There’s no denying that Customer Data Platform industry growth has slowed in recent periods.  While the CDP Institute’s most recent CDP Industry Update (free download) showed a respectable 5% increase in total employment* since January 2024, nearly all that growth came from vendors appearing in the report for the first time.  Growth among vendors listed in the previous report, a more meaningful measure that we call “organic growth,” was a tiny 0.3%.  This follows two years of low growth, a sharp contrast to the high rates during early years of the industry (apart from the pandemic-induced stumble in 2020).

Looking outside the Institute’s own data, Google Trends paints a similar picture.  Interest in “customer data platform” hit a plateau in 2022 and has been stable ever since.  That’s better than falling but doesn’t augur well for future growth.

While the CDP industry has definitely stalled, the reason is far from clear.  Composable CDP vendors will gladly take credit, but a look at the data suggests otherwise.  (See this CDP Institute paper to learn what is a composable CDP.) Aggregate data from the main composable CDP vendors (Hightouch, Census, RudderStack, GrowthLoop, and newcomer Imagino) shows an underwhelming 3% organic growth rate since January 2024: that’s better than the packaged CDPs but hardly explosive.**  More important, total employment among those vendors is only 719 compared with 16,848 for the packaged CDPs.  It’s just not enough to matter.

Google Trends tells the same story.  Yes, interest in “composable CDP” has skyrocketed since 2023.

But it barely registers when plotted against interest in “customer data platform.”

The broader “cloud data warehouse” fares better, but is still well below CDP.  And it, too, has fallen from its peak.

So the question remains: Why has CDP industry growth stalled?  There’s some evidence in industry surveys that tech investment in general – and martech investment in particular — is slowing or even falling, as companies attempt to prune overgrown tech stacks and make room for new spending on AI.  Beyond that, we’ve seen that control of CDP projects is shifting from marketing department to central IT and data teams.  Those teams are less likely to buy a packaged CDP and more likely to prefer to build their own in-house equivalent.  They might buy composable CDP tools to do this, but many will have a complete toolset already in place.  They may also buy from the growing number of packaged CDP vendors who have unbundled their products into IT-friendly components.  So the growth of homegrown CDP systems is likely to far outpace the growth of composable CDP vendors. 

None of this means the packaged CDP industry is about to start shrinking.  Nearly all CDP systems are software-as-a-service platforms, meaning existing clients generate a steady stream of revenue.  So long as packaged CDP vendors retain a good portion of their old clients, their revenues will be stable.  Of course, there’s always some churn over time, but there are also always some new clients who enter the market.  For the CDP market in particular, there is also growth in new segments, such as healthcare, education, and small business, that are just starting to open up.  Even the shift from marketing to IT control may have less impact than expected, since most CDP vendors offer marketing functions such as journey management, message selection, and delivery that will never be built into enterprise warehouses.  Marketers will be reluctant to abandon those tools even if they start to copy profiles from a warehouse rather than building them independently.  It’s also likely that a large portion of the firms now deciding to build their own CDP equivalent have always favored in-house development, so they would never have bought a packaged CDP under any circumstances.  This means the growth of self-built CDPs at those firms doesn’t shrink the packaged CDP market because those firms were never in it.

In sum, the CDP industry is likely to enter a period of slower growth.  In mature CDP markets such as retail, most companies likely to buy a CDP may have already made their initial purchase.  In other industries, an enterprise-wide perspective may make it harder to sell marketing-focused CDPs.  But many firms will lack the resources or desire to build their own CDP equivalent, regardless of what tools are available to make that easier.  So net-new CDP sales will continue to grow, probably with a shift towards industry-specific products or industry-specific packages from general purpose vendors.  The need for unified, accessible customer data is here to stay, and CDPs will continue to meet it.

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* We’d rather report on revenue than employment, but most CDP vendors are private firms that don’t release revenue data.  The big public firms like Salesforce and Adobe, which account for about 30% of the vendors and 40% of estimated employment, rarely report CDP revenue separately.  By contrast, LinkedIn provides fairly reliable employment data on everyone.  In the long run, employment will correlate with revenue.  It’s less reliable when comparing one period to the next as companies often hire in advance of growth or cut staff in anticipation of a slowdown.  While both factors have no doubt impacted our data, I see no dependable way to adjust for them.

** The two-year growth picture for the composable vendors is brighter: employment is up 25%, or nearly 6% per six month period.  But that’s from a small base and the 3% growth in the most recent six months suggests it may already be slowing.