Uncertainty Amid Market Shifts

The future of Customer Data Platforms (CDPs) is uncertain, as their unique value is increasingly challenged by overlapping functionalities in other Martech tools and evolving market dynamics.

We look at why businesses must carefully assess whether CDPs remain a necessary investment in their marketing technology stacks – or more importantly what shape the CDP takes in the stack.

Key Factors Challenging the Future of CDPs

There are five critical factors driving this uncertainty about the future role of CDPs:

Market Confusion: The Overlap Problem
Composability: The Double-Edged Sword
Swiss Knife Syndrome: Simplification of Martech Stacks
Data Maturity: Business Readiness for CDPs
Privacy Risks: Evolving Requirements

Market Confusion: The Overlap Problem

Historically, Martech tools had distinct roles: marketing automation focused on communications, personalisation tools optimised experiences, and analytics platforms delivered insights (and so on).

CDPs were designed to unify customer data across these systems, providing a single digital view for marketers to engage with customers effectively - and move data between systems in a way that didn’t rely on technology teams and large complex integration tools..

However, as Martech platforms evolve, many now offer CDP-like functionalities – mainly because Martech platforms need to do similar things at a customer level – identify, track and activate (often across channels).

For example, omnichannel engagement platforms, analytics tools, and reverse ETL solutions increasingly encroach on the core capabilities of CDPs. As businesses evaluate their Martech investments, they must ask: Do I need all these overlapping tools? Proper due diligence and clear use cases are essential to understanding whether CDPs remain relevant in an ecosystem where other tools are replicating their functions.

Composability: The Double-Edged Sword

Composable Martech stacks, which are designed to integrate modularly and flexibly, offer scalability and adaptability to changing business needs. CDPs often serve as the backbone of these composable stacks, acting as a central hub that connects disparate systems.

Yet, the rise of "Composable CDPs" introduces a new question: Is a dedicated CDP still necessary if other tools in the stack can replicate its core functions? The modular nature of these tools further blurs the lines between CDPs and other solutions, leading to confusion in the market and making it harder for businesses to justify a standalone CDP.

The other consideration is that for composable to be truly effective, they need to unlock data in Enterprise data platforms – and those need to be structured and designed in a way that meets Marketing needs – which is not always the case.

Swiss Knife Syndrome: Simplification of Martech Stacks

Marketers are increasingly seeking to simplify their technology stacks, consolidating functionalities where possible. Why use five tools when two can do the job? This "Swiss Knife Syndrome" reflects the trend of consolidating various Martech capabilities, such as customer engagement and data management, into fewer, more powerful platforms.

For businesses operating with limited budgets, the question becomes: Is a CDP necessary when other platforms offer similar or overlapping functionalities? Simplifying the Martech stack may lead some organisations to forgo a dedicated CDP in favour of more integrated solutions.

Data Maturity: Business Readiness for CDPs

Not all businesses are at the right stage of data maturity to fully benefit from a CDP. For companies still building their data infrastructure or lacking the expertise to harness first-party data effectively, the value of a CDP may be limited. Marketers often ask: "Do I even need a CDP?" In many cases, the answer is no—or not yet. Without the right level of data maturity, businesses may struggle to extract value from a CDP, leading to dissatisfaction and missed ROI.

Privacy Risks: Evolving Requirements

As privacy regulations continue to tighten globally, the way businesses collect, store, and use customer data is under increasing scrutiny. CDPs, which primarily manage first-party data, must evolve to meet these new privacy challenges. The question is: How will CDPs adapt to address emerging privacy risks and ensure compliance with evolving regulations? Failing to do so may further jeopardise their relevance in Martech stacks.