Tuesday, May 08, 2018

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.



Monday, May 07, 2018

The Black Mirror Episode You'll Never

I’m no fan of the TV show Black Mirror – the plots are obvious and the pace is excruciatingly slow. But nevertheless, here’s a story for consideration.

Our tale begins in a world where all data is stored in the cloud. This means people don’t have their own computers but can instead log into whatever machine is handy wherever they go.

All is lovely until our hero one day notices a slight error in some data. This is supposed to be impossible because the system breaks every file into pieces that are replicated millions of times and stored separately, blockchain-style. Any corruption is noted and outvoted until it’s repaired.

As he investigates, our hero finds that changes are in fact happening constantly. The system is infected with worms – we’ll call them snakes, which has nice Biblical overtones about corruption and knowledge – that move from node to node, selectively changing particular items until a new version becomes dominant. Of course, no one believes him and he is increasingly ignored because the system uses a reputation score to depreciate people who post information that varies from the accepted truth. Another security mechanism hides “disputed” items when they have conflicting values, making it harder to notice any changes.

I’m not sure how this all ends. Maybe the snakes are controlled by a master authority that is altering reality for its own purposes, which might be benevolent or not. The most likely result for our hero is that he’s increasingly shunned and ultimately institutionalized as a madman. Intuitively, I feel the better ending is that he ends up in a dreary-but-reality-based society of people who live outside the cloud-data bubble. Or perhaps he himself has been sharded and small bits begin to change as the snakes revise his own history. I can see a sequence of split-second images that illustrate alternate versions of his story co-existing. Perhaps the best ending is one that implies the controllers have decided the episode itself reveals a truth they want to keep hidden, so they cut it off in mid

Tuesday, May 01, 2018

Facebook, Privacy, and the Future of Personalization

Readers of this blog and the CDP Institute newsletter know that I’ve been fussing for years about privacy-related issues with Facebook, Google, and others. With the issue now attracting much broader public attention, I’ve backed off my own coverage. It’s partly because people can now get the information without my help and partly because there’s so much news that covering it would consume too much precious reader attention. But, ironically, the high level of noise around the topic also means that some of smaller but significant stories get lost.

I’ll get to covering those in a minute. But first a general observation: the entirely coincidental convergence of the Facebook/Cambridge Analytica story and implementation of the European Union’s General Data Protection Regulation (GDPR) seems to have created a real possibility of changes to privacy policies everywhere, and most particularly in the United States. In a nutshell, the Facebook news has made people aware of how broadly their data is shared and GDPR has shown them it doesn’t have to be this way. Until now, few people in the U.S. really seemed to care about privacy and it seemed unlikely that they would overcome the resistance of commercial interests who largely determine what happens in the government. (Does that make me sound horribly cynical? So be it.) It’s still very much uncertain whether any significant change will take in U.S. laws or regulatory agencies. But that there is any significant chance at all is brand new.

So much for that. Just wanted to get it on the record so I can point to it in case something actually happens. Here are some developments on the Facebook / Walled Garden / Privacy fronts that you might have missed.

More Bad News

One result of the heightened interest in these issues that public agencies, academics, and especially the media are now looking for stores on the topic. This in turn means they find things that were probably always there but went unreported. So we have:

- CNN discovers that ads from big brands are still running on YouTube channels of extremist groups.
This has been a known problem forever, so the fact that it gets reported simply means that journalists chose to look for it and decided people would be interested in the results.

- Washington Post finds paid reviews are common on Amazon, despite being officially banned.  Again, this comes under the heading of “things you could always find if you bothered to try”.

- Journalism professor Young Mie Kim found that fully half the groups running political advertising on Facebook during the 2016 election couldn’t be traced.  Kim started her research before the current news cycle and it was probably accepted for publication before then too. But would Wired have picked it up?

- PricewaterhouseCooper’s FTC-mandated privacy review of Facebook in 2017 failed to uncover the Cambridge Analytica breach.  It’s more evidence for the already-obvious fact that current privacy safeguards don’t work. But it never would have seen the light of day if this hadn’t been a hot issue.

Attacks from All Sides

Politicians, government agencies, and business rivals are all trying to gain advantage from the new interest in privacy.

- Immediately after the Zuckerberg hearings in Congress, two Senators introduced a bill to give consumers more rights over their data.  The language was highly reminiscent of GDPR.

- A group of 31 state attorneys general opposed a bill to create a Federal law with standards for reporting about data breaches, fearing that Federal standards would override more stringent state regulations. Of course, this is exactly what the sponsors intend. But now the state AGs are more motivated to resist.

- The Securities and Exchange Commission (SEC) fined Yahoo $35 million for failing to discuss a 2014 data breach involving over 500 million accounts.  Data protection isn’t usually a SEC concern, so it’s equally interesting that they chose to make it an issue (arguing the breach was news that should have been shared with investors, which seems a bit of a stretch) and the Republican-majority Federal Trade Commission is steadfastly unengaged.

- Four major publisher trade groups have attacked Google’s proposed approach to gathering advertising consent, which places the burden on the publishers but requires them to share user data.  This would have been an issue under any circumstances but I suspect that publishers are emboldened to resist by the expanded interest in privacy and greater hostility to the Google, Facebook, et. al.

Scrambling by Facebook

Facebook has been scrambling to redeem itself, although it has so far avoided changes that would seriously (or even slightly) impact its business.

- It has ended a program to target ads using data from external compilers, such as Acxiom.  How this helps privacy isn’t clear but it sounds good and conveniently makes Facebook’s own data even more valuable.

- It announced major API changes that limit the amount of data shared with developers.  Note carefully: they’re not limiting data collected by Facebook, but only how much of that is shared with others. Similar changes applied to Facebook-owned Instagram. Again, the actual effect is to add value to ads sold by Facebook itself.

- It announced just today that it will let members block it from collecting data about their visits to non-Facebook Web sites.  By now you see a pattern: less data from outside of Facebook makes Facebook data more important. This reflects perhaps the most disturbing revelation from the Zuckerberg hearings: that Facebook collects such data even on non-members. But the change doesn’t address that issue, since only members can tell Facebook to stop the data collection. If you find this confusing, that’s probably no accident.

- It promised to add an “unsend” feature to Messenger.  Nice, but it only happened after reports that Facebook executives themselves already had this capability.

- It rolled out a new centralized privacy center that made settings easier to manage but apparently didn’t change what users can control.

- More substantively, it promised to apply GDPR consent rules globally.  Signals were a bit mixed on that one but maybe it will happen. Who wants to start a betting pool?

- It dropped opposition to a proposed consumer privacy law in California.  Good but it would have been a public relations disaster to continue opposing it. And who knows what they’re doing in private?

- On the Google front: Google-owned YouTube has touted its efforts to flag objectionable videos.  That’s not exactly a privacy issue but probably overlaps the public perception of how online tech giants impact society. Remember they’re also motivated by tough laws in Germany and France enacted early this year, which require to remove illegal content within 24 hours.

Business as Usual for Everyone Else

How much of this is unique to Facebook and how much reflects a fundamental change in attitudes towards data privacy? Certainly Google, Amazon, and others are tip-toeing quietly in background hoping not to be noticed. Per the above, YouTube has occasionally wandered into the spotlight, especially when extremist videos on YouTube intersect with extremist content on Facebook. Over-all, I’d say it’s very much business as usual for most firms that gather, sell, and employ consumer data.

- Amazon continues to offer amazingly intrusive concepts with little evidence of pushback. For example, they’re expanding their Amazon Key in-home delivery program to also leave packages in your car.  And they continue to expand the capabilities of Alexa ‘smart speaker’ (a.k.a. ‘always listening’) systems, most recently by making it easier for people to build their own custom capabilities into the system.

- Similarly, Waze has been merrily promoting its ability to share data about traffic conditions, setting up any number of integrations such as deals with Carto and Waycare to help traffic planning and, in Waycare’s case, warn drivers about current road conditions. Waze’s data is truly anonymized, at least so far as we know. But they certainly don’t seem to be worried a general privacy backlash.

- Another announcement that raised at least my own eyebrows was this one from Equifax, which headlined the blending of consumer and commercial data to predict small business credit risks. Anything that suggests personal data is being used for business purposes could worry people – but apparently it that doesn’t worry Equifax marketers.

What Do Consumers Think?

The big question in all this is whether consumers (should we just call them “people”?) remain concerned about privacy or quickly fall back into their old, carefree data sharing ways. It’s probably worth noting that Facebook was already uniquely distrusted compared with Google and Amazon, both by consumers and small business.

We do know that most have been following the Cambridge Analytica story in particular. But, to their credit, they also recognize that what they post on Facebook is public even if they don’t necessarily understand just how much tracking really takes place.

Sure enough, it seems that few Facebook users actually plan to close their account and, more broadly, there’s little support for government regulation of social media.

Indeed, most consumers are generally comfortable with sharing personal information so long as they know how it will be used. 

Surveys do show that EU consumers say they’ll exercise their privacy rights under GDPR, but it’s reasonable to wonder how many will follow through. After all, they’re notably lax on other cybersecurity issues such as changing default passwords on home networks.

But this doesn’t mean that Facebook and similar firms are home free. Consumers are smart enough to distrust recommendations from smart speakers, as indeed they should be.
They’re also not terribly enthusiastic about ads on smart speakers or, indeed, about personalization in general.
On the other hand, of course, many studies do show that consumers expect personalized experience, although there’s some reason to suspect marketers overestimate its importance compared with other aspects of the customer experience.

This matters because personalized experiences are the main public justification that marketers give for gathering personal data – so consumers who increase the value they place on privacy could quickly reach a tipping point where privacy outweighs the benefits of personalization. That could radically shift how much data marketers collect and what they can do with it. Given the dire consequences that would have for today’s marketing ecosystem, everyone involved must do as much as possible to make sharing data genuinely safe and worthwhile.

Friday, April 27, 2018

What I Learned at the Customer Data Platform Workshop

I ran a four hour workshop on Customer Data Platforms this week at the MarTech Conference in San Jose.* The attendees were a mix of marketers and technologists from brands, agencies, and vendor companies. We had surveyed them in advance and found, not surprisingly, goals ranging from understanding CDP market trends to optimizing data loads for technical performance. The agenda was correspondingly varied and I like to think that everyone learned something useful.  Based on attendee comments and my own observations, here’s what I myself learned.

- CDP is a vague category. This was voiced with some frustration at the end of the workshop, when several people said they had hoped to come away with a clear picture of what is and isn’t a CDP, but found instead that CDP systems differ widely. In the context of the workshop, I actually considered this to be a positive result: one of the main points I tried to get across was that CDPs have very different features and picking the right one requires you to first understand your own needs and then look carefully at which systems have the features needed to meet them.  Complaining about it is like going to a workshop on car buying and discovering that automobiles differ widely: if you didn't understand that before, you couldn’t possibly have made a sound choice. The variety may seem overwhelming but once you recognize it exists, you’re ready to take the next step of figuring out how to find the capabilities that match your needs.

- People want CDP-specific use cases. I knew in advance that people want to understand CDP use cases. This has become a very common question in the past year and the CDP Institute Library includes many papers on the topic. My personal problem has been that CDPs are like bacon: they make everything better. This made it seem silly to list use cases, because the list would include pretty much any marketing project that involves data. What I learned from the workshop is people are really looking for use cases that only become possible with a CDP. That’s a much different and more specific question: What can I do with a CDP that can’t do without one?

We discussed the answers as a group at the end of the workshop and the main conclusion was CDP makes possible many cross-channel activities that are otherwise impossible because cross-channel data isn't unified.  This isn’t exactly news – unified customer data is the whole point of a CDP – but it’s still good to focus specifically on the use cases that unification makes possible.

On reflection, I’d add the CDP also exposes data that’s otherwise trapped in source systems or not collected at all. This could be information from a single channel, so it’s distinct from the cross-channel use case. Our workshop group didn’t mention this one, so I’ll have to stress it more in the future.

The group also didn’t list the operational efficiencies of a CDP as unique benefits. That’s interesting because so much of our discussion stressed the lower cost, faster deployment, and lower risk of CDP compared with other solutions. Apparently that’s either not credible or not important. I’ll speculate that the technicians didn’t believe it and the marketing people didn’t really care. But of course that’s utterly unsupported stereotyping. (Speaking of stereotyping, I’m pretty sure the technical people sat in the back rows and the marketers talked a lot more during the small group discussions.  Next time I'll make them wear labels so I know for sure.)

- Marketers don’t care about technical details. Ok, that's really unfair stereotyping so let's change it to “some marketers”.  But it’s definitely fact-based: one of marketers complained as we started to drill into the technical parts and several others agreed. I pushed back a bit, arguing that you can’t make a sound system selection without looking at technical differences. I think I was polite about it, but have strong feelings on the subject: lack of research into specific product capabilities is by far the biggest reason people end up unhappy with a software purchase. (Yes, I have research to back that up.)

I suppose the counter-argument is what really matters are the functional differences and not the technical methods used to accomplish them. My counter-counter-argument would be the technical methods matter because they determine how efficiently a system executes those functions and how easily it can extend them. Architecture is destiny, as it were.  In my mind, the argument ends there and I win but maybe there’s more to be said for the other position. (If case you’re wondering, I did speed through the technical parts after that objection, and talked more about use cases instead. Squeaky wheels get the grease. And there was a later part of the agenda that circled back to technical questions anyway.)

So, that’s what I learned during the workshop. As you might imagine, preparing it forced me to think through several topics that I’ve been addressing casually. I’m most pleased with having clarified the relationships among strategy, marketing programs, use cases, resources, and requirements. The image below summarizes these: as you see, strategy drives marketing programs which drive resource needs**, while marketing programs drive use cases which drive system requirements. Those are two sets of objects that I usually discuss separately, so I’m happy to finally connect them. Plus, I think it’s a cute picture. Enjoy.



_______________________________________________________________________________________
* I'll likely be repeating it elsewhere over the next few months.  Let me know if you're interested in attending.

** The flow can also run the other way: available resources determine what marketing programs you can run which determine what strategy makes the most sense.




Friday, April 13, 2018

Building Trust Requires Innovation

Trust has been chasing me like a hungry mosquito. It seems that everyone has suddenly decided that creating trust is the key to success, whether it’s in the context of data sharing, artificial intelligence, or customer retention. Of course, I reached that conclusion quite some time ago (see this blog from late 2015) so I’m pleased to have the company.   But I’m also trying to figure out where we all need to go next.

I picked up a book on trust the other day (haven’t gotten past the introduction, so can’t say yet whether I’d recommend it) that seems to argue the problem of trust is different today because trust was traditionally based on central authority but authority itself has largely collapsed. The author sees a new, distributed trust model built on transparent, peer-based reputation (think Uber and Airbnb)* that lets people confidently interact with strangers. The chapter headings suggest she ends up proposing blockchain as the ultimate solution. This seems like more weight than any technology can bear and may just be evidence of silver bullet syndrome.   But it does hint at why blockchain has such great appeal: it’s precisely in tune with the anti-authority tenor of our times.

From a marketer’s perspective, what’s important here is not that blockchain might provide trust but that conventional authority certainly cannot. This means that most trust-building methods marketers naturally rely on, which are based in traditional authority, probably won’t work. Things like celebrity endorsements, solemn personal promises from the CEO, and references to company size or history carry little weight in a hyper-skeptical environment. Even consumer reviews and peer recommendations are suspect in a world where people don’t trust that they’re genuine. What’s needed are methods that let people see things for themselves: a sort of radical transparency that doesn’t require relying on anyone else’s word, including (or perhaps especially) the word of “people just like me”.

One familiar example is comparison shopping engines that don’t recommend a particular product but  make it easy for users to compare alternatives and pick the option they like best. A less obvious instance would be a navigation app that shows traffic conditions and estimated times for alternate routes: it might present what it considers the best choice but also makes it easy for the user to see what’s happening and, implicitly, why the system’s recommendation makes sense. Other examples include package tracking apps that remove uncertainty (and thus reduce anxiety) by showing the movement of a shipment towards the customer, customer service apps that track the location of a repair person as he approaches for a service call, or phone queue systems that estimate waiting time and state how many customers are ahead of the caller.  A determined skeptic could argue that such solutions can't be trusted because the systems themselves could be dishonest.  But any falsehoods would quickly become apparent when a package or repair person didn’t arrive as expected, so they are ultimately self-validating.

Of course, many activities are not so easily verified. Claims related to data sharing are high on that list: it’s pretty much impossible for a customer to know how their data has been used or whether it has been shared without their permission. This is the European Union’s approach to privacy in the General Data Protection Regulation (GDPR) makes so much sense: the rules include a requirement to track each use of personal data, documentation of authority for that use, and a right of individuals to see the history of use. That’s very different attitude from the U.S. approach, which has much looser consent requirements and no individual rights to review companies' actual behaviors.  In other words, the EU approach creates a forced transparency that builds trust, especially false information would be a legally-punishable offense.

There’s a slender chance that the GDPR approach will be adopted in the U.S. in the wake of Facebook’s Cambridge Analytica scandal, although the odds are greatly against it. More likely, companies that are not Facebook will unite to oppose any legislation, even if Facebook itself sits on the sidelines. (That’s exactly what’s happening right now in California.)  The more intriguing possibility is that Facebook alone will adopt GDPR policies in the U.S. – as it has not very convincingly promised – and that this will pressure other companies to do the same.  Color me skeptical on that scenario: Facebook will probably renege once public attention turns elsewhere and few consumers will stop using services they enjoy due to privacy considerations.  In fact, if you look closely at studies of consumer attitudes, what you ultimately see is that consumers don’t really put a very high value on their personal data or privacy in general.

What does scare them is identity theft, so it’s just possible that regulations addressing that issue might provide privacy protections as a bonus. That’s especially true if consumers decide they don’t trust the government to enforce data protection standards but, following the distributed authority model, instead demand transparency so they can verify compliance to “self-enforce” the rules for themselves.  Yet this too is a long shot: few current political leaders or privacy activists are likely to adopt so subtle a strategy.

In short, the government won't solve the trust problem for marketers, so they'll need to find their own solutions.  This means they have to devise trust building measures, convince their companies to adopt them, and then educate customers about how they work.  This is an especially hard challenge because the traditional, authority-based methods of gaining trust are no longer effective. Finding effective new methods is an opportunity for innovation and competitive advantage, which are fun, and for long hours and failed experiments, which are less fun but part of the package. Either way, you really have no choice: as that mosquito keeps telling me, trust is essential for success in today’s environment.

________________________________________________________________________
* both firms with corporate trust issues of their own, ironically.

Wednesday, March 28, 2018

Adobe Adds Experience Cloud Profile: Why It's Good News for Customer Data Platforms


"A CDP by any other name still stores unified customer data."
Adobe on Tuesday announced the Experience Cloud Profile, which it described as a “complete, real-time view of customers” including data from outside of Adobe Cloud systems. The announcement was frustratingly vague but some ferreting around* uncovered this blog post by Adobe VP of Product Engineering Anjul Bhambhri, who clarified that (a) the new product will persistently store data ingested from all sources and (b) perform the identity stitching needed to build a meaningfully unified customer view. Adobe doesn’t use the term Customer Data Platform but that’s exactly what they’ve described here. So, unlike last week's news that Salesforce is buying MuleSoft, this does have the potential to offer a viable alternative to stand-alone CDP products.

Of course, the devil is in the details but this is still a significant development. Adobe’s offering is well thought out, including not just an Azure database to provide storage but also an open source Experience Data Model to simplify sharing of ingested data and compatible connectors from SnapLogic, Informatica, TMMData, and Microsoft Dynamics to make dozens of sources immediately available. Adobe even said they’ve built in GDPR-required controls over data sharing, which is a substantial corporate pain point and key CDP use case.

The specter of competition from the big marketing clouds has always haunted the CDP market. Salesforce’s MuleSoft deal was a dodged bullet but the Adobe announcement seems like a more palpable hit.** Yet the blow is far from fatal – and could actually make the market stronger over time. Let me explain.

First the bad news: Adobe now has a reasonable product to offer clients who might otherwise be frustrated by the lack of integration of its existing Experience Cloud products. This has been a substantial and widely recognized pain point. Tony Byrne of the Real Story Group has been particularly vocal on the topic. The Experience Cloud Profile doesn’t fully integrate Adobe’s separate products, but it does seem to let them share a rich set of customer data. That’s exactly the degree of integration offered by a CDP. So any Adobe client interested in a CDP will surely take a close look at the new offering.

The good news is that not everyone is an Adobe client. It’s true that the Cloud Profile could in theory be used on its own but Adobe would need to price it very aggressively to attract companies that don’t already own other Adobe components. The could of course be an excellent acquisition strategy but we don’t know if it’s what Adobe has in mind. (I haven’t seen anything about the Cloud Profile pricing but it’s a core service of the Adobe Experience Platform, which isn’t cheap.) What this means is that Adobe is now educating the market about the value of a persistent, unified, comprehensive, open customer database – that is, about the value of CDPs. This should make it much easier for CDP vendors to sell their products to non-Adobe clients and even to compete with Adobe to deliver CDP functions to Adobe’s own clients.

I’ll admit I have a vested interest in the success of the CDP market, as inventor of the term and founder of the CDP Institute. So I’m not entirely objective here. But as CDP has climbed to the peak of the hype cycle, I’ve been exquisitely aware that it has no place to go but down – and that this is inevitable. The best CDP vendors can hope for is to exchange being a “hot product” for being an established category – something that people recognize as a standard component of a complete marketing architecture, alongside other components such as CRM, marketing automation, and Web content management. I’ve long felt that the function provided by CDP – a unified, persistent, sharable customer database – fills a need that won’t go away, regardless of whether the need is filled by stand-alone CDPs or components of larger suites like Adobe Experience Cloud. In other words, the standard diagram will almost surely include a box with that database; the question is whether the label on that box will be CDP. Adobe’s move makes it more likely the diagram will have that box. It’s up to the CDP industry to promote their preferred label.



________________________________________________________________________
*okay, the first page of a Google search. No Pulitzer Prize for this one.
** yes, I’ve just combined references to Karl Marx and William Shakespeare in the same paragraph, garnished with a freshly mixed metaphor. You’re welcome.








Tuesday, March 20, 2018

Salesforce Buys MuleSoft and Offers It as a Data Unification Solutions

The Customer Data Platform industry is doing very well, thank you, with new reports out recently from both Gartner  and Forrester  and the CDP Institute launching its European branch.  But the great question hovering over the industry has been why the giant marketing cloud vendors haven’t brought out their own products and what will happen when they do. Oracle sometimes acts as if their BlueKai Data Management Platform fills the CDP role, while Adobe has made clear they don’t intend to do more than create a shared ID that can link data stored in its separate marketing applications. Salesforce has generally claimed its Marketing Cloud product (formerly ExactTarget) is a CDP, a claim that anyone with experience using the Marketing Cloud finds laughable.

The flaws in all these approaches have been so obvious that the question among people who understand the issues has been why the companies haven’t addressed them: after all, the problems must be as obvious to their product strategists as everyone else and the attention gained by CDP makes the gaps in their product offerings even more glaring. My general conclusion has been that the effort needed to rework the existing components of their clouds is too great for the vendors to consider. Remember that the big cloud vendors built their suites by purchasing separate products.  The effort to rebuild those products would be massive and would discard technology those companies spent many billions of dollars to acquire. So rationalization of their existing architectures, along with some strategic obfuscation of their weaknesses, seems the lesser evil.

We got a slightly clearer answer to the question on Tuesday when Salesforce announced a $6.5 billion purchase of Mulesoft, a data integration vendor that provides connectors between separate systems. In essence, Salesforce has adopted the Adobe approach of not pulling all customer data into a single repository, but rather connecting data that sits in its system of origin. In Salesforce’s own words, “MuleSoft will power the new Salesforce Integration Cloud, which will enable all enterprises to surface any data—regardless of where it resides—to drive deep and intelligent customer experiences throughout a personalized 1:1 journey.”

This is a distinct contrast with the CDP approach, which is to load data from source systems into a separate, unified, persistent database. The separate database has some disadvantages – in particular, it can involve replicating a lot of data – but it also has major benefits. These include storing history that may be lost in source systems, using that history to build derived data elements such as trends and aggregates, and formatting the data in ways that optimized for quick access by marketing systems and other customer-focused applications.

Although the difference between these two approaches is clear, some practical compromises can narrow the distance between them. Most CDPs can access external data in place, reducing the amount of data to be moved and allowing the system to use current versions of highly volatile information such as weather, stock prices, or product inventories. Conversely, a system like Mulesoft can push data into a persistent database as easily as it can push it to any other destination, so it can build some version of a persistent database. In fact, many CDPs that started out as tag managers have taken this approach.

But pushing data into a persistent database isn’t enough. Mulesoft and similar products work with well-defined inputs and outputs, while CDPs often can accept and store data that hasn’t been mapped to a specific schema. Even more important, I’m unaware of any meaningful ability in Mulesoft to unify customer identities, even using relatively basic approaches such as identity stitching. It’s possible to build workarounds, such as calls to external identity management systems or custom-built matching processes. Again, these are solutions employed by some CDP vendors that also lack advanced identity management. But such solutions can be costly, complex, and incomplete. From a buyer’s perspective, they are compromises at best. No one – except a salesperson – would argue they’re the ideal approach.

In short, Salesforce’s purchase of Mulesoft offers a partial solution to the needs that have driven the growth of CDPs. It’s probably the best that Salesforce could do without making the impractical investment needed to rebuild its existing marketing cloud components.  Get ready for a lot more confusion about the best way to build unified customer data. To avoid getting distracted, focus on what marketers really need and let that, not theory or vendor hype, drive your evaluation of the alternatives.