Customer data platforms (CDPs) represent a big leap forward in marketing technology. The tech’s ability to integrate disparate tools into a single suite, unify customer data, and create comprehensive profiles based on that data has offered advertisers a lifeline amid an uncertain data-compiling future. 

Ideally, CDPs are designed to collect and store your customers’ information directly, reducing the number of parties involved in capturing that data to create a safer, more sustainable, and more efficient method of engaging with your customers. But this potential can only be realized when an organization’s teams communicate effectively, have their priorities aligned, and are knowledgeable enough to operate a CDP.

What are CDPs?

CDPs collect and house an advertiser’s or publisher’s first-party customer data into a single, holistic view of each customer over time. That data can be collected by tracking where customers clicked and what they engaged with, or by directly requesting information through surveys or forms. 

  • Offline data from brick-and-mortar stores can also be added to customer profiles. All this can be categorized into specific attributes and deployed to target relevant customers through personalized ad campaigns.  

What are the benefits of using a CDP?

By storing customer data in one place, CDPs allow marketers to create personalized ad campaigns through collecting, recalling, and applying customers’ information from a centralized database. This creates a “single source of truth” for marketers, allowing them to see at a glance what their target audience is and determine how best to reach them.

  • Get a full view of the customer journey: This streamlined data-collection approach offers advertisers the chance to be more efficient by unifying customer profiles, including first- and third-party data, into a single customer profile. Predictive analysis can be layered on top of that data to help build effective marketing campaigns. In 2023, Atlassian, parent company of Jira and Trello, said it decreased its time to market for omnichannel campaigns by 17%, decreased its spend on paid ads due to successful scalability, and increased its campaign velocity and revenue capture—all thanks to implementing an updated and well-executed CDP.
  • Improve customer loyalty: Data suggests that many shoppers prefer ad personalization ads: 37% of adults worldwide say ads that link them directly to offers/promotions for their favorite brand or product are the most influential when making a purchase decision, according to an April 2023 PwC survey. These personalized experiences help improve customer loyalty.
  • Improve privacy and organizational sharing: CDPs can also keep real-time data tracking on which consumers have opted out of having their data tracked, allowing marketers to respect their consumers’ privacy preferences and avoid annoying them with unwanted ads. This is especially important as new and differentiated privacy laws are enacted. By having all customer data in one place, all members of a company’s team, including sales and marketing, can access this data in real time.   

What are composable CDPs?

Composable CDPs are collections of software, modules, and other components from within a single vendor or across different companies that act as a CDP when stacked together. This personalized approach has been gaining steam recently, but before implementing a composable CDP, marketers should make sure the CDP is compatible with their organization’s tech stack first.

How will the cookieless future affect CDPs?

Mounting privacy laws and skepticism have made third-party cookies all but obsolete. Tools like Apple’s AppTrackingTransparency help protect users from third parties. In this environment, CDPs have increased in popularity as a compromise between marketers looking to continue personalizing ads and consumers demanding more autonomy over their personal data.    

What are some common challenges with implementing a CDP?

More than one-third of deployed CDPs deliver little to no value, according to the CDP Institute’s 2022 member survey, due in part to a lack of communication between marketing and IT departments. This divide often comes from marketers focusing primarily on functionality versus IT and data teams looking to provide efficiency and security. These goals are not mutually exclusive, however, and problems can be avoided if the analysts, data scientists, and engineers on a CDP deployment project are brought in from the beginning.

CDPs can also suffer from issues with reliability and scalability. This can be avoided by ensuring the CDP is compatible with your organization’s composable architecture; starting small and scaling upward; and determining beforehand if the CDP is capable of managing potentially large data volumes and complex data models. 

This article has been updated. Original was posted October 20, 2023.