with built-in features designed to manage customer data end-to-end. These platforms offer a comprehensive suite of tools and functionalities out of the box, making them an attractive option for organisations looking for a turnkey solution.

Traditionally, Packaged CDPs were created primarily for known customer data, focusing on building unified profiles for identified customers. However, some modern Packaged CDPs have expanded their capabilities to include profile creation for unknown or anonymous customers as well.

Key characteristics of Packaged CDPs include:

• Pre-built connectors for common data sources and marketing tools
• Standardised data models and schemas
• Integrated identity resolution and profile unification
• Built-in segmentation and activation capabilities

What is a Composable CDP?

A Composable CDP represents a modular approach to customer data management, and popularly leverages existing cloud data infrastructure, such as Google Cloud or Snowflake. This approach allows organisations to build a custom CDP solution by integrating their preferred activation connectors and utilising their existing data stack.

A key component of many Composable CDP implementations is the concept of Reverse ETL (Extract, Transform, Load). This process involves extracting data from a central data warehouse or lake, transforming it into a format suitable for various marketing and operational tools, and then loading it into those systems for activation.

Key characteristics of Composable CDPs include:

• Flexibility to use existing data infrastructure and not have to copy data between a data warehouse and a CDP
• Ability to customise data models
• Integration with best-of-breed tools for specific functions
• Greater control over data governance and sovereignty

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Comparing Packaged vs. Composable CDPs

Analysis of a Packaged CDP

Advantages:

1. Out-of-the-box readiness: Packaged CDPs come with pre-built features and connectors, allowing for quick deployment.
2. Strong connector availability: These CDPs typically offer a wide range of integrations with popular marketing tools and data sources.
3. Simplified data model: They often use a standardised data model, making it easier to organise and map customer data.

Disadvantages:

1. Limited to known data: Traditionally, many Packaged CDPs were designed primarily for known customer data, potentially limiting their ability to leverage anonymous or unknown user data.
2. Rigid data model: The pre-defined data structures can be inflexible, making it challenging to adapt to unique business requirements or industry-specific data needs.

Analysis of a Composable CDP

Advantages:

1. Strong compliance: By working within a client's existing cloud infrastructure, Composable CDPs can more easily adhere to data privacy and security requirements.
2. Better control of martech stack: Organisations have more flexibility in choosing and integrating best-of-breed tools.
3. Data sovereignty & zero-copy data: This approach allows for better control over data location and reduces data duplication, enhancing compliance and security.
4. Cost efficiency: No large upfront CDP investment is required, as it leverages existing infrastructure.
5. Potentially faster implementation: Fewer integrations into data sources may be needed, potentially speeding up the implementation process.

Disadvantages:

1. High data querying costs: Extensive use of data warehouse queries can lead to significant operational costs.
2. IT ownership: Composable CDPs are often managed by IT departments, which can create friction with marketing and other teams that need direct access to data and CDP outputs.

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An Alternative Approach: The Holistic CDP

Modern, holistic CDP solutions bridge the gap between Packaged and Composable CDPs, addressing many of the challenges associated with traditional approaches.

Key features of a Holistic CDP include:

1. CDP + DMP Capabilities: A holistic platform may often combine the strengths of both Customer Data Platforms and Data Management Platforms. This unique approach enables the collection and processing of both known and anonymous unknown data. It can capture signals from anonymous users and connect that data back to identified users when they become known, providing a comprehensive view of customer interactions.

2. Customisable Schema / Data Model: Unlike rigid Packaged CDPs, a modern solution allows for customisation of the data schema and model. This flexibility enables organisations to adapt the platform to their specific data structures and business requirements, overcoming the limitations of traditional CDPs.

3. Real-Time Data Processing: Modern CDPs can connect directly to data touchpoints in real-time, eliminating the need to rely solely on data warehouse extracts. This capability enables more timely and relevant customer interactions, enhancing the effectiveness of marketing campaigns and customer experiences.

4. Rapid Implementation: With a streamlined approach, you can typically implement and deliver the first use case within 8 weeks. This accelerated time-to-value allows businesses to start benefiting from their CDP investment quickly.

5. Open Architecture: These CDPs often feature an open architecture that allows organisations to onboard their own machine learning models. This capability fosters innovation and enables the use of advanced analytics tailored to specific business needs, providing a level of customisation typically associated with Composable CDPs.

By combining the best aspects of Packaged and Composable CDPs, a holistic solution offers the ease of use and rapid deployment of a Packaged CDP with the flexibility and customisation options of a Composable approach.

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Evaluating Your Needs: Which CDP is Right for You?

Choosing between a Packaged CDP, a Composable CDP, or a holistic solution like mediarithmics depends on various factors unique to your organisation. Consider the following questions when researching your options:

1. Do you have a strong IT team and prefer granular control over your data infrastructure?
2. Consider the complexity of your data sources and customer interactions, do you need a unique or industry-specific data model?
3. How quickly do you need to implement and see results from your CDP?
4. Think about your future needs. Will your chosen solution be able to grow and adapt as your organisation's requirements evolve?
5. Can your chosen solution connect with your existing martech stack effectively?
6. Have you evaluated the total cost of ownership, including implementation, maintenance, and potential future customisations? Consider both upfront costs and ongoing operational expenses.
7. Have you assessed your data privacy and security requirements, ensuring that a CDP solution can meet necessary compliance standards?
8. Which teams within your organisation need access to the CDP and its outputs?

Remember, there is no one-size-fits-all solution in the CDP landscape. The right choice depends on your organisation's unique context, goals, and resources. A hybrid solution like mediarithmics might offer the best of both worlds for organisations seeking flexibility and ease of use.

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Looking Ahead

In conclusion, the CDP landscape continues to evolve, with Packaged CDPs, Composable CDPs, and holistic solutions each offering unique advantages. By carefully evaluating your organisation's needs and considering the strengths and limitations of each approach, you can select the CDP solution that best positions your organisation for success in the data-driven marketing landscape.

The mediarithmics hybrid approach offers a compelling option for organisations seeking the benefits of both Packaged and Composable CDPs, providing a flexible, powerful, and future-proof solution for customer data management.

mediarithmics offers the modernised Holistic CDP capabilities listed above. We are on a mission to create closer integrations between a CDP and a client’s existing cloud infrastructure. For instance, our CDP is already available on Google Marketplace for businesses invested in Google Cloud Platform (GCP), allowing you to use the data in your data warehouse quicker and more easily for marketing activity. We are also developing further composable capabilities to offer businesses full flexibility in their data management options.

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