Uniphore Buys ActionIQ: What We Can Learn

Acquisitions of, or by, major CDP vendors have been vanishingly rare in recent years.  So news that ActionIQ  had been purchased by Uniphore generated an especially large amount of interest.  Let’s look at it from three perspectives.

1.    Significance for ActionIQ.  Although ActionIQ has been a significant CDP since its founding in 2014, the company was always a bit different from most other CDPs.  Rather than starting as a tag manager or messaging platform, ActionIQ’s roots were in big data technology: co-founders Tasso Argyros and Nitay Joffe were, respectively, the founder of big data engine Aster Data (purchased by Teradata in 2011) and a leading data engineer at Facebook.  Not surprisingly, the company’s approach to CDP was also driven by data technology: in particular, it used in-memory storage to support high volume, real time use cases.  In recent years, the company evolved its technology to offer component-based and warehouse-native options in addition to a conventional integrated CDP.

The company’s business results were less stellar than its technology.  It primarily targeted large enterprises that could most benefit from its sophisticated approach, and had reasonable success in that market.  But, despite raising a hefty $144 million (per Crunchbase), growth stalled in recent years.  Headcount, which stood at 208 in mid-2021 (per LinkedIn) has declined steadily since then and last week was 161.  We don’t know whether sales also fell; it’s likely that the headcount reductions reflected preemptive belt-tightening as new funding became less available, rather than tracking an actual revenue decline.  

Either way, it doesn’t seem that ActionIQ was on a path for substantial growth as an independent company.  So a sale to a friendly buyer like Uniphore makes good sense.  I’m told that the ActionIQ product itself will continue to be sold, supported, and developed, so it’s a good outcome for ActionIQ customers as well.

2.    Significance for Uniphore.  I’ll admit I wasn’t familiar with Uniphore before this deal, even though they are in fact a well-established, fairly large company (founded in 2008, 800+ employees, $621 million in funding).  Their specialty has been speech-related customer experience tech, such as self-service, phone agent and sales assistance and conversational analytics.  Like others in that industry, they are currently focusing on enhancing their products with AI to improve worker productivity and business results.  

What’s more interesting is where they differ with the competitors, which is a greater focus on the data infrastructure needed to support AI.  This is where the ActionIQ acquisition makes sense, since it will help to support what Uniphore calls the “Zero Data AI Cloud”.  As the name suggests, Uniphore’s vision is to provide AI systems with data without first exporting that data into a separate database.  This is the “zero copy” or “warehouse-native” approach that’s increasingly popular in CDP circles.  It’s also something that ActionIQ has evolved to support, so the acquisition is strategically sound.  As you’re probably aware, Uniphore also announced its acquisition of Infoworks at the same time as the ActionIQ acquisition.  Infoworks is an even more technical vendor, dedicated to managing cloud data migrations.  At 75 employees and $71 million in funding since it was founded in 2014, it's smaller than ActionIQ but still a substantial business.  Like ActionIQ, its head count has also fallen in recent years, from a recent peak of 112 in early 2023.

Uniphore’s pivot to AI data infrastructure seems like a good move, at least compared with the hugely overcrowded AI-based CX marketplace.  I think “pivot” is a fair term here, since Uniphore’s earlier acquisitions – Hexagone and RedBox in 2023, Colabor in 2023, and Emotion Research Labs in 2021 – all firms applied AI to more conventional CX use cases, such as emotion detection and conversation analysis.  Of course, the data infrastructure space itself is the playground of major cloud companies like Google and Amazon, as well as cloud data firms like Snowflake and Databricks.  Whether Uniphore can carve out a unique niche for itself as a tooling provider to connect those systems is uncertain but it seems worth a try.

As an aside -- I don't think a true "zero copy" approach to AI data is really possible.  We had this debate in the early years of the CDP industry, when companies including Salesforce and Adobe argued they could assemble customer profiles on the fly without a persistent database.  They ultimately learned that didn't work.  This doesn't invalidate Uniphore's strategy, even though the actual implementation will almost surely involve extracting, cleaning, and reorganizing data and storing the results somewhere that AI systems can use it.  That "somewhere" could in fact be a data warehouse -- the approach favored by composable CDP vendors.  This might more accurately be called "one copy" than "zero copy," although it wouldn't sound as appealing.

3.    Significance for the CDP Industry.  ActionIQ’s decision to sell to Uniphore obviously says something about the prospects for independent CDP vendors, but the implications are limited because ActionIQ’s technology was atypical.  In fact, since ActionIQ already supported the “composable” and “warehouse-native” approaches that are often touted as successors to traditional CDP systems, you could argue the deal indicates that prospects for firms taking those directions are more limited than their advocates believe.  

Given ActionIQ’s unique situation, I don’t think this deal presages a sudden burst of exits by mid-tier CDP vendors.  Even though growth has largely stalled for those firms, I think most can keep afloat long enough to find their footing in a new world.  This footing may well differ for different firms: for example, we’ve seen Lytics attempt to simplify CDP deployment enough to make it accessible to smaller businesses, while mParticle is moving more in the direction of combining customer data with analytics.  All need to dodge the giant cloud, cloud database, marketing cloud, and messaging vendors who are trampling the heart of traditional CDP territory.  Some will indeed take shelter within larger organizations like Uniphore.  Others may stay independent but retreat to niches such as data management tools or serving specific industries.  So even though the market for traditional, integrated CDP products is likely to shrink, I believe most of the vendors will survive in some form or another.  This is because the fundamental need driving CDPs – the need for unified, accessible customer data – will only grow stronger.  Companies that find a profitable way to meet that need will be able to thrive over time.

ActionIQ Merges Customer Data Without Reformatting

One of the fascinating things about the Customer Data Platform Institute is how developers from different backgrounds have converged on similar solutions. The leaders of ActionIQ, for example, are big data experts: Tasso Argyros founded Aster Data, which was later purchased by Teradata, and Nitay Joffe was a core contributor to HBase and the data infrastructure at Facebook.  In their previous lives, both saw marketers struggling to assemble and activate useful customer data. Not surprisingly, they took a database-centric approach to solving the problem.

What particularly sets ActionIQ apart is the ability to work with data from any source in its original structure. The system simply takes a copy of source files as they are, lets users define derived variables based on those files, and uses proprietary techniques to query and segment against those variables almost instantly. It’s the scalability that’s really important here: at one client, ActionIQ scans two billion events in a few seconds. Or, more precisely, it’s the scalability plus flexibility: because all queries work by re-reading the raw data, users can redefine their variables at any time and apply them to all existing data. Or, really, it's scalability, flexibility, and speed, because new data is available within the system in minutes.

So, amongst ActionIQ’s many advantages are scalability, flexibility, and speed. These contrast with systems that require users to summarize data in advance and then either discard the original detail or take much longer to resummarize the data if a definition changes.

ActionIQ presents its approach as offering self-service data access for marketers and other non-technical users. That’s true insofar as marketers work with previously defined variables and audience segments. But defining those variables and segments in the first place takes the same data wrangling skills that analysts have always needed when faced with raw source data. ActionIQ reduces work for those analysts by making it easier to save and reuse their definitions. Its execution speed also reduces the cost of revising those definitions or creating alternate definitions for different purposes. Still, this is definitely a tool for big companies with skilled data analysts on staff.

The system does have some specialized features to support marketing data. These include identity resolution tools including fuzzy matching of similar records (such as different versions of a mailing address) and chaining of related identifiers (such as a device ID linked to an email linked to an account ID). It doesn’t offer “probabilistic” linking of devices that are frequently used in the same location although it can integrate with vendors who do. ActionIQ also creates correlation reports and graphs showing the relationship between pairs of user-specified variables, such as a customer attribute and promotion response. But it doesn’t offer multi-variable predictive models or machine learning.

ActionIQ gives users an interface to segment its data directly. It can also provide a virtual database view that is readable by external SQL queries or PMML-based scoring models. Users can also export audience lists to load into other tools such as campaign managers, Web ad audiences, or Web personalization systems. None of this approaches the power of the multi-step, branching campaign flows of high-end marketing automation systems, but ActionIQ says most of its clients are happy with simple list creation. Like most CDPs, ActionIQ leaves actual message delivery to other products.

The company doesn’t publicly discuss the technical approach it takes to achieve its performance, but they did describe it privately and it makes perfect sense. Skeptics should be comforted by the founders’ technical pedigree and demonstrated actual performance. Similarly, ActionIQ asked me not to share screen shots of their user interface or details of their pricing. Suffice to say that both are competitive.

ActionIQ was founded in 2014 and has been in production with its pilot client for over one year. The company formally launched its product last month.