CDP Industry Funding Increased by $556 Million During First Half of 2021: Study

The top 25% of the CDP vendors accounted for 77% of funding and 64% of employment, according to the study.

The major events of 2020, such as the loss of third-party cookies and the pandemic, accelerated digital transformation among most organizations by up to seven yearsOpens a new window . One of the functions that underwent a significant change was marketing. The rapid shift to digital led to a growing demand to understand customers and respond in real-time. This has led to an increase in the addition of customer data platforms (CDPs) to the marketing stack of many organizations.

According to the CDP Institute’s latest studyOpens a new window , the number of customer data platform (CDP) vendors grew rapidly during the first half of 2021. The overall demand for CDPs recovered from the industry’s brief slowdown during the early stages of the pandemic. The study showed the employment growth rate of the vendors listed in the previous report was 6% after two slow periods.

CDP employment growth rate in Q1, 2021

Source: CDP Institute StudyOpens a new window

Also read: Marketers Are Leaning on CDPs To Adapt To New Privacy and Data Policies: New Study by Tealium

1. Top 25% CDP Vendors Account for Nearly Two-Thirds of Employment

The study found that the top 25% of the vendors accounted for 77% of funding and 64% of employment. While the employment rate increased slightly over time, funding increased considerably. The average employee count in these top companies has grown even as the average sizes of the rest stagnated. This means larger companies grew faster than smaller companies during the last five years and the study period.

2. Funding’s and Acquisitions Rose During the Study Period

The study showed that industry funding rose by $556 million during the period, including $317 million raised during the study period and $240 million raised previously by companies added to the study. Nine companies, including campaign, delivery, and analytics vendors, raised new funding. Almost all the funds went to U.S. companies and those founded in 2011 or later. An exception was Appier, the only CDP offering from Taiwan, which raised $271 millionOpens a new window in its IPO offering on the Tokyo Stock Exchange this year.

The industry also witnessed seven acquisitions and a merger during the period. Further, Ysance sold its services and renamed its CDP business Easyence. Five companies were based in Europe, and four were based in the U.S. Most purchased companies were older, smaller campaign and delivery CDPs with almost no funding. Companies who bought them are those assembling a suite of customer engagement tools and using a CDP to tie their products together and add new channels.

 3. Existing CDP Vendors Lead in Growth and Funding

The industry added 20 new vendors and more than 1,200 employees. Growth was specifically strong among existing vendors as they added the highest number of employees. The first half also witnessed a flurry of funding and acquisitions in this industry. The industry received funding of $556 million during the study period. Again, the existing vendors added the highest funding.

A significant number of the firms added were either delivery CDPs (35%) or startups founded after 2014 (55%). Most delivery CDPs are established, well-funded organizations that added a CDP offering. The startups were usually data and analytics CDPs. They were also found to be small and lightly funded companies.

Also read: How Successful Have CDPs Been in Delivering Business Value? Treasure Data Report Shares New Findings

4. Established Companies and Campaign CDPs Dominate the Market

The study found that campaign CDPs were the most common product type and accounted for 40% of companies, 47% of funding, and 42% of employment. However, as delivery CDPs enter the industry, the share of campaign CDPs has started shrinking. Several delivery CDPs have employees not counted in the CDP employment figures. Both campaign and delivery CDPs tend to be old organizations whose early-stage funding is not covered in the report.

Type of company and CDP dominating the industry

Source: CDP Institute StudyOpens a new window

According to the study, vendors founded after 2014 make up almost one-quarter of the CDP industry. Having said that, they are smaller and have less funding than well-established companies. Companies founded between 2008 and 2012 form the core of the industry. The number fell from 44% in 2016 to 26% in the present report. Yet, they account for 61% of funding and 41% of employment. The share of companies founded earlier than 2008 remained mostly stable. These firms have roughly average numbers of CDP employees and below-average funding (discounting their early-stage funding not captured in the report).

The oldest firms, which were part of the study, are primarily campaign and delivery CDPs. They added CDP capabilities after their business was established. On the other hand, almost all data and analytics CDPs were founded after 2012, as mentioned earlier. Their initial purpose of establishment was CDP. Organizations founded between 2008 and 2012 are usually larger and better funded than others, even within the same type of CDP.

U.S. CDP Companies Remain Significantly Larger and Better Funded

The study found that U.S.-based firms remain significantly larger and better funded than organizations from other regions. The notable exception was APAC companies founded between 2008 and 2012. Companies in the U.S. accounted for 45% of companies, 64% of funding, and 58% of employees. However, this share is slowly shrinking, specifically due to the growth in the Asia Pacific (APAC) region. The sharp increase in APAC funding over the last two periods reflects the entry of large and well-established vendors from this region.

The U.S. has 64 CDP vendors with $2.2 billion in funding and more than 6,500 employees. The rest of the industry is spread across 30 countries. Besides the U.S., France, the U.K., and the Netherlands have the highest number of vendors. Singapore and India, too, have a significant number of vendors with a fairly high average funding and company size.

U.S. and European companies were found to be of similar age and have similar type distributions. On the other hand, APAC-based companies were found to be younger and concentrated toward delivery CDPs. Further, U.S companies are usually larger than APAC and European companies, especially for data and analytics vendors.

Also read: Moving From Customer Data Platforms To Customer Experience Management: Twilio Segment Releases New Study

Our Take

It should come as no surprise that the digital acceleration over the last 1.5 years has led to growth in the CDP industry. As the pandemic forced organizations to move online, the previous year saw a huge increase in velocity, volume, and variety of consumer data being tracked across companies. This increased the demand for piping and storing this data efficiently. Further, customer behavior and expectations, too, have changed in a significant way. As such, CDPs are playing a critical role in providing the best experience to customers in a digital-first world. According to a recent study by SegmentOpens a new window , 73% of companies reported that a CDP would be critical to their customer experience efforts.

All these factors have led to significant growth in the CDP industry.

So, what more could the year 2021 hold for the industry? There are a few major trends we are already witnessing. The following are a few.

• Both app expansion and consolidation are happening simultaneously. This is visible from CDP Institute’s study.
• With third-party cookies dying, CDPs are playing a key role in digital advertising.
• CDPs may evolve into customer experience management platforms as collecting and unifying customer data and engaging with customers are two parts of the same problem.
• CDPs with machine learning (ML) and artificial intelligence (AI) capabilities can make marketing more efficient and help companies act faster on key trends.

Have you implemented a CDP in your organization? If yes, which category of CDP do you use? Do let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .