Customer Data Platform Industry Profile: A Look Inside the Numbers

My snarky twin at the Customer Data Platform Institute just published a new report on the CDP industry. Since few industry vendors release financial or business details, the report relies on public sources including Owler for revenue estimates, Crunchbase for funding history, and LinkedIn for employee counts. Most vendors did provide client counts, and several privately shared other information where the public data was clearly wrong. You can download the report here. I'll wait while you do that.  (Sound of fingers tapping.)


Okay, you've downloaded it, right?  Good.

As you see, the report only presents figures for the industry as a whole. We feel those are reasonably accurate but that data for individual vendors are too unreliable to show separately. That may sound illogical but bear in mind that figures for the larger vendors are more reliable, so many errors that are significant for individual small vendors don’t materially change the total. Also remember that some vendors provided information in confidence and we made estimates of our own for some others.

I do feel I can safely publish statistics for three groups within the industry.  This gives some additional insight without exposing any proprietary or misleading vendor data.  The groups are based on each vendor's original business.  They are:

• Tag managers. This may seem an unlikely starting point, but it actually makes sense.  Tag management was originally about collecting data once (when a Web page loaded) and then sharing it with other systems that would otherwise have their own tags. This gave the Web site owner more control over what went where and reduced the number of tags on each page.  The data sharing was similar to what happens in integration platforms/data hubs  like Jitterbit and Zapier. So tag managers were always about data distribution.  To become true CDPs, the tag vendors had to ingest data from additional sources and send the data to a persistent database. Ingesting new sources can be challenging but vendors could grow incrementally by choosing which sources to accept.  Feeding a persistent data is basically just adding a new destination for data sharing.  So the transition to CDP offered a reasonable path to escape being a commodity tag manager.

• Campaign managers. I’m using this term loosely to include companies that offered any sort of marketing message selection. It includes systems that do email, Web site messages, mobile app messages, and omnichannel campaigns. These vendors all started out as CDPs in the sense that they always built unified customer databases. Among other things, this meant that most included reasonably robust cross-channel identity resolution. These vendors didn’t necessarily start by sharing their database with other systems.  But they do it now or I wouldn't consider them a CDP.

• Data assembly systems. This is a bit of a catch-all category but almost every system in this group was designed primarily to create a customer database that would be accessible to other systems.  Intended uses included analytics, marketing execution, or both. (I say "almost" because the group includes two systems that built databases primarily to support their own attribution services.) There’s more variety within this group than the other two.  But many vendors provide advanced identity resolution and all are strong at providing external access.

Here are key statistics for each group.

original purpose:	vendors	funding	2016 revenue	customer count	revenue / customer	employee count	revenue / employee
Tag Management	6	$356 million	$118  million	13,500	$9,000	840	$141,000
Campaign Management	8	$106 million	$108 million	1,000	$108,000	520	$207,000
Data Assembly	13	$246 million	$100 million	3,000	$34,000	920	$108,000

Here are some observations:

• Revenue is split about evenly among the three groups. That’s a bit surprising because tag management is an older and more established category than the others, so you might have expected it to have more revenue.  Vendors in the other categories do tend to be newer, smaller, and growing more quickly.

• Tag management vendors have many more customers and earn less revenue per customer. This largely reflects the original tag management products, which are sold to many non-enterprise customers. But the tag management vendors also have hundreds of enterprise clients.  Many of those clients are building the large-scale customer databases we expect to call a CDP.  The tag management group also includes a couple of vendors who specialize in building CDPs for smaller companies. These are not as expensive as the enterprise installations.  The campaign management vendors average about $100,000 per customer, which is what you'd expect for an enterprise CDP.  Revenue per customer is just $34,000 for the data assembly vendors, but that's largely due to one vendor with 2,000 clients.  Without that vendor, revenue per customer figures for the data assembly group would be $88,000. Backing out non-CDP clients is why the report puts the number of CDP customers for the entire industry at 2,500.

• Revenue per employee is generally in line with what we expect to see at growing Software as a Service companies. The standout here is the campaign management group, which has an impressively high figure of $207,000 per employee.  This suggests the campaign managers have a high value-added business.  The relatively low amount of external funding is more evidence that campaign managers throw off considerable cash from their own operations. The much lower revenue per employee for the data assembly companies, $108,000, is more typical of new SaaS ventures.  Indeed, several of these are just starting to earn revenue from their first clients.  These data assembly companies have attracted considerably more funding than the campaign managers, giving them a cushion to invest in growth. (If you’re wondering about that company with 2,000 clients, its revenue per employee is similar to others in its group.)

There are other nuances to consider in assessing these figures. For example, several vendors do business through agencies, which makes it harder to count clients and to compare revenue per client.  But the over-all picture that emerges is a healthy industry that is already attracting substantial revenue and funding.

The report projects a 50% annual growth rate, which yields an estimated $1 billion revenue for 2019.  The projection is based on public and private reported growth rates, which actually averaged much higher than 50% on a revenue-weighted basis.  The report used 50% to be conservative.  While past performance doesn't guarantee future growth, I think CDP revenues will if anything accelerate because most marketers still don't realize what a CDP can do for them.  As more of them get the message, CDP adoption should skyrocket. So the future is bright indeed.