In the fast-paced world of technology and data-driven marketing, the Customer Data Platform (CDP) industry experienced some growth in the second half of 2023. However, this growth was small and sluggish, reflecting the challenges faced by companies in this space. In this article, we will delve into the state of the CDP industry, discussing the slow growth, the entry of new players, revenue forecasts, adoption by digitally mature brands, integration with digital experience offerings, utilization of external data sources, and the uncertain future of the CDP space.
Slow growth in the CDP industry
Despite the potential of CDPs, the second half of 2023 witnessed limited and sluggish growth in the industry. Both net employment and funding saw marginal increases, with growth rates of around 2%. These figures represent the lowest increases reported within the industry thus far. While the growth is a positive sign, it indicates a slower pace and raises questions about the factors impeding more substantial advancements.
New entrants in the CDP space
Despite slower growth, the CDP industry has seen the entry of 10 new companies since 2019. Most of these newcomers were small businesses aiming to tap into the potential of CDPs and carve a niche for themselves. The presence of new entrants highlights the perceived value and growing demand for CDP solutions. It also intensifies competition within the industry, spurring innovation and pushing established players to up their game.
Forecasted revenue growth for 2024
Looking ahead, the CDP Institute anticipates below-average growth in revenues for 2024. They project that revenues will reach $2.5 billion, a modest increase from the $2.3 billion recorded in 2023. While any growth is positive, the projected figures suggest that the industry may face challenges in achieving significant revenue growth in the near term. Factors such as market saturation, increased competition, and evolving customer demands could be contributing to this forecast.
Adoption of CDPs by digitally mature brands
One aspect that may impact the industry’s growth potential is the already high adoption rate among digitally mature brands. With the increasing focus on data-driven marketing, it is likely that most brands with sufficient digital maturity have already considered implementing a CDP to extract value from their customer data. This raises questions about how many potential customers remain untapped and whether further growth necessitates new market segments or advanced offerings.
The need for more brands to embrace CDPs
To achieve stronger growth in the CDP industry, it is crucial that more brands ascend the digital maturity curve and embrace the power of CDPs. While digitally mature brands have already adopted CDPs, there is still a vast market of less digitally mature brands that can benefit from utilizing these platforms. Encouraging more brands to embrace CDPs will be essential for driving sustained growth and expanding the market potential.
Integration of CDPs with digital experience offerings
A notable trend in the industry is the acquisition and integration of CDPs with broader digital experience offerings. Recognizing the value of customer data in delivering personalized experiences, companies are acquiring CDPs to enhance their overall digital experience solutions. This integration allows for seamless data flow and holistic customer insights, enabling brands to provide personalized experiences at every touchpoint.
CDPs Utilizing External Data Sources
Another significant shift in the CDP landscape is the increasing reliance on external data sources, such as data lakes and warehouses. CDPs are plugging into these external sources to harness a broader range of data for customer insights. This trend reduces the burden on CDPs to ingest and manage all the necessary data themselves, improving efficiency and scalability.
Uncertain future of the CDP space
While the CDP industry has shown some growth and adaptation, its future remains uncertain. Rapid technological advancements, evolving customer expectations, and market dynamics make it challenging to predict the industry’s trajectory. It is expected that further developments, innovations, and market consolidations will shape the future of the CDP space. Staying agile and responsive to these changes will be crucial for companies operating in this sector.
The Customer Data Platform industry experienced slow growth in the second half of 2023, with modest increases in net employment and funding. While new entrants have joined the space, revenue growth forecasts for 2024 remain below average. The integration of CDPs with digital experience offerings and the utilization of external data sources highlights the industry’s adaptability and potential for providing more comprehensive customer insights. However, the future of the CDP space is uncertain, and further developments are expected. Companies in this industry must continue to monitor the evolving landscape and stay prepared to capitalize on new opportunities.