Building Or Buying A CDP: What Does It Mean?
Building a CDP means the organization takes ownership of bringing all the components of the CDP together in-house. Several third-party tools may be licensed and used for specific functions.
Buying a CDP means subscribing to a hosted CDP solution available in the market and configuring it to fit the organization’s needs. This includes integrating the CDP with data sources and activation channels and configuring CDP components such as data unification logic, audiences and segments and activations.
Understanding Key Features Of A CDP
For a CDP to be effective and complete, it must have the following features
- Collection and standardization of data in real-time or via scheduled data ingestion.
- Customer identity resolution and unification of all data with the resolved identities.
- Data analysis and enrichment, including labeling, scoring, segmentation, derived attributes, etc.
- Activation and democratization of data, including the ability to trigger actions in real time based on customer data and activities.
- Data governance, consent management, data usage policies and similar controls.
- Secure, reliable and scalable infrastructure to host the platform, including data storage, manipulation processing and data pipelines.
Option: Build an in-house CDP
This path leans heavily on engineering to develop a platform that uses a data warehouse as a single source of truth for customer data. While building an in-house solution can give you more control, it can come with a hefty price tag and a lengthy timeline. Often, building a CDP can take six to 12 months to complete.
Pros of building an in-house CDP
- Single Source of Truth: Store all customer data in one secure cloud location for better reliability, completeness, and security.
- Customized Use Cases: Tailor data channels to fit your marketing, data, and engineering needs, enabling effective cross-channel campaigns.
- Marketer-Friendly: Build a platform designed with marketers in mind, ensuring ease of maintenance and scalability.
Cons of building an in-house CDP
- Significant timeline and effort
- Distract from your business focus
- Lengthy implementation time
- Lack of domain expertise
- Fewer/ Limit of marketing integration
Source: Twilio Segment
Option: Buying a composable CDP
A composable CDP sits on top of your company’s cloud data warehouse. It gives your marketing team a self-serve (no code) interface to create and segment audiences on top of the data warehouse. Then, it allows marketers to activate those audiences in real time to channel destinations, such as CRMs, email marketing tools, and ad platforms.
Benefit of buying a composable CDP
- Centralize your data source (in your cloud) with flexible structure and single of truth
- Best- of – breed marketing integrations
- Fast implementation time
- Domain and audience expertise
Cons of buying a composable CDP
A composable CDP does require a cloud data warehouse. This requires some time and financial investment, but the benefits come in the form of more security and scalability.
Six Factors To Consider When Deciding To Build Or Buy A CDP
| Factors | Build | Buy |
| Cost and ROI | Costs to build a CDP would include development team salaries, third-party tool licenses, infrastructure costs and security and quality certifications for the duration of development and maintenance. | Buying would generally include a one-time implementation cost along with recurring annual subscription and support expenses |
| Technical Infrastructure And In-House Expertise | Building a CDP requires expertise in cloud infrastructure, data engineering, marketing, product management and support. | When buying, you need a relatively small team to operate the CDP. In fact, your existing marketing team can be trained to operate the CDP, as most of them are business-user friendly. |
| Business Strategy And Alignment | If you consider the processing of customer data to be a differentiator for your business, you might consider building a specialized CDP per your needs | If you’d rather focus on your core business functions and let a CDP vendor handle customer data processing, then buying may be the way. |
| Deployment Scope And CDP Features | If your organization needs a system with minimal features for a few regions, you might be able to get away with building a simple CDP in-house. | Buying a CDP gives you the ability to scale the system per business needs. If your CDP vision has a larger scope with complex and state-of-the-art features, such as automation in real-time, multi-channel data synchronization, predictive intelligence and highly personalized experiences, then building a CDP would require heavy investment and technical expertise. |
| Timeline | It takes about a year and a half to build a CDP with basic features in-house and much longer to build a CDP with advanced features. | When you buy a system, implementation can be as quick as three months. |
For Data Security and Privacy, whether you choose to buy or build, building and operating a CDP comes with the responsibility of adhering to various data regulations and managing the complex security challenges and threats that often arise.
The key question to ask here is: Are you prepared to take on the risks associated with rapidly evolving consumer data privacy regulations and their legal implications?
Deciding whether to self-build or buy martech tools can be a challenging consideration for every business. Each option has its pros and cons, but determining the right direction for short-term or long-term business investment is crucial.
Source: https://www.growthloop.com/post/customer-data-platform-buy-vs-build & https://www.forbes.com/sites/forbestechcouncil/2022/12/27/customer-data-platform-6-factors-to-consider-in-a-build-vs-buy-decision/