News
The Gist
- Simon Data fuels CDP industry growth. Simon Data secured a Series D funding of $54 million, taking its total funding to $118 million.
- Industry shift toward cloud data warehouses? Simon Data emphasizes the importance of integrating cloud data warehouses at the core of companies' data infrastructure. Its belief is in leveraging composable solutions tailor-made to maximize the potential of these warehouses.
- Warehouses and CDPs — a complex relationship. Not all data warehouses are equipped to meet the unique needs of CDPs. Designing warehouses to cater to CDPs requires IT departments to prioritize those modifications, according to one industry analyst.
Simon Data woke up an otherwise quiet growth engine this year for the customer data platform (CDP) industry.
The New York City-based CDP provider announced a Series D funding round of $54 million yesterday. That raised the total funding for the 2013-born provider to $118 million.
According to the Customer Data Platform Institute's CDP Industry Update published last month, the industry over the first half of 2023 saw slow overall growth, where new entrants, new funding, net new employees and organic growth (the employment increase among previously listed vendors) all fell to record or near-record lows.
"Belts tightened across the CDP industry in the first half of 2023, as a dearth of new funding reduced the number of entrants and enabled industry leaders to expand their share," according to the report.
Simon Data Aims for 'Fully-Connected CDP'
Simon Data is attempting to break that downward growth trend for the $2.3 billion industry, according to the CDP Institute. Other outlets have different market worth figures for the CDP industry, one as high as $4.67 billion, so it depends on who you ask. In 2022, the customer data platform industry revenue stood at an estimated $2 billion, up 25% from a value of $1.6 billion reported a year earlier, according to Statista.
Simon Data's funding round was led by Macquarie Capital with participation from several existing investors, including Polaris, .406, and F-Prime. The news comes after Simon Data launched in June Connected Segmentation, designed to allow marketers to build customer segments directly within the Snowflake Data Cloud.
Simon Data officials said the $54 million cash infusion will allow the company to build connected applications with other cloud data warehouses and provide more customers with a "fully-connected CDP." The value proposition it sells there is that within "traditional CDP architectures, customer data is replicated multiple times as it moves across data centers and marketing end channels. ... This movement is outside the centralization and security standards set by the cloud data warehouse, and also creates tremendous workflow inefficiencies for both tech and marketing teams."
"This funding round signifies a pivotal moment for Simon Data and the industry at large,” Jason Davis, CEO and co-founder of Simon Data, said in a statement. “We firmly believe that the cloud data warehouse should be at the heart of companies' data infrastructure. We’re seeing a fundamental shift in the CDP space — pitting packaged solutions that exist independently of enterprise cloud data warehouses against composable solutions that are purpose-built to unlock its potential."
Related Article: Quest for Unified Customer Data: How CDPs Enter the Mix
Are Data Warehouses Designed for CDP Requirements?
Where does this $54 million rank as far as funding rounds for CDP providers? David Raab, founder of the CDP Institute, told CMSWire the largest funding round for a CDP was $234 million for Treasure Data in November 2021. The highest total funding is Klayvio with $778 million. The largest funding round in 2023 as of June is Insider at $105 million.
"Obviously it’s good for Simon," Raab said. "I doubt there will be any particular impact on the CDP space at large, although Simon will have more resources to tell their story."
That story is all about being a "composable CDP" that operates within a cloud data warehouse. Larry Handen of Simon Data investor Macquarie Capital said, “Simon Data’s ability to connect seamlessly to first-party cloud data infrastructure and enable real-time personalized marketing at scale is exactly what today’s businesses need the most and we are looking forward to supporting this talented team in their next phase of innovation.”
Some other CDP vendors claim data warehouse capabilities. According to the 2023 CMSWire CDP Market Guide:
- Aginity’s Amp (now Coginiti) is data warehouse software that enables companies to create, catalog and manage analytics as assets, which can be reused throughout the enterprise. Amp software is deployed globally with partners that include IBM, Cloudera and Hortonworks.
- Segment’s platform leans toward the data foundation end of the spectrum. Using Segment, marketers collect, unify and connect first-party data to over 200 marketing, analytics and data warehouse tools.
- Yeti Data’s Virtual Marketing Data Warehouse was designed to unify customer data. The company’s patented Snowflake data structure helps marketers create a virtual marketing system of record; analyze customer behavior; and build predictive models to launch targeted and personalized, integrated campaigns.
However, Raab notes few data warehouses are designed for CDP requirements. According to the 2023 CMSWire CDP Market Guide, while some technical resources will be needed to set up and maintain the CDP, it should not require the same skill and support as other data warehouse solutions, reducing cost, time and business risk.
"While you could design a warehouse to meet CDP needs, that will only happen if the IT department prioritizes those changes, which rarely happens," Raab said. "Getting away from dependence on the warehouse and IT is why CDPs were invented in the first place. That said, Simon has all the capabilities of a legit CDP, unlike the reverse ETL (Extract, Transform, Load) vendors, so it will be able to help its clients either modify their warehouse or (more likely) extend it in ways that basically create a separate mini-CDP database inside of it."
The option to read data directly from a cloud data warehouse is being added by more and more CDP vendors, Raab noted. In practice, he added, clients will use a mix of reading directly from the warehouse and massaging the warehouse data to meet CDP needs.
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Raab cautions against the belief that most data warehouses can support CDP requirements without changes to the warehouse. "It’s just not true," he said, "but it fools a lot of people who don’t know any better and think the warehouse-based approach will save them money."
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