Brands can avoid the lengthy, drawn-out process of installing conventional Customer Data Platforms. They can now add an activation layer to their existing data assets.
For years, marketers have used traditional Customer Data Platforms (CDPs) to offer complex personalization. Using CDPs, marketers can gather, store, and use customer data and attributes in martech tools.
As the martech ecosystem has grown, companies realize they don’t need a separate platform to analyze customer data. This has led to the creation of the composable CDP.
A traditional CDP functions as a separate entity and stores data outside the current infrastructure. On the other hand, a composable CDP is an activation layer that enables you to create audiences, plan journeys, and send your existing data to your front-line marketing tools.
The Evolution of CDPs
Before CDPs, a ticket had to be submitted to the data team whenever a marketer wanted to start a new experiment or target a particular audience.
This manual, ad hoc process created several issues. First, data teams had to write custom code whenever data needed to be transferred from the warehouse to any desired downstream destination. Each one of these data points or customer attributes could extend lead times.
For the longest time, marketing teams did basic personalization by auto-filling a few simple fields. Legacy CDPs predate cloud data warehouses.
CDPs were the first managed cloud services that allowed storage and activation of customer data at scale.
It’s interesting to note that cloud data warehouses power the majority of CDPs in use today.
These single-platform solutions allowed data and marketing teams to monetize and generate value from customer data.
Traditional CDPs typically consist of these essential elements:
- Data Storage: Completely managed data archiving for both events and client profiles
- Identity resolution: Integrated data modeling abilities to connect online and offline behaviors to a single customer profile.
- Audience Management: Fine-grained audience management tools for building and coordinating journeys for different groups of users.
- Data syncing: Using pre-built integrations to send data further down the chain automatically.
Now, as cloud storage offers newer tools to coordinate campaigns and touchpoints across channels, data teams can access more than ever.
But despite having access to the best tools and data, many organizations struggle to create personalized, impactful experiences.
What are the reasons for these challenges?
The Reasons Traditional CDPs Fail
The central problem that CDPs continue to address is the bundled architectural design of these platforms. Some additional challenges are:
- Limited Customer Understanding: Traditional CDPs are based on a rigid user/account model. It is created to gather behavioral events such as page views, cart abandonments, and button clicks. They have limited insights into data.
- Duplicate Storage and Compute: CDPs store data separately from the current data infrastructure. It requires firms to buy extra storage and manage their data. This could result in security and compliance issues.
- Long Implementation Time: The average CDP implementation takes six months to a year.
- Complete Re-architecting needed: It requires brands to create a brand-new ingestion pipeline. They must completely re-architect the CDP whenever they want to store a new data point or attribute.
- Inflexible Modelling: CDPs are frequently developed around a rigid user/account model because these platforms are designed to collect and store behavioral clickstream data. Complex personalization use cases for custom objects become very challenging to solve.
- High Cost of Ownership: With conventional CDPs, you must buy and pay for each feature individually. This frequently entails paying for features your current data stack already addresses upstream.
As many businesses now realize they don’t need to pay for a CDP, the composable CDP was born. The objective of a composable CDP is the same as a traditional CDP- to activate customer data to downstream tools.
Packaged versus Composable CDP- Which is Better
Using current data assets, the Composable CDP offers several advantages over bundled CDP offerings. Choosing between packaged vs. composable CDP is a challenging decision.
- It generates immediate value rather than incurring additional storage and computing costs.
- The architecture is technology-independent because a Composable CDP is just a data activation layer that sits on top of your current data stores.
- A Composable CDP is only powered internally by reverse ETL. This means scaling and modifying your infrastructure to support your most complex use cases will be fine.
- By utilizing the current data collection, data storage, and data modeling capabilities, you can take advantage of modularity to avoid the main drawbacks of CDPs.
- The flexibility of this architecture allows firms to access all of their data easily. They can create rich audience cohorts for personalization, which frees them from the limitations of a single platform.
- Also, brands can avoid a traditional CDP’s lengthy, drawn-out implementation process. They are simply adding an activation layer to their existing data assets.
- Composable CDPs provide a more adaptable and individualized solution. They construct an orchestration platform on top of a cloud data store. This helps control audiences and user journeys while activating customer data.
So Which One to Choose
Packaged and composable CDPs offer different advantages or challenges to different enterprises. Composable CDPs may offer a faster time to value than packaged CDPs, depending on the company’s setup. This includes an identity resolution strategy and integration with other MarTech tools. There are certain deciding factors for choosing between composable and packaged CDP solutions.
Here are some pointers:
- One advantage of both options is their importance in activating first-party data across channels. This quality enables companies to deliver more individualized marketing campaigns and experiences.
- Composable CDPs provide greater adaptability and scalability as businesses evolve. They make data warehouses the center of the marketing universe.
- Cloud data warehouses provide flexible controls for data residency and consent. Composable solutions can function within an existing governance framework. These are multi-region support, data expiry, and column-level protection.
- Packaged CDPs frequently recreate key components of customer data in a CDP-managed environment. This causes processing problems for requests related to the CCPA and the GDPR, for example.
- Additionally, they must work with client-provided consent attributes or incorporate third-party consent platforms. Some CDPs install their CDP “on-prem” to lessen this.
- Sometimes, packaged CDPs offer a comparable or even better time to value. Organizations need a strong identity resolution strategy and well-integrated MarTech tools.
Effective customer data management and activation are essential for business success. Organizations must evaluate their setup and requirements before selecting between the CDP solutions.
So, the main considerations should be an organization’s needs, goals, and technological setup. Businesses can adopt the best-fit solution to promote growth and enhance customer experiences. This will help maintain an edge over the constantly evolving digital landscape.