Move over DMP, DSP and SSP: CDP is ad tech’s hot new acronym

Although the CDP market is being defined, John Matthews, managing director for Oaklins DeSilva+Phillips who advises on company exits, thinks CDPs will likely become acquisition targets for ad tech companies this year to underpin their targeting capabilities with richer and more unified targeting data, given the convergence of ad tech and marketing tech, with crossover merger and acquisition activities already taking place. “Overall, this moves ad tech companies toward being more CRM-focused for marketers,” said Matthews.

Eric Franchi, an early investor in mParticle, also said CDPs are hot right now and have “tremendous upside,” so they could grow into their own market. He doesn’t categorize CDPs as ad tech companies.

But as DMPs and CRM software evolve, they can do many things that CDPs claim to do. For instance, major DMPs that traditionally rely on third-party data have started processing first-party and second-party data, according to Matt Skinner, product marketing manager for DMP Adobe Audience Manager. “CDPs are an interesting emerging area. They talk about including PII [personally identifiable information] into their first-party data, which DMPs don’t do. But there’s lots of overlap in what CDPs, CRMs and DMPs can facilitate,” said Skinner. “I think CDP will be a big buzzword in 2018.”

Meanwhile, Matthews, who was a CRM industry analyst and consultant for 15 years, believes CDPs are just hybrids of DMPs and CRM platforms that incorporate online advertising data to enable some form of real-time analytics and targeting, across multiple offline and online channels. “[The rise of CDPs] also ties into the increasingly talked-about idea of people-based marketing, as in people as customers or prospective customers,” said Matthews.

Franchi also thinks CDPs are becoming the new darling in the investment community because consumer experience is fragmented across mobile, desktop and Amazon Alexa, among other devices, and CDPs can help marketers fill the gaps. “It’s time for CDPs to power marketing the way marketers want,” said Franchi. “DMPs are becoming less and less effective with cookies under GDPR, and there are more opportunities for CDPs to connect consumers across devices.”

But Matthews believes the challenge with CDPs — in addition to regulation and privacy issues — is managing customer data at high volume, regardless of whether a brand has allowed a CDP to mix its first-party data with other data sources. There’s also the question of whether brands are even willing to provide access to their first-party customer data in the first place, he said.

“There’s lots of value in using a brand’s first-party data, and I’m very supportive of that. But sometimes the industry tries to put different names on the same stuff,” said Jeffrey Finch, co-founder and chief product officer for DSP Choozle. “For me, CDPs and CRM companies are the same thing. If you try to raise money, it’s smart of you to put a new name on it.”