4 predictions for the CDP market in 2022

A lot has been going on in the world for the past couple of years. Industries, workforces, and customers have all been experiencing unprecedented disruption and uncertainty. It seems this is likely to continue well into 2022, and so, just like everyone else, the CDP market must brace itself for more pivots and shifts.

So, what’s in store for customer data platform companies in the year ahead?

1. We’ll see exponential category growth

Although the CDP market actually experienced a dip in 2020, it’s back with a bang, and industry leaders are predicting stronger growth than ever in the near future. It seems that the 2020 lag was momentary and likely due to uncertainty and budget freezes among customers, as was experienced by software vendors across numerous categories.

But there’s some good news: In an industry update published in July 2021, the CDP Institute predicted that revenue among CDP vendors would reach $1.6 billion by the end of the year. Not only is this a 25% increase from the previous year, but the report predicts that this trend is set to continue.

2. High-level digital trends will drive further CDP adoption

It’s clear that CDP adoption is on the rise. In the July 2021 update, the CDP Institute stated that 20 new vendors entered the market in 2021 while existing vendors grew their funding by 10% and their employee headcount by 6%.

So, what’s driving the CDP adoption trend in 2022?

Digital acceleration continues to boost the rise of CDPs

The pace of digital transformation was ramped up several gears due to the onset of the pandemic. With that digital transformation, organizations that had previously lagged on unifying and leveraging their customer data are having to catch up pretty quickly.

From healthcare organizations to brick-and-mortar stores, even the most traditional business models have been turned on their heads. Large organizations that are undergoing rapid shifts to digital delivery are turning their heads towards the opportunity to leverage customer data in order to improve experiences.

Larger amounts of customer data will drive CDP adoption

Now that organizations across the board are digitizing their customer experience in one way or another, they’re dealing with a massive influx of CX data.

In a report published by Ecosystm 360, Tim Sheedy, their principal advisor for Cloud, AI, and CX, said:

“Customer journeys have changed significantly in the past few years as we adapted to a digital and contactless world. With economies opening up, businesses have to decide what the current and future state of the CX looks like—what stays, what goes, what changes.”

In making these types of crucial decisions, data-driven companies are looking for better ways to organize and process customer data.

3. There will be category clarifications for CDPs

Since the term was first introduced in 2013, the customer data platform has undergone some confusion in terms of what a CDP offers and how it should be used.

Heading into 2022, customers are finally starting to understand the correct and most efficient application of CDPs and the fact that there are subcategories within the industry.

In the CDP Institute’s Member Survey 2021 report, research found that the vast majority of customers (63% and 75%, respectively) understand that the core benefits and capabilities of CDPs are unified customer views and loading data from multiple sources.

Within the CDP world, vendors are likely to start identifying themselves to customers based on subcategories so that capabilities and benefits are made instantly apparent. This includes pure data CDPs, analytics CDPs, and campaign or delivery CDPs.

These distinctions and clarifications are likely to improve CDP implementation success rates and help users understand how their CDP fits into their larger MarTech stack.

4. CDPs will refocus on data privacy issues

One of the most interesting findings from the CDP Institute’s latest member report is the dip in data privacy compliance reported by vendors. In 2020, 12% of respondents said they pay some attention to privacy regulations but take few steps to comply. Meanwhile, 2% admitted that they make little effort to understand or comply with privacy regulations.

When the survey asked the same question in 2021, these numbers had increased. Now 11% said they pay some attention but make little effort, and 4% said they make little effort to understand or comply. The worst offenders across these two categories were B2B products and services and companies based in the Americas.

These types of approaches may have flown under the radar in the chaos of a global pandemic. But as regulators regain their footing in the year ahead and things settle down for businesses, privacy compliance is likely to climb back up the priority list.

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