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January 19, 2017

Reflections on the CDP Industry Profile Report

By David Raab, CDP Institute

CDP Institute yesterday released its Industry Profile report, presenting core statistics including revenue, number of customers, funding, and employee counts. It’s a quick read: at 1,300 words, not much more than a longish blog post. That’s on purpose, because we wanted to focus attention on the numbers themselves. Because this was the first time they’d ever been assembled, they were the news. (You can download the report here.)

But now that report itself is published, it’s time to step back and consider what it means. I’ll share several observations, and would love to hear what others think.

The biggest surprise was simply the size of the industry. The headline figure for the report was a projection of $1 billion CDP revenue by 2019. That’s an eyecatching figure but it’s just a prediction. What's more important is that we estimate actual revenues for 2016 at just over $300 million. To put things in perspective, that’s the size of the marketing automation industry in 2011, only one year before Oracle bought Eloqua and began to end the era of independent marketing automation vendors. I don’t see the CDP industry as anywhere near that type of consolidation, but its size suggests much broader acceptance than you’d expect for a band of plucky startups.

A related surprise is that most of that revenue doesn’t belong to vendors who evolved into CDPs from previous incarnations as tag managers. (See this Customer Experience Matrix blog post for a more detailed discussion.) Twothird of the revenue comes from vendors who were CDPs from the start, in the sense that they built unified, persistent customer databases. Again, this shows the core CDP concept is already better established than many had realized.

A third surprise is the diversity of the industry. As the Profile report mentions briefly, CDP vendors came from three different origins (tag managers, campaign and personalization systems, and customer data systems). All have converged on the CDP model but there is still great variety among systems from the different groups and even within the groups. This is one big difference compared with marketing automation systems, which very quickly adopted a standard set of functions. It’s one reason the CDP industry isn’t ready for consolidation. At this stage, many different types of CDP are competing and we’ll see if one configuration becomes dominant.

All these surprises illustrate another truth: that CDPs are still unfamiliar to most marketers and marketing technologists. That’s frustrating in some ways, but it's good news for the industry in the sense that many potential buyers have yet to enter the market. One reason we project continued strong growth for CDPs is that we expect many of those people to buy once they learn what CDPs can do for them. Educating those buyers is the mission of the CDP Institute and we look forward to the challenge.  Still, it's nice to find a report that shows the wind is at our back.

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