What is the difference between a Customer Data Platform and a Marketing Cloud?

Executive Summary:

  • Marketing clouds have their strength in designing and delivering advertising messages in the most common channels for existing customer marketing (e.g. email, mobile push) due to their frequent origin in the field of email marketing.
  • Customer Data Platforms are a relatively new category in marketing technology that specializes in consolidating user and customer data from different data sources into 360° profiles, making them accessible to non-technical marketers. (e.g. creation of complex customer segmentations and marketing automationwithout programming knowledge) and by integrating them into existing delivery tools in the marketing channels for a cross-channel approach to users across multiple channels.
  • Depending on the range of functions and positioning of the Customer Data Platform, these can be seen in a complementary or in competition with the Marketing Clouds.
    • Customer Data Platform + Marketing Cloud: In this case, a CDP sits “on top” on the marketing cloud and, due to its strength on the data side, is particularly used for the creation of complex user segments and the implementation of marketing automations (often with a focus on real-time use cases).

The segments (in the case of marketing automations are also called a “segment of one”) are transferred to the marketing cloud and used there as a basis for the delivery of campaigns (chains) across several channels.

  • Customer Data Platform + “Integrated Best-of-Breed” approach: In this case, the use of a Customer Data Platform allows the advertiser to build its own marketing cloud by selecting the most appropriate tools for each marketing channel or by reusing existing tools and CDP relies on the channel tools as a cross-channel customer data and campaign management solution on the channel solutions “on top of it” and integrates with them via APIs.
  • A prerequisite for this approach is that the CDP offers cross-channel campaign management functionality, which is not the case for every CDP provider.

  • There are often mixed forms between these approaches, as even when using a marketing cloud, other channel tools are regularly used – often for new, innovative marketing channels such as Whatsapp or Messenger, which are not yet compatible with the marketing clouds. so that even in the cases a “higher instance” in the form of a CDP makes sense to ensure an orchestration of communication over really all channels.
  • Introduction

    The difference between a Customer Data Platform (CDP) and a Marketing Cloud (also called “Multi-Channel Campaign Management” (MCCM) by market research firm Gartner) is not apparent to many marketers at first glance, which is due in particular to this , that there are no fixed definitions of the terms and that there are therefore many suppliers in the market which, depending on their orientation, differ more or less from each other.Nevertheless, the definition of the two categories as general as possible should be carried out below.

    Marketing Clouds

    As defined by Gartner, MCCT’s software solutions are that help organizations

    “[to orchestrate customer engagements and marketing content to individuals and segments across multiple channels”.

    [1

    The best-known vendors in the German-speaking market in this category are the Marketing Cloud products from Salesforce, Adobe and Oracle.Many of these solutions originated from email tools (e.g. Salesforce Marketing Cloud through acquisition of Exact Target and Oracle Marketing Cloud through acquisition of Responsys). Accordingly, other market participants are seeing a number of email tools that have since been renamed Marketing Cloud, such as Emarsys. The renaming to a “marketing cloud” was usually preceded by an extension of the functionalities beyond e-mail marketing, by acquiring providers in the areas or developing solutions in-house. Delivery of advertising messages in other marketing channels (e.g. solutions for sending mobile push messages or personalizing the website), which has added cross-channel campaign management and analytics to the offering. The focus and strength of these solutions can therefore usually be seen in the design and delivery of advertising messages in the “mainstream” marketing channels.

    Customer Data Platforms

    CDPs are still a relatively young category in marketing technology compared to Marketing Clouds, which was first mentioned by the American David Raab, founder of the Customer Data Platform Institute, in 2013 and the first time gartner in the ” Hype Cycle” in 2016. for Digital Marketing and Advertising 2016 “.Since then, CDPs have received a lot of attention and are certainly one of the most interesting trends in marketing at the moment, which is due, among other things, to the presence of the topic at the leading marketing technology conferences and the comparatively large financing rounds for providers in the area. This has ultimately led to Gartner seeing CDPs at the highest point of the curve in the latest “Hype Cycle for Digital Marketing and Advertising 2017” one year after the first mention.

    Due to the fact that the category is still relatively new, there is still no exhaustive definition of which functions a CDP should include, but at least the following three core functionalities can be recorded[2):

    • Data: Merging user and customer data from different systems into a unified customer view (“360° user profile”).
    • Decision: Complex user segmentation and creation of marketing automation (“Segment of One” marketing) without programming and database knowledge.

    Due to the technologies used by CDPs from the big data sector, which are mostly different from the relational databases used in marketing clouds, real-time decisions are also possible on the basis of very large amounts of data.

  • Actions: Provide data to run marketing campaigns by integrating with channel-specific delivery tools.
  • David Raab adds:[3

    They are designed to run by marketing departments with little or no support from corporate IT.

    As a result, the purchase decision for a CDP is usually made by the marketing department with the aim of becoming – after a one-time integration with the existing data sources, for which the help of IT and/or business intelligence department is usually necessary is – more independent and thus also more agile in the implementation of data-based marketing measures.

    Within the group of providers of CDP solutions, however, there is a relatively large diversity of solutions, with the following focal points emerging:

    • Focus on data: A number of CDP providers focus on data, which is particularly evident by focusing on the provision of standard interfaces to widely used data sources such as shop systems or analytics solutions.

    This greatly simplifies the integration of data, which requires the use of standard data sources. Often these providers have their background in the area of tag management and have decided to further develop their product due to the increased competition situation in the area of tag management by the Google Tag Manager.
    Examples of vendors: Tealium, Ensighten

  • Focus on “out-of-the-box” solutions for verticals/SMEs: Another group of CDP providers has chosen to develop specialized solutions for verticals such as eCommerce or Travel instead of the most flexible, versatile offering possible.
  • In addition to the connection of standard data sources in the verticals, this often includes the specification of certain campaigns that seem promising for the corresponding vertical, such as shopping cart breaker campaigns in the eCommerce Vertical. In this group, one finds most frequently providers who, instead of integrating with delivery solutions in the individual channels, have developed their own solutions for, for example, the sending of e-mails or the website personalization. This makes a distinction with the classic marketing clouds the most problematic in the group of providers.
    Examples of providers: Blueshift, Optimove

  • Focus on cross-channel decisions and actions: Another group of vendors has decided to develop a CDP in conjunction with cross-channel campaign management in order not only to make the consolidated data accessible to the non-technical marketer, but also to provide him with direct re-use.
  • This is made possible by providing a cross-channel campaign management tool that allows users and customers to be addressed through all available marketing channels in a coordinated communication strategy. Providers of this category are sometimes referred to by Gartner as “MCCM-lite” solutions, because they enable cross-channel approach similar to the marketing clouds, but do not deliver advertising messages in the channels themselves, but rather consistently integrate with the appropriate channel providers instead.
    Examples of providers: CrossEngage

    Demarcation and interaction between marketing clouds and customer data platforms

    Apart from the rather theoretical classification of marketing clouds and customer data platforms, in practice two constellations can usually be observed, which (in addition to the in-house development of a cross-channel marketing solution, which due to the required financial and human resources as well as the implementation period and is therefore hardly to be found in practice) allow advertisers to conduct cross-channel marketing.

    1.) Customer Data Platform + Marketing Cloud

    In this constellation, a marketing cloud is used for the delivery of advertising messages in the most common marketing channels.Due to the fact that the marketing clouds are limited in the processing of large amounts of data with complex data structures due to their data model based on relational databases, and the user selection is therefore usually only limited (example: A selection “Customers, male, > 30 years” can usually still be carried out relatively easily, a selection “Customer, last website visit within last 14 days or newsletter opening within last 7 days” allows without technical support), companies choose to use a customer data platform in conjunction with a marketing cloud.

    As a rule, the solutions perform the following tasks:

    • Customer Data Platform:
      • Integration of user and customer data from all available data sources and creation of the 360° user view
      • Complex user segmentation and creation of real-time marketing automation
      • Transfer of segments (if necessary

    personalization data per user) to the Marketing Cloud

  • Marketing Cloud:
    • Creation of cross-channel campaigns based on the transferred segments
    • Design of advertising media per channel (e.g. templates in the e-mail channel)
    • Coordinated delivery of advertising messages across the various channels

    Schematically, such a constellation is as follows:

    2.) “Integrated best-of-breed” based on a CDP

    In this constellation, no marketing cloud is in use, but the advertising company selects for each channel the most suitable solution for its own needs.

    continues to use the existing solutions. Cross-channel campaign management is done in the Customer Data Platform and through a very in-depth integration into the existing channel tools not only segments are passed, but the actual sending of the advertising messages through the channel tools is triggered by the CDP.

    As a rule, the solutions perform the following tasks:

    • Customer Data Platform:
      • Integration of user and customer data from all available data sources and creation of the 360° user view
      • Complex user segmentation and creation of real-time marketing automation
      • Creation of cross-channel marketing campaigns based on the segments, in particular definition of messages to be sent per channel including selection of advertising material, personalization and, if necessary,

    re-segmentation at the channel level (example: sending e-mail to all customers, but sending postcards only to customers with high customer lifetime value)

  • Initiation of the delivery of advertising messages
  • Channel tools:
    • Design of advertising media per channel (e.g. templates in the e-mail channel)
    • Delivery of advertising messages per channel (e.g. sending e-mail, display of Facebook ads)

    Schematically, such a constellation is as follows:

    Digital companies such as HelloFresh[4 have opted for such an approach and accordingly the use of a CDP, but also established companies such as Deutsche Bahn[5 are now using a CDP as a central element in their CRM technology infrastructure.

    3.) Mixed moulds

    In addition to these two pure forms, there are also mixed forms, where, for example, the most common CRM channels such as e-mail and mobile push are mapped bundled via a marketing cloud, but for new, more “innovative” channels such as WhatsApp or Facebook Messenger currently solutions from smaller vendors.

    As soon as all channels are no longer covered by the Marketing Cloud, cross-channel campaign management must actually take place in the CDP to ensure that communication across all channels is actually mutually voted on.

    Footnotes

    [1 Magic Quadrant for Multichannel Campaign Management

    [2 Customer Data Platforms White Paper | CrossEngage

    [3 Everything a marketer needs to know about CDPs.Wait, what’s a CDP? – Chief Marketing Technologist

    [4 HelloFresh Case Study | CrossEngage

    [5 Martech start-up: Cross Engage wins Deutsche Bahn as new customer

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