Customer data platforms mission-critical as cookies fall

The Covid pandemic has triggered a massive rise in the adoption of customer data platforms as businesses build digital-first customer engagement strategies and slash their reliance on third-party online data as cookies face the final curtain.

So says the third annual Customer Data Platform Report report, based on anonymised data from Twilio Segment, a customer engagement platform used by hundreds of thousands of businesses and more than ten million developers worldwide to build unique, personalised experiences for their customers.

Over the past few years, companies have been forced to reimagine the way they engage with customers to boost personalised, digital experiences. This has created an explosive demand for CDPs. The volume of API calls on the Twilio Segment platform has been growing steadily year over year since 2017, but 2020 was an inflection point, with record numbers of API calls on the platform in late 2020 and 2021 reaching over 1 trillion a month.

The report also evaluates specific industries and finds the shift of customer interactions from in-person to online is here to stay, with retail customers reporting data volume surge by up to 1,000% during seasonal ecommerce events like Black Friday and Cyber Monday.

The death knell has sounded for third-party data gathered online. Between increasing privacy regulations and the shift to a cookieless future across apps and browsers, embracing first-party data is now becoming a must for any business.

Although this shift should have spelled disaster for advertisers, companies and marketers that want to build digital-first customer experiences are exploring new approaches and adapting new technologies, the report maintains.

This has seen CDPs become pivotal because they enable businesses to leverage first-party data, while prioritising privacy and personalised customer engagement, making them an increasingly preferred choice for marketers everywhere.

As marketers prepare for a world without cookies, they are also turning to the advertising services of Google, Facebook, and Amazon. These walled gardens have a robust amount of users and are some of the most prominently used apps on Twilio Segment.

The combination of these top apps, plus the increasing demand for CDPs, shows that tapping into the scale and reach of a walled garden is critical to activating, converting, retaining, and growing customers, Twilio insists.

In the past year, there has been an explosive increase in data processed and API calls across all businesses, including streaming, ecommerce, on-demand delivery and more. Despite this record growth in data volume, the median number of apps used actually decreased by 9%, showing companies are looking to reduce martech sprawl.

As a result, there have been more companies sending data to digital advertising and data warehouse tools from the Twilio Segment platform to streamline data efficiency. This evolution was triggered by the need for more storage and processing bandwidth, as well as enhanced analytics capabilities, with the rise in data volume.

In the past year, the categories of data warehouses and analytics platforms saw the largest YoY growth on the Twilio Segment platform as integrations.

Additionally, the report found that over 50% of Twilio Segment customers are now using CDPs for advertising purposes, with the most popular applications being analytics (91.8%); warehouses (53.4%); advertising (53.0%); heatmaps and recording (40.9%); and raw data (35.7%).

Twilio Segment VP of marketing Katrina Wong said: “Companies have been confronted with two major challenges – evolving their tech stack to deliver world-class customer engagement, and adapting to stricter privacy regulations that force companies to rebuild their existing data strategies, but still offer personalised experiences.

“CDPs are now mission-critical because they offer access to great, accurate, and compliant first-party data, enabling companies to not only compete, but thrive, in a digital-first world.”