Software Review: Skypoint Cloud Combines CDP and Privacy Management

There are obvious similarities between Customer Data Platforms and privacy systems: both find customer data in all company systems; both assemble that data into unified profiles; and both govern access to those profiles. Indeed, some CDP vendors have expanded into privacy management by building consent modules to their systems or by integrating third-party consent managers.

Still, the line between CDP and privacy managers is usually clear: CDPs store customer data imported from other systems while privacy managers read the data in place. There might be a small gray area where the privacy system imports a little information to do identity matching or to build a map of what each source system contains. But it’s pretty easy to distinguish systems that build huge, detailed customer data sets from those that don’t. 

There’s an exception for every rule. Skypoint Cloud is a CDP that positions itself as a privacy system, including data mapping, consent management, and DSR (Data Subject Request) fulfillment. What makes it a CDP is that Skypoint ingests all customer data and builds its own profiles. Storing the data within the system actually makes fulfilling the privacy requirements easier, since Skypoint can provide customers with copies of their data by reading its own files and can ensure that data extracts contain only permitted information. Combining CDP and privacy in a single system also saves the duplicate effort of having two systems each map and read customer data in source systems.

The conceptual advantages of having one system for both CDP and privacy are obvious. But whether you’d want to use a combined system depends on how good it is at the functions themselves. This is really just an example of the general “suite vs best-of-breed” debate that applies across all systems types. 

You won’t be surprised that a young, small vendor like Skypoint lacks many refinements of more mature CDP systems. Most obviously, its scope is limited to ingesting data and assembling customer profiles, with just basic segmentation capabilities and no advanced analytics or personalization.  That’s only a problem if you want your CDP to include those features; many companies would rather use other tools for them anyway. There’s that “suite vs best-of-breed” choice again.

When it comes to assembling the unified database, Skypoint has a bit of a secret weapon: it relies heavily on Microsoft Azure Data Lake and Microsoft’s Common Data Model. Azure lets it scale effortlessly, avoiding one set of problems that often limit new products. Common Data Model lets Skypoint tap into an existing ecosystem of data connectors and applications, again saving Skypoint from developing those from scratch. Skypoint says they’re the only CDP vendor other than Microsoft itself to use the Common Data Model: so far as I know, that’s correct. (Microsoft, Adobe, SAP, and others are working on the Open Data Initiative that will map to the Common Data Model but we haven’t heard much about that recently.) 

How it works is this: Skypoint can pull in any raw data, using its own Web tag or other sources, and store it in the data lake. Users set up a data flow to ingest each source, using either the existing or custom-built connectors. The 200+ existing connectors cover most of the usual suspects, include Web analytics, ecommerce, CRM, marketing automation, personalization, chat, Data Management Platforms, email, mobile apps, data stores, and the big cloud platforms.

Each data flow maps the source data into data entities and relations, as defined in the Common Data Model or adjusted by the user. This is usually done before the data is loaded into the data lake but can also be done later to extract additional information from the raw input.  Skypoint applies machine learning to identify likely PII within source data and lets users then flag PII entities in the data map.  Users can also define SQL queries to create calculated values. 

Each flow has a privacy tab that lets the user specify which entities are returned by Data Subject Requests, whether data subjects can order the data erased, and which data processes use each entity. The data processes, which are defined separately, can include multiple entities with details about which entities are included and what consents are required. Users can set up different data processes for customers who are subject to different privacy regulations due to location or other reasons.

Once the data is available to the system, Skypoint can link records related to the same person using either rule-based (deterministic) matches or machine learning. It’s up to the client define her own matching rules. The system maintains its own persistent ID for each individual. Matches can be either incremental – only matching new inputs to existing IDs – or can rebuild the entire matching universe from scratch. Skypoint also supports real-time identity resolution through API calls from a Web tag.

After the matching is complete, the system merges its data into unified customer profiles. Skypoint provides a basic audience builder that lets users define selection conditions. This also leverages Skypoint's privacy features by first having users define the purpose of the audience and then making available only data entities that are permitted for that purpose. Users can also apply consent flags as variables within selection rules. Audiences can be connected with actions, which export data to other systems manually or through connectors.

Users can supplement the audience builder by creating their own apps with Microsoft Azure tools or let external systems access the data directly by connecting through the Common Data Model.

Back to privacy. Skypoint creates an online Privacy Center that lets customers consent to different uses of their data, make data access requests, and review company policy statements. It creates an internal queue of access requests and tracks their progress towards fulfillment. Users can specify information to be used in the privacy center, such as the privacy contact email and URLs of the policy statements. They can also create personalized email templates for privacy-related messages such as responses to access requests or requests to verify a requestor’s email address.

This is a nicely organized set of features that includes what most companies will need to meet privacy regulations. But the real value here is the integration with data management: gathering data for subject access requests is largely automated when data is mapped into the system through the data flows, a major improvement over the manual data assembly required by most privacy solutions. Similarly, the connection between data flows, audiences, and data processing definitions makes it easier to ensure the company uses only properly consented information. There are certainly gaps – in particular, data processes must be manually defined by users, so an undocumented process would be missed by the system. But that’s a fairly common approach among privacy products.

Pricing for Skypoint starts with a free version limited mostly to the privacy center, consent manager, and data access requests. Published pricing ranges past $2,000 per month for more than ten data integrations. The company was founded in 2019 and is just selling to its first clients.

Software Review: Osano Manages Cookie Consent and Access Requests

The next stop on our privacy software tour is Osano, which bills itself as “the only privacy platform you’ll ever need”.  That's a bit of an overstatement: Osano is largely limited to data subject interactions, which is only one of the four primary privacy system functions I defined in my first post on this topic. . (The other three are: discovering personal data in company systems, defining policies for data use, and enforcing those policies.) But Osano handles the interactions quite well and adds several other functions that are unique. So it’s certainly worth knowing.

The two main types of data subject interactions are consent management and data subject access requests (DSARs). Osano offers structured, forms-based solutions to both of these, available in a Software-as-a-Service (Saas) model that lets users deploy them on Web sites with a single line of javascript or on Android and iOS mobile apps with an SDK.

The consent management solution provides a prebuilt interface that automatically adapts its dialog to local laws, using the geolocation to determine the site visitor's location.  There are versions for 40+ countries and 30+ languages, which Osano updates as local laws change. Because it is delivered as a SaaS platform, the changes made by Osano are automatically applied to its clients. This is a major time-saver for organizations that would otherwise need their own resources to monitor local laws and update their system to conform to changes.

Details will vary, but Osano generally lets Web visitors consent to or reject different cookie uses including essential, analytics, marketing, and personalization. Where required by laws like the California Consumer Protection Act (CCPA), it will also collect permission for data sharing. Osano stores these consents in a blockchain, which prevents anyone from tampering with them and provides legally-acceptable proof that consent was obtained. Osano retains only a hashed version of the visitor’s personal identifiers, thus avoiding the risk of a PII leak while still enabling users to search for consent on a known individual.

Osano’s use of blockchain to store consent records is unusual. Also unusual: Osano will search its client’s Website to check for first- and third-party cookies and scripts. The system will tentatively categorize these, let users confirm or change the classifications, and then let site visitors decide which cookies and scripts to allow or block. There’s an option to show visitors details about each cookie or script.

Osano also provides customer-facing forms to accept Data Subject Access Requests. The system backs these with an inventory of customer data, built by users who manually define systems, data elements, and system owners. Put another way: there’s no automated data discovery. The DSAR form collects the user’s information and then sends an authentication email to confirm they are who they claim.  Once the request is accepted, Osano sends notices to the owners of the related systems, specifying the data elements included and the action requested (review, change, delete, redact), and tracks the owners’ reports on completion of the required action. Osano doesn’t collect the data itself or make any changes in the source systems.

The one place where Osano does connect directly with source systems is through an API that tracks sharing of personal data with outside entities. This requires system users to embed an API call within each application or workflow that shares such data: again, there’s no automated discovery of such flows. Osano receives notification of data sharing as its happens, encrypts the personal identifiers, and stores it in a blockchain alone with event details. Users can search the blockchain for the encrypted identifiers to build a history of when each customer’s data was shared.

Perhaps the most unusual feature of Osano is the company’s database of privacy policies and related information for more than 11,000 companies. Osano gathers this data from public Web sites and has privacy attorneys review the contents and score each company on 163 data points.  This lets Osano rate firms based on the quality of their privacy processes. It runs Web spiders continuously check for changes and will adjust privacy ratings when appropriate. Osano also keeps watch on other information, such as data breach reports and lawsuits, which might also affect ratings. This lets Osano alert its clients if they are sharing data with a risky partner.

Osano is offered in a variety of configurations, ranging from free (cookie blocking only) to $199/month (cookie blocking and consent management for up to 50,000 monthly unique Web site visitors) to enterprise (all features, negotiated prices). The company was started in 2018 and says its free version is installed on more than 750,000 Web sites.

Privacy-Protecting Systems Are The New Green

Let’s take a break from Customer Data Platforms to do some trend-spotting. I spy with my little eye…privacy systems!

Specifically, there's a crop of systems that are privacy-safe alternatives to dominant social, search, email and other common consumer technologies. One well known example is DuckDuckGo, which positions itself as “a search engine that doesn’t track you”.  But there are plenty of others.  Some that have recently caught my attention include:

• Brave, a browser that lets users decide which ads they’ll see and blocks advertisers from seeing behavioral details
• Anagog, which let mobile apps track behaviors and make predictions while keeping all data on the device
• ProtonMail, an encrypted email service  (it's one of a dozen alternatives in that market)
• Vero, an ad-free social network
• Chatterbox, a privacy-safe smart speaker for kids
• Aegis One “mini-computer” for anonymous Web browsing, from a company so privacy-conscious that they apparently don’t publish their contact information (which may take things a bit too far)

A thorough search would surely turn up more examples. You could also add add products whose purpose is privacy, like ad blockers or proxy servers; the gazillion contenders in the pay-people-to-watch ads industry; privacy-enhancing extensions to standard products such as Google Chrome and Firefox; and, perhaps most prominent, the privacy-centered positioning of Apple.

In other words, privacy-protecting systems are a big and growing business.  Privacy is the new green: the cool virtue signifier for consumers and businesses alike.

This is worth noting because industry conventional wisdom has long held that consumers don’t really care about privacy, despite claims to the contrary. The core evidence has been that even people who say they care about privacy are willing to give up their personal data for the tiniest of incentives, whether monetary discounts or convenience. There’s still plenty of data along those lines, such as this Mulesoft study, which found that 49% of consumers would share personal data to get personalized service.  But the same surveys show a substantial minority don’t want their data tracked at all and many have stopped using big social media platforms due to privacy concerns. (See also this Harris Poll report for another set of similar statistics.)

It’s hard to find consistent data over time but it’s a safe bet that this GlobalWebIndex report is correct that consumers' privacy concerns have grown sharply in recent years.

The implications of this are intriguing. There’s a reasonable possibility that we’ll soon gain access to an alternative universe of online systems that protect rather than destroy consumer privacy. If government regulators finally step up their protection of consumers – as is already happening with laws like GDPR and the California Consumer Privacy Act – these systems will have a significant head start over existing products, not to mention vastly more credibility. The result could be a tipping point when network effects kick in and privacy-centric systems suddenly pull a mass audience away from the current, data-fueled incumbents.

That’s still a long shot, if only because the incumbent firms have huge revenues that give them the resources to fight back. But a fundamental change in consumer attitudes could make their brands so toxic that no amount of investment would save them once consumers recognize there are viable, privacy-safe alternatives. 

How will you know if this is actually happening? Keep your eyes out for three things:

• funding announcements from venture capital firms that specifically cite the privacy-preserving features of their investments
• evidence that consumers are paying real attention to privacy, based not just on surveys about attitudes but on actual behaviors (such as the decline in Facebook use, which is already happening)
• a Scott Brinker/Terry Kawaja style logoscape of privacy-enhancing versions of standard consumer technologies

If you’re looking for a much deeper analysis of Internet privacy and other trends, take a look at the Mozilla Foundation’s recent Internet Health Report.

European CDP Market Is Still Behind the U.S.

I returned earlier this week from a sequence of workshops, speeches, and meetings in Europe, all focused on Customer Data Platforms. Here are some observations:

- The European CDP market is indeed behind the U.S. My own conversations are with people who already care about CDPs, so they're a very skewed sample.  But vendors, consultants, agencies, and marketers I spoke with mostly agreed that the larger community is just beginning to hear about the concept. Many are seeking to position themselves as early adopters or experts, sensing a big business opportunity.

- Separate martech staff is rare. Nearly every large and mid-size company that I see in the U.S today has someone in charge of marketing technology, and often an entire team of marketing technologists reporting to the CMO. I was told this is much less common in Europe and personally didn’t meet anyone with a martech title. Nor did I hear about powerful IT departments taking charge. Rather, it seems that marketers still mostly act on their own, which is how it worked in the U.S. until a few years ago. I did have the impression that European marketers rely more heavily on specialist consultants to help them out, but that might be biased by the fact that many of my meetings were with consultants.

- DMP means something different in Europe. We consistently heard that marketers throughout Europe, and especially in France, were oversold several years ago on Data Management Platforms as a complete solution to handle all customer data needs. This contrasts quite sharply with the U.S., where DMPs have in most cases been understood as limited to serving up digital ad audiences. European DMPs are now recognized as having failed to deliver on the broader promise, which is beyond their technical capabilities. The resulting backlash greatly damaged the image of DMP products and has left marketers looking for a new solution that is truly capable of meeting their needs. Many recognize that CDP could be this solution and are intrigued.  But they're also skeptical and worried that they’ll be fooled again. This makes it harder for CDP vendors to sell their products. On the bright side, it also means the problem CDPs address is already well understood.

- CRM also means something different.  Back when Bill Clinton was president, CRM was described as a trinity of sales, service, and marketing systems, with marketing much weaker than the other two.  It commonly referred to B2C as well as B2B. Later, in the U.S., the term came to be more associated with B2B sales and customer service in general and the Salesforce.com Sales cloud in particular. In Europe, CRM is used very broadly to mean any and all customer data, extending far beyond sales, service, and marketing, and including both B2B and B2C.  On reflection, I may have recently been hearing people in the U.S. apply the term more broadly as well.

- Use cases are everything. We’ve seen a huge demand to present CDP use cases in the U.S.  But it seemed even more pressing in Europe, perhaps because understanding of the CDP concept is weaker. One difference seemed to be that Europeans are willing to interact with vendors as a way of learning: while many U.S. buyers actively avoid vendors during the early stages of the purchase process, we heard quite a few requests in Europe to see detailed demonstrations of how individual vendors accomplish specific tasks. Maybe the European salespeople do a better job of being consultative, or maybe European buyers are less determined to find things out on their own. Or maybe it’s just my imagination.

- Immediate ROI is required. We also found a greater focus in Europe on use cases that tie directly to marketing programs, as opposed to the analytical use cases that are most common starting CDP applications in the U.S. The reason seems to be that European buyers are more insistent on finding a specific financial justification for their investment. Many U.S. buyers will accept a broader strategic justification and start with analytical use cases. This may be why European CDP vendors are more likely to offer a full scope of data, analytical, and campaign capabilities, since buying them in a single package makes it easier to tie new marketing programs directly to the CDP investment.

- National markets are distinct. Some of the big U.S. vendors are present throughout Europe, but many local vendors are largely limited to individual markets. We had some sense of this beforehand but the isolation was greater than expected. The French market in particular has its own ecosystem of CDPs and other types of software that have a major domestic position but little presence elsewhere. The Netherlands, German, Nordic and UK markets show more cross-over, probably because English is widely spoken in all of them. The greater interest in CDP-based marketing programs may also encourage this, since marketing programs are closely tied to specific local markets.

- GDPR hasn’t caused much change. We had some discussions about using CDP for GDPR compliance but privacy constraints in general rarely come up. The common attitude was that privacy rules were already tight in the countries we visited (Belgium, Netherlands, Germany and France), so GDPR hadn’t required significant adjustments. There was also some discussion about waiting to see how the rules are actually enforced, which might require further adjustments if the regulators are strict.

Summary

While these differences are interesting, they’re also fairly minor. Over all, the European marketers were feeling the same pressures as their U.S. counterparts to create unified data for better customer experiences. So while each market will have its own quirks and proceed at a its own pace, it looks like they’ll follow the same general path as the U.S.

Consumers Aren't As Into Personalization As You Think, and Other Survey Results

I see a lot of surveys -- easily a dozen each week.  Mostly they go into a big file which I mine occasionally for factoids to spice up a paper or presentation.  Sometimes I take a more thorough tour to look at some bigger issues.  Today is one of those days.

Specifically, I was prepping for a presentation in Amsterdam, which meant I needed to present general industry trends and then see what is different in Europe.  This turned out to be pretty interesting.  But I assembled vastly more data than I could include in any presentation where the audience was not chained to their seats (frowned upon by EU regulators).   So I'm sharing it all here with you instead.

(I've also packaged it all in a paper for the Customer Data Platform Institute, available here.  Much more convenient than copying this blog post if you want a reference copy.)

Note that there's more information on sources at the end of this post.  For now, let's just get to the good stuff.

Consumer Attitudes: Personalization

If marketers hold any truth to be self-evident, it’s that today’s consumers want and expect personalization. The reality is a bit different and depends greatly on the definition of “personalization”. The majority of consumers believe they receive personalized service, but many fewer expect personalized experiences. What they do expect is consistent service, shared information, and being identified as repeat customers. In other words, they expect you to know who they are and to use that data to serve them – for example, by being aware of past purchases and problems. But they don’t necessarily expect you to make personalized offers or otherwise personalize their experience.

We do see quite consistently that European consumers have lower expectations for all kinds of personalization.

Whether or not consumers expect personalization, it can still be a competitive advantage to provide it. The majority of consumers do say they’re more loyal to brands that understand them and provide good service, and more likely to stop doing business with brands with poor service. But, again, the focus seems to be more on service than proactive personalization: barely one quarter of consumers said that anticipating needs is the most important part of personalization. This may come as a shock to marketers who have put anticipating needs at the top of their list of reasons to do personalization.

These results shouldn’t be read as a reason to ignore customer needs. Companies get more revenue when they offer customers what they want, whether or not the customer expects it.

We again see that European consumers place slightly less weight than U.S. consumers on personalization, although the difference is less pronounced than with expectations. One interpretation would be that European consumers don’t expect personalized treatments and thus don’t factor it into their behavior.

 
Consumer Attitudes: Privacy

Marketers know they need to balance personalization against privacy. We’ve just seen that consumer interest in personalization may not be quite as high we thought. By contrast, consumers show great interest in privacy, both in general and specifically in relation to marketing. More than three-quarters don’t want companies to market to them based on personal data. Fewer than half would trade their data for personalized service, even though that’s the reason most companies give for collecting it. Although European consumers show slightly less concern about privacy in general, they are more opposed than U.S. consumers to letting companies use their data for marketing. This is consistent with the personalization results: if European consumers place less value on personalization, it makes sense that they’d be less willing to share their personal data to enable personalized treatments.

Looking beyond personalization to the broader question of trust, we again see that Europeans place less trust in business than U.S. consumers. An astonishing 68% believe brands sell their data. This may reflect the attention drawn to data sharing by the European Union’s General Data Protection Regulation (GDPR). Europeans' lack of trust in most business may also explain why they are more likely to support brands that do show high purpose.

Marketing Technology

Now let’s turn to marketers. Most European marketers will tell you that their region is behind the U.S. in adoption of advanced marketing technology. European consumer perceptions of less personalization support this. The data here do show that European marketers use fewer data sources and channels for most purposes, although the figure for inputs to attribution is higher. The differences are relatively small with the significant exception that Europeans report using personalization in 20% fewer channels (4.1 vs 5.1) than U.S. marketers.

The gap is larger when we focus specifically on data integration. European marketers are much more likely to cite challenges with linking multiple data sources, more likely to see linking data as the reason to deploy a Data Management Platform, and more likely to avoid a DMP because the technology is too complex. While integration is a substantial problem for many U.S. based marketers, it’s clear the pain is greater in Europe – despite having slightly fewer data sources to integrate.

The same pattern holds for marketing technology in general. European marketers spend a slightly smaller share of their marketing budget on martech and a slightly smaller share of their martech budget on data and analytics. But while those differences are fairly small, U.S. marketers expect much higher growth in their 2019 martech budgets. This is a significant indicator of attitudes regardless of what actually happens. Similarly, European marketers show consistently but slightly lower adoption of advanced marketing systems such as DMP, cross-channel engagement, and flexible attribution models.

Marketing Maturity

Looking beyond technology, we see that U.S. and European marketers share a high level of belief in personalization. But European marketers rank lower on other measures that indicate maturity. It’s particularly intriguing that European marketers are less likely than U.S. marketers to be prioritizing first party data, even though GDPR is generally assumed to make first party data more important.

In sum, the belief that European marketers are using less advanced technology than U.S. marketers appears to be correct.

 
Leaders vs Mainstream

What separates the most successful marketers from the rest? This data, all from the same survey, found that high performing marketing departments were twice as likely to be responsible for technical activities related to customer data: operations, governance, security, and schemas. This suggests that marketers do in fact get better results when they have more control over their customer data. By contrast, leading and mainstream departments had similar responsibility levels for traditional marketing activities such as automation rules, data acquisition, and analytics.

It’s important to qualify this message. Even among leading marketing departments, the majority do not have technical responsibilities. So clearly success is possible under other arrangements. It’s also important to recognize that marketing and IT will almost always share some responsibilities. And they should.

Other leader vs mainstream comparisons provide more insight into the challenges faced at different maturity levels. Mainstream marketers are more likely than leaders to cite disparate technology as their biggest martech challenge: this suggests that is the first hurdle to cross. Leaders, having started to knit together their systems, are likely to run into organizational barriers next. Once they resolve organizational problems, they can deliver results such as a single customer view and quantifying the benefits of personalization and real time marketing. Few mainstream marketers, still fighting technical and organizational battles, are able to accomplish these.

Some markers show much less correlation with leadership. Mainstream marketers are nearly as likely as leaders to lead customer experience initiatives and to run real time interactions in at least one channel. Note that single channel real interactions do not require unified customer data or any type of shared systems. So they are not by themselves an indication of maturity.


Customer Data Platforms

Finally, we’ll look at some information specifically related to Customer Data Platforms. The table below compares CDP selection priorities for enterprise vs mid-tier buyers. It supports the common belief that these groups have different concerns. Enterprise marketers give higher priority to data security and integrating data from many sources, including third party data. Mid-market buyers also rank security as their top concern but then look for help with internal data and for data analysis tools. These are probably problems that enterprises have already solved. One implication is that CDP vendors may find themselves specializing in one or the other type of buyer so they can optimize their systems for the different needs.

I also have several surveys that asked about CDP deployment. Answers vary greatly although the general result suggests that CDP adoption is getting close to DMP adoption. The very low figure from Heinz Marketing reflects the nature of its survey, which asked B2B marketers about tools for marketing analytics and pipeline management. The audiences for the other surveys were more representative but the figures still seem much higher than likely. The CDP Institute’s own estimate is that market penetration for CDPs at the end of 2018 was around 15%.

Note on Sources

This paper draws from surveys with different audiences, survey methods, and sample sizes. The origin of each item is indicated by a number that relates to the list of surveys below.  This list provides some information about each survey, as presented in the survey report.
Data from the original surveys has been processed in several ways:

• Questions have been paraphrased for brevity and clarity.
• European results are averages of country results, which have been weighted in different cases by national population, sample size, or not at all. Different surveys included different countries.
• Some U.S. results include data from all of North America.

Readers should be able to track down the original survey reports on the Internet. I haven't published links because links change too often to be useful.

1 Acquia, Closing the CX Gap: Customer Experience Trends Report 2019. More than 5,000 consumers and 500 marketers.
2 AdRoll, The State of Marketing Attribution, 2017. 987 respondents recruited by email and social media. Majority at director/manager level.
3 Aspect, 2017 Aspect Consumer Experience Index. Online survey with 1,000 aggregate U.S. sample and similar in Germany, Spain, United Kingdom.
4 Econsultancy, The Customer Data Imperative, 2018. 509 online survey respondents, primarily at large B2C brands. Mix of marketing, IT, and operations.
5 Edelman, 2018 Edelman Trust Barometer. 33,000_ online survey respondents across 28 countries.
6 ExchangeWire, Adoption vs Execution: How Media Agencies Across the Globe Are Making the Most of their DMP’s Capabilities, 2017. 470 agency professionals.
7 Frost & Sullivan, The Global State of Online Digital Trust, 2018. 990 survey responses.
8 Gemalto, Data Security Confidence Index, 2018. 1,050 IT decision makers from organizations with perimeter security systems.
9 GlobalWebIndex, Trends 19, 2019. 91,913 Internet users aged 16-64.
10 Harvard Business Review Analytics Services, The Age of Personalization, 2018. 625 responders from audience of Harvard Business Review readers. Primarily executive/senior management at large enterprises.
11 Heinz Marketing, State of Revenue Marketing, 2018. 241 B2B marketing executives, primarily small to mid-size companies.
12 Infosys, Endless Possibilities with Data, 2018. 1,062 senior executives from organizations with annual revenues exceeding $1 billion.
13 Ipsos+Medallia, The Customer Experience Tipping Point, 2018. 8,002 consumers in U.S., UK, France, Germany.
14 Mulesoft, Consumer Connectivity Insights 2018. 650 IT decision makers at organization with 1,000+ employees.
15 Relevancy Group, CDP Buyers Guide 2018. 406 executive marketers.
16 Salesforce Research, Fifth Edition State of Marketing 2019. 4,101 responses from full-time marketing leaders, primarily mid-size organizations. Mix of B2B and B2C.
17 Sizmek, Marketers Survey Results 2018: An Insider’s Look at Data, Walled Gardens, and Collaboration. 522 B2C brand marketers.
18 Spiceworks, 2019 State of IT, IT Marketing. 780 business technology buyers.
19 Walker Sands, State of Marketing Technology 2018. 300 marketing professionals. Primarily small to mid-size companies.
20 WE Communications, Brands in Motion 2018. Online interview of consumer survey panel totaling 11,000+ in U.S., U.K., and Germany.
21 Winterberry Group, Know Your Audience: The Evolution of Identity in a Consumer-Centric Marketplace, 2018. Online survey of more than 400 advertisers, marketers, fundraisers, publishers, technology developers and marketing service providers.

Will GDPR Burst the Martech Bubble?

Some people have feared (or hoped) that the European Unions’ General Data Protection Regulation would force major change in the the marketing and advertising ecosystems by shutting off vital data flows. I’ve generally been more sanguine, suspecting that some practices would change and some marginal players would vanish but most businesses would continue pretty much as they are. The most experienced people I’ve spoken with in recent days have had a similar view, pointing to previous EU privacy regulations that turned out to be mostly toothless.

But even though I respect those experienced opinions, I’m beginning to wonder GDPR might have a much greater than most of us think. The reason isn’t that GDPR requires major changes in how data is collected or used: by and large, consumers can be expected to grant consent without giving it much thought and most accepted industry practices actually fall within the new rules. Nor will the limited geographic reach of GDPR blunt its impact: it looks like most U.S. firms are planning to apply GDPR standards worldwide, if only because that’s so much easier than applying different rules to EU vs non-EU persons.

What GDPR does seem to doing is create a shake-out in the data supply chain as big companies reduce their risks by limiting the number of partners they’ll work with. The best example is Google’s proposed consent tool for publishers, which limits consent to no more than twelve data partners. This would inevitably lead to smaller firms being excluded from data acquisition.  Some see this as a ploy by Google to hobble its competitors, and maybe they're right. But the real point is that asking people to consent to even a dozen data sharing options is probably not going to work. So even though publishers are free to use other consent tools, there’s a practical limit on the number of data partners who can succeed under the new rules.

A similar example of market-imposed discipline is contract terms proposed by media buying giant GroupM , which requires publishers to grant rights they might prefer to keep. GroupM may have the market power to force agreement to its terms, but many smaller businesses will not. With less legal protection, those smaller firms will need to be more careful about the publishers they work with. Conversely, advertisers need to worry about using data that wasn’t acquired properly or has been mistreated somewhere along the supply chain before it reached them. Since they can’t verify every vendor, many are considering cutting off smaller suppliers.  Again, the result is many fewer viable firms as a handful of big companies survive and everyone else is shut out of the ecosystem.  (Addendum: see this Marketing Week article about data supplies being reduced, published the day after I wrote this post.)

There’s nothing surprising about this: regulation often results in industry consolidation as compliance costs make it impossible for small firms to survive. The question I find more intriguing is slightly different: will a GDPR-triggered reduction in data processing will ramify through the entire adtech and martech ecosystem, causing the long-expected collapse of industry growth?

So far, as uber-guru Scott Brinker recently pointed out, every prediction of consolidation has been wrong.  Brinker argues that fundamental structural features – including low barriers to entry, low operating costs of SaaS, ever-changing needs, micro-services architectures, and many more – favor continued growth (but carefully avoids making any prediction).  My simplistic counter-argument is that nothing grows forever and sometimes one small jolt can cause a complex system to collapse. So something as seemingly trivial as a reluctance of core platforms to share data with other vendors could not only hurt those vendors, but vendors that connect with them in turn. The resulting domino effect could be devastating to the current crop of small firms while the need to prove compliance could impose a major barrier to entry for new companies.

I can’t say how likely this is. There’s a case to be made that GDPR will have a more direct impact on adtech than martech and adtech is particularly ripe for simplification.  You could even note that all my examples were from the adtech world. But it’s always dangerous to assume trends will continue indefinitely and it’s surely worth remembering that every bubble is accompanied by claims that “this time is different”. So maybe GDPR won’t have much of an impact. But I suspect its chances of triggering a slow-motion martech consolidation are greater than most people think.

State of Customer Data Platforms in Europe

The Customer Data Platform Institute will be launching its European branch later this month with a series of presentations in London, Amsterdam and Hamburg. We’ve seen considerable CDP activity in Europe – nearly one quarter of the CDPs in the Institute's latest industry update are Europe-based, several others with European roots have added a U.S. headquarters, and some of U.S.-based CDPs  have significant European business. A recent analysis of CDP Institute membership also found that one quarter of our individual members are in Europe. So what, exactly, is the state of CDP in Europe?

 It’s long been an article of faith on both sides of the Atlantic that the U.S. market is ahead of Europeans on marketing technology in general and customer data management in particular. That (plus the larger size of the U.S. market) is why so many European vendors have relocated to the U.S. This study from Econsultancy suggests the difference is overstated if it exists at all: 9% of European countries reported a highly integrated tech stack, barely under the 10% figure for North American companies. North American firms were actually more likely to report a fragmented approach (48% vs 42%), although that was only because European countries were more concentrated in the least advanced category (“little or no cloud based technology”) by 20% vs 13%.

 The assumption that cloud-based technology is synonymous with advanced martech is debatable but, then again, the survey was sponsored by Adobe.  What is clear is that European firms have generally lagged the U.S. in cloud adoption -- see, for example, this report from BARC Research.

Lower cloud use probably hasn’t directly impeded CDP deployment: although nearly all CDPs are cloud-based, a substantial number offer an on-premises option. (The ratio was seven out of 24 in the CDP Institute’s recent vendor comparison report, including nearly all of the Europe-based CDPs.) But the slower cloud adoption may be a hint of the generally slower pace of change among European IT departments, which could itself reduce deployment of CDPs.

A Salesforce survey of IT professionals supports this view. Answers to questions about leading digital transformation, being driven by customer expectations, and working closely with business units all found that U.S. IT workers are slightly but distinctly more business-oriented than their European counterparts. Interestingly, there’s a split within the European respondents: UK and Netherlands are more similar to the U.S. answers than France and Germany. I should also point out that I’ve highlighted questions where the U.S. and European answers were significantly different – there were quite a few other questions where the answers were pretty much the same.

Organizational silos outside of IT are another barrier to CDP adoption. A different Salesforce survey, this one of advertising managers, also found that North American firms are generally more integrated than their European counterparts. The critical result from a martech perspective is North American marketing and advertising departments were much more likely to collaborate on buying technology.

Then again, a Marketo survey found that European respondents (from a mix of IT, marketing, sales, and service departments) were generally more satisfied with their tools and performance, even though they lagged North Americas in slightly innovation and more clearly in strategic alignment with corporate objectives. This isn’t necessarily inconsistent with the previous results: being less integrated with other departments may free the Europeans to pursue their departmental goals more effectively, even if they’re less fully aligned with corporate objectives. Other surveys have given similar results: people are generally happier with technology when they buy it for themselves.

Not surprisingly, one area where the Europeans are clearly ahead in preparation for GDPR: a Spiceworks survey at the start of this year found that 56% of European companies had allocated funds for compliance compared with just 31% of U.S. companies. (Almost half the U.S. respondents believe GDPR wouldn’t affect them, even though GDPR applies globally.) While the result clearly relates to the fact that GDPR is a European Union regulation, it may also reflect a generally higher interest in privacy among European consumers: to take one example, ad blocking is much more common in Europe than the U.S. That’s good news for CDP vendors, since GDPR has emerged as one of the primary use cases.

On the other hand, a survey from Aspect found that U.S. consumers are generally more demanding than Europeans about customer service: they care more about having a choice of service channels, are more willing to pay extra for good service and are quicker to stop buying after a poor experience. This is probably bad news for European CDP vendors, since unified customer data is a foundation for modern customer service.

In sum, things really are a bit different in Europe. Integration, the primary CDP use case, is lagging compared to the U.S. So it makes sense that CDP adoption is also lagging.  But GDPR may be changing the equation and consumer attitudes are certainly adding external pressure.  The need for CDP is growing and we hope the CDP Institute’s European operations will make it a little easier for European companies find right solutions.

Will GDPR Hurt Customer Data Platforms and the Marketers Who Use Them?

Like an imminent hanging, the looming execution of the European Union’s General Data Protection Regulation (GDPR) has concentrated business leaders’ minds on their customer data. This has been a boon for Customer Data Platform vendors, who have been able to offer their systems as solutions to many GDPR requirements. But it raises some issues as well.

First the good news: CDPs are genuinely well suited to help with GDPR. They’re built to solve two of GDPR’s toughest technical challenges: connecting all internal sources of customer data and linking all data related to the same person. In particular, CDPs focus on first party (i.e., company-owned) personally identifiable information and use deterministic matching to ensure accurate linkages. Those are exactly what GDPR needs. Some CDP vendors have added GDPR-specific features such as consent gathering, usage tracking, and data review portals. But those are relatively easy once you’ve assembled and linked the underlying data.

GDPR is also good for CDPs in broader ways. Most obviously, it raises companies’ awareness of customer data management, which is the core CDP use case. It will also raise consumers' awareness of their data and their rights, which should lead to better quality customer information as consumers feel more confident that data they provide will be handled properly. (See this Accenture report that 75% of consumers are willing to share personal data if they can control how it’s used, or this PegaSystems survey in which 45% of EU consumers said they would erase their data from a company that sold or shared it with outsiders.)  Conversely, GDPR-induced constraints on acquiring external data should make a company’s own data that much more valuable.

Collection requirements for GDPR should also make it easier for companies to tailor the degree of personalization to individual preferences.  This Adobe study found that 28% of consumers are not comfortable sharing any information with brands and 26% say that too-creepy personalization is their biggest annoyance with brand content. These results suggest there’s a segment of privacy-focused consumers who would value a privacy-centric marketing approach. (That this approach would itself require sophisticated personalization technology is an irony we marketers can quietly keep to ourselves.)

So, what's not to like?  The downside to GDPR is that greater corporate interest in customer data means that marketers will not be left to manage it on their own.  Marketing departments have been the primary buyers of Customer Data Platforms because corporate IT often lacks the interest and skills needed to meet marketing needs.  GDPR and digital transformation don't give IT new resources but they do mean it will be more involved.  Indeed, this report from data governance vendor Erwin  found that responsibility for meeting data regulations is held by IT alone at 36% of companies and is shared between IT and all business units (not just marketing) at another 55%.  I’ve personally heard many recent stories about corporate IT buying CDPs.

Selling to IT departments isn’t a problem for CDP vendors. Their existing technology should work with little change.  At most, they'll need to retool their sales and marketing. But marketers may suffer more. Corporate IT will have its own priorities and marketing won’t be at the top of the list. For example, this report from master data management vendor Semarchy found that customer experience, service and loyalty applications take priority over sales and marketing applications. More broadly, studies like this one from ComputerWorld consistently show that IT departments prioritize productivity, security and compliance over customer experience and analytics. Putting IT and legal departments in charge of customer data is likely to mean a more conservative approach to how it's used than marketers would apply on their own.  This may prevent some problems but it's also likely to make marketers' jobs harder.

A greater IT role may also reverse the current trend of adding analytical and marketing applications to CDP data management functions. Marketers generally like those applications because it saves them the trouble of buying and integrating separate analytical and marketing systems. IT departments won’t use those features themselves and will probably be more interested in making sure CDP data can be shared by external applications from all departments. Similarly, IT buyers may favor CDP designs that are less tuned specifically to marketing needs and more open to multiple uses. This will favor some technical approaches over others.

The final result is likely to be clearer division of the CDP market into systems that focus on enterprise-wide customer data management and that give marketers integrated data, analytics, and customer engagement. If both types of vendors find enough buyers to survive, the expanded choice means that everyone wins. But the combined data, analytics and execution CDPs could be squeezed between data-only CDPs and the integrated applications of big marketing clouds. If there's not enough room left for them, marketers choices will be reduced.  Should that happen, GDPR will have done CDP vendors and marketers more harm than good.