In April 2023, we, in partnership with Six Degrees Executive, launched our Digital & Marketing In Focus study. The report which is now in its third year (formerly known as the Marketing State of Play report), has been developed to shine a light on the marketing and digital industry down under.
Each year as part of the study we track investment priorities across the marTech stack, and whilst Customer Relationship Management and Marketing Automation platforms continue to be high on the list of investment priorities, it is Customer Data Platforms that have stolen the limelight in our 2023 report.
The study has found that year on year, those prioritising investment into CDPs has skyrocketed, from 21% stating it to be a key investment priority in 2022, to 40% of leaders stating it is a key marTech investment priority in this year’s report.
But why are CDPs are all the rage and what is driving the demand in CDP platforms?
According to a study by Salesforce in 2019, the average marketing organisation had 14 disparate sources of data to contend with and that number was anticipated to grow by 20% year on year to 2025. Bringing data together into a central repository and creating a single customer view is not a new concept - brands have been attempting to do it for decades - but often the technology was a key inhibitor to delivering on a single customer view. Synching data across platforms and bespoke integrations often drove high levels of cost to maintain a single view of the customer (if the organisation was lucky enough to get that far). As data sources expanded and the volume and velocity of data creation rapidly increased, existing solutions were ill-equipped to provide brands with the agility required to interrogate and activate data at scale and at speed. Enter the CPD and that elusive ambition of a single view feels more within reach than ever before.
But it isn’t the allure of bringing together a multitude of data sources together that is driving CDP growth. A host of industry challenges and shifts are colliding and collectively becoming key driving forces behind CPD growth. These include:
The changing privacy compliance landscape;
A need to drive growth through a brand's existing customer base by better utilising data as economic uncertainty takes hold;
The need to build 1st party data assets, as brands prepare for 3rd party cookie deprecation. In fact, so critical has data become to digital and marketing teams, that the study found that the second biggest priority for teams over the next 12 – 18 months was for brands to build their customer data strategy and better utilise 1st party data.
More than just a single customer view
Whilst a key strength of CDPs lies in their ability to seamlessly ingest structured and unstructured data into the platform and build a single customer view, these platforms solve a number of challenges brands have faced within the marTech space and provide a number of distinct benefits, including:
Single identifiers What CDPs do well (well, most of them) is helping brands to identify a single customer and aggregate a customer’s data around that one identifier through sophisticated matching algorithms. This ensures teams are not forced to define rules and work-arounds in order to remove duplicates and identify a single customer with multiple profiles or accounts.
Activation cross channel CDP capability enables brands to activate data across an array of channels beyond email and SMS. As brands build 1st party data assets to future-proof against 3rd party cookies, brands increasingly need mechanisms to activate that data via media channels. CDPs provide the capability to do so seamlessly in a privacy protected manner.
Predictive model capability To drive personalisation and reach customers at the right time, predictive modelling and predictive analytics is important. Most CPDs are built with a level of predictive analytics capability, but the capability varies based on the power of the platform.
Data visualisation Unlike a data warehouse or a CRM platform, most CDPs are highly visual platforms – enabling the end user to be able to better understand the data assets that exist - including the variables it contains, segment sizes and a host of other benefits. This transparency removes some of the mystery around what data assets exist within the organisation and allows teams to focus on how to use it.
Team capability is still vitally important to be successful
Like every platform, no tech will provide brands with a silver bullet to build maturity in data utilisation, activation and performance reporting. Data literacy and skills are critical for brands to garner the value from their investment in a CDP.
Today, however, teams are still ill-equipped to effectively implement and scale the platforms they invest in, and lack the data literacy to derive value from the platforms. When it comes to the largest skill gaps within teams across Australia, our study found that data & analytics topped the list, followed by marketing tech strategy and implementation. What this highlights is that teams don’t necessarily have the capability to drive and power the technology procured, which often leads to teams struggling to integrate platforms, and embed and scale the technology.
To be successful, brands need to couple technology investment with robust investment in people and consider adapting ways of working if they are to derive value from the investment.
Want to get your hands on a copy of the Digital & Marketing In Focus report? Download a copy here.