The pandemic shifted marketers’ priorities

All of the organizations in our survey (100%) saw at least some marketing budget cuts due to COVID-19, and 41% saw cuts over 20%. Though the pandemic made organizations more reliant on digital channels for reaching their customers, most marketers couldn’t afford to invest in new tech solutions. More than three-quarters (77%) of organizations cut tech initiatives in 2020 due to COVID-19.

At the same time as budget cuts were forcing them to do more with less, marketers shifted their priorities to address new challenges caused by the pandemic. For marketers without a developed first-party data strategy, the demise of third-party cookies made it harder to manage ad spend across digital channels. Tighter budgets made customer acquisition and retention more difficult. And finally, the restriction or elimination of in-person experiences put incredible pressure on marketers to offer a unified customer experience across channels — particularly digital ones.

Our results suggest that marketers are using their CDPs to address these challenges head-on. For example, in our 2020 report, respondents reported various forms of real-time functionality were the most useful capabilities of a CDP. Now, the emphasis has shifted to managing data across multiple channels and resolving customer identity — which are important for delivering seamless digital experiences in a post-cookie world.

Despite the drop in tech investment overall, there wasn’t a drop-off in CDP investment during COVID-19 — likely because CDPs are so important for addressing marketers’ pandemic-related concerns. Eighty-nine percent of marketers we surveyed had a CDP, and nearly a tenth (9%) had adopted a CDP since the beginning of the pandemic in March 2020.
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In 2021, marketers will make up for lost time by increasing their tech investments. Eighty-nine percent of organizations will spend more on tech in 2021 than they did in 2020, and almost one-third (32%) will spend significantly more. Perhaps because they were hit harder by the pandemic, travel and hospitality marketers were most likely to say they’ll spend significantly more. The big question: Where will marketers allocate these funds in 2021?

The importance of integrations

As first-party data becomes more central to marketing strategy, CDPs are becoming more central to martech stacks, too. That means they need to integrate with more solutions across the organization — and they need to do so easily and quickly.

As a result, marketers are demanding more from their CDPs. Integration with more third-party solutions shot up from the No. 4 improvement marketers want in their CDPs in our 2020 report to No. 1 in the 2021 report.

Unfortunately, many marketers feel their existing solutions aren’t delivering. Almost two-thirds (62%) of respondents said it’s difficult to integrate new third-party solutions into their martech stacks. And 63% said they have struggled to achieve marketing goals due to the difficulty of integration since March 2020.

When it comes to more and faster third-party integrations, one major barrier stands in marketers’ way. A majority (53%) of marketers strongly agreed that their martech stacks are walled gardens — meaning they consist mostly of solutions from one vendor that are designed to work together. Products that are part of a walled garden will almost always have limited cross-compatibility with third-party solutions.

It’s no surprise that many marketers are actively seeking new solutions that won’t limit their options: Seventy percent said they’ve discussed adapting their martech stack to incorporate third-party solutions more easily.

AI is key to 2021 marketing strategies

The pandemic has made delivering great digital customer experiences — and doing so efficiently, at low cost — more important than ever. To keep up with the competition, marketers must predict customer behavior and take proactive action to drive the outcomes they want. And that means effectively deploying AI and machine learning to generate predictive insights. Fifty-nine percent of respondents say AI capabilities are extremely important for achieving their marketing priorities for 2021, and 99% say they’re at least somewhat important.

Closing the AI expertise gap

CDPs are the foundation of AI and machine learning capabilities because they help ensure the data that is collected is complete and accurate, which is critical for AI and machine learning to be effective. Marketers already understand this: Customer analytics and predictive insights is the second most important solution area they want CDPs to address (see Section 03). Many marketers are already seeing AI success. A majority (62%) say their organizations are very effective at deploying AI for predictive marketing insights.

However, gathering the right data to feed AI and machine learning algorithms isn’t trivial. And while marketers are mostly confident about their ability to build the data foundations necessary to deploy AI, not all feel like they have the right expertise. Among respondents who say their organizations aren’t very effective at deploying AI for predictive marketing insights, the top reasons are lack of expertise among marketers (30% and IT (29%). It’s likely building the data skills and capabilities necessary to support machine learning and AI will be a major focus for marketers in 2021.  

The elusive revenue connection

In 2020, CDPs became more integral to marketing operations and data teams, addressing more use cases, incorporating more data and linking to more third-party tools across organizations. This has made it even more difficult to quantify CDP ROI, since impact is diffused across so many solution areas. It’s no surprise, for example, that organizations still struggle to quantify CDPs’ impact on revenue: Just 7% of organizations measure CDP ROI based on revenue, the same percentage as in the 2020 report.

In the 2020 report, respondents cited data quality as their top way to measure CDP ROI, which isn’t ideal. Data quality is important, but hard numbers about monetary impact are key for securing leadership buy-in. The 2021 report data shows that marketers have made some progress tying CDPs to operational savings, which is now the No. 1 way to measure CDP ROI, up from No. 2 in the 2020 report.  

Perhaps due to the increasing sophistication of ROI measurement, or the difficulty of integrating CDPs with the martech stack, average time to value for CDPs has increased. In the 2020 report, more than half (53%) of companies saw ROI from their CDP in six months or less. But in the 2021 report, less than one-third (30%) of companies did so.

A majority (57%) of marketers expect to see ROI from martech solutions within six months or less. That means only some CDPs are meeting marketers’ expectations for time-to-value — the rest are lagging behind, possibly due to slow integrations.