The rise of the Modular CDP

If you want to create personalized marketing that really speaks to your customers, you need to have a good handle on their data. Customer Data Platforms also known as CDPs have been developed to support data-driven Marketing. However, with the growing complexity of customer journeys and the evolution of technology, CDPs have shown many limitations, especially with the rise of the Modern Data Stack.

That's where Modular or Composable CDPs come in - they're designed to be more flexible and adaptable to today’s marketing use cases and technical stacks. This article discusses the history of CDPs, their limitations, and how modular CDPs became the best solution for modern marketers.

CDPs have been around for quite some time, but they have evolved significantly over the years. In the early days, businesses used Customer Relationship Management (CRM) systems to store customer data.

CRMs are designed for managing companies’ relationships and interactions with customers and potential customers they help companies stay connected to customers and streamline processes.

In the early 2000s, companies began using Data Management Platforms (DMPs) to collect customer data for online ads. These platforms mainly relied on third-party cookies to gain insights into unknown audiences. However, they were not effective at managing known data or storing data for extended periods of time.

Although DMPs were designed to work with other marketing technology platforms, they were typically managed by the IT department and did not provide marketers with the ability to make informed, data-driven decisions that put the customer at the center of their marketing strategy.

To keep up with the rise of digital channels in the customer journey, traditional marketing tools have tried to morph into both a data layer and a cross-channel marketing platform. CDPs were created to collect and organize customer data from multiple sources (website, mobile apps, social media, etc.) into a unified customer data base.

CDPs are used to collect, centralize, manage and activate customer data.

Well, while they were created to solve the problem of data fragmentation, they ended up creating some new challenges for businesses:

Classic CDPs were often complex and required a lot of IT resources to implement. This meant that marketers had to rely on their IT teams to get access to customer data, which is another failed promise to marketers’ autonomy aspirations besides being a time-consuming process.

Additionally, classic CDPs lacked flexibility and features to integrate with other marketing technologies, making them difficult to scale and modular.

Existing CDP license range from 100k to many million euros. Many companies found that they had to hire new extra skills and resources to use and maintain the platform, which led to high run costs.

One of the biggest concerns with classic CDPs is the issue of privacy. Companies had to duplicate their customer data in 3rd party tools, which raised many privacy issues and may not have been compliant with standards.

Another problem is that trad CDPs often fail to answer more elaborate marketing use cases. For example, they may not be able to identify churn-risk customers or top users during a specific month. This is because classic CDPs struggle to fulfill promises like real-time data activation and a single customer view.
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As a result, only 10% of CDP owners today feel that the product meets all their needs. The ideal of a 360° view of customers remains elusive…

The demand for customer data is on the rise, but traditional Customer Data Platforms are struggling to keep up as third party cookies crumble. Fortunately, cloud data warehouses have provided a solution that serves up first-party data on a silver platter.

Enter the modular CDP - a new type of solution built on a microservices architecture that's much more flexible and high-performing than traditional CDPs. With the ability to activate data directly from the cloud data warehouse, organizations can unlock the full potential of their data investments. Thanks to the rise of the modern data stack, a new era of customer data management has emerged. Data teams now have the ability to create and manage their data layer on their own infrastructure, which has helped bridge the gap between data teams and marketing teams.

But that's not all - the Composable CDP takes it a step further by empowering businesses to seamlessly integrate with all the marketing technologies in the menu, including CRMs, Ads, and Marketing Automation platforms. This piece of the process is called Data Activation and it is possible thanks to Reverse ETL tools like DinMo. This way you make sure that valuable data can be accessed and utilized across the entire marketing stack, regardless of which downstream tools are in use.

Modular Customer Data Platforms, or composable CDPs, offer several benefits to businesses that make them a valuable investment. Here are 8 key benefits to consider:

In conclusion, traditional CDPs are no longer sufficient for modern marketing. The rise of cloud data warehouses and modular CDPs has made it possible for you to achieve a single source of truth in data, and to realize the dream of a 360° view of your customers. This has led to more efficient and effective decision-making, as well as a more harmonious working relationship between data teams and marketing teams.

By seamlessly integrating all Martech tools and accessing valuable data across the entire marketing stack, the Composable CDP has become a powerful tool for optimizing marketing efforts and achieving better results in today's data-driven world.
Get connected to our experts at DinMo, the Data-Led Growth platform and learn how to transform your data warehouse into a modular CDP and take full advantage of your data to drive growth.