Looking ahead into 2023 it’s clear that very little is clear. Both macro-economic and geo-political trends are fueling uncertainty, and the technology sector has been especially hard-hit. In spite of all that, we see a consistent theme of momentum in the core area of customer data enablement – enterprises continue to invest in customer data strategy and related initiatives. Though more focused and purposeful than in years past, investments in customer data are still high priorities for enterprises who see the opportunity to create efficiencies and long-term value and are not prepared to sit out 2023 while their competitors continue to progress.
In the category of customer data enablement, we see five clear trends emerging in 2023:
1. Composable Tech Stacks
With the ongoing march towards cloud database primacy in the tech stack, enterprises are focused on leveraging their investment in cloud databases to realize more utility and value. The composable tech stack (or “modern marketing stack,” to some) – where task-specific applications are composed/integrated/connected into a centralized cloud data warehouse – is increasingly appealing as a flexible and efficient method to solve for myriad customer data use-cases and the requisite technology needs, while leveraging a centralized data resource in a consistent manner. This distributed model contrasts with the all-in-one-suite approach with a federated alternative of best-of-breed point solutions tethered to a central cloud-based customer data hub. The flexibility and utility of this emerging option will be a driving trend in 2023 and beyond, and will shape enterprise technology and resourcing decisions, as well as technology providers’ strategies and product focus.
2. Solutions Rationalization
2023 is a year in which enterprises take a hard look at their current tech stack and make a concerted effort to consolidate and eliminate overlapping capabilities. Licensing fees and renewals will be under scrutiny, and enterprises will push for unification across a core set of platforms that provide unique, differentiated, and complementary capabilities. (Got three ESPs in the mix today? You’ll probably be down to one by July).
3. Predictive Analytics as Efficiency Drivers
Efficiency is a core theme in 2023. As momentum shifts away from growth at all costs, and as new customer acquisition becomes increasingly more expensive, predictive analytics – the focused use of data and machine learning to better segment and market to customers – is increasingly important in driving customer retention and growth. Threading into trend #1 as well, composable data stacks enable new opportunities in predictive analytics to power execution and insight across channels, and leverage core data investments with additive, composable predictive capabilities.
4. Media Enablement
A trend, but not an event, enterprises continue to progress in deploying first party customer data into media targeting. That progress accelerates in 2023. The increasing fluidity of data into the media ecosystem (i.e. this stuff is getting easier to execute), and C-level commitments to leverage their investment in customer data across what is, for many enterprises, their largest marketing expense (i.e. advertising) will drive increasing deployment of first party data into outbound media targeting this year. Additionally, the rise of new media alternatives outside of Google and Facebook, compounded by the deprecation of effective ad targeting in those two ecosystems, compels advertisers to make this trend a priority.
5. Clean Rooms
A technology whose time has come, the business case for data clean rooms emerges in 2023 as brands and their constituents (publishers, retailers, suppliers, etc.) are increasingly interested in collaborating on data intelligence. Aligned with trend number four above, media transactions are a key driver here, with retail media networks and CPGs increasingly excited about the potential for collaboration on first party data for ad targeting and end-to-end measurement. Compelling demand for richer customer insights also fuels this demand. Clean rooms are the facilitators here, providing a necessary neutral-ground wherein parties can transact. We’ll be watching this trend evolve as additional compelling use cases come to fruition.
Again, while clarity is in short supply as we enter 2023, we believe the five trends above are real, gaining momentum, and useful tethering concepts for enterprises looking for guidance and certainty in the year ahead. Thoughts, comments, we’d love to hear from you…