Lytics: How An OG CDP Distinguishes Itself In a Crowded Category

This is the sixth in AdExchanger’s “Meet the CDPs” series. Read previous interviews with mParticle, Acquia-owned AgilOne, Amperity, Segment, ActionIQ, Bluecore, Microsoft, Tealium, OptimoveAdobe, Treasure Data and BlueConic.

Everyone and their mother operates a customer data platform (CDP) nowadays.

And that crowding obscures the actual purpose of a CDP, said James McDermott, co-founder and CEO of the CDP Lytics.

“If Tealium, Segment, mParticle or Braze is a CDP, then everybody is,” he said. “And the promise of a CDP, to unlock customer intelligence and deliver experiences, has been unfulfilled.”

Lytics was founded in 2013, and McDermott said it was the first vendor to describe itself as a “customer data platform” on its site.

Lytics is also an apt example of the CDP venture capital run in the past five to 10 years. The company has raised $58 million, including a $35 million round a year ago. It has a headcount of about 110, half of them in engineering.

McDermott spoke with AdExchanger.

AdExchanger: Did you start as a CDP?

JAMES MCDERMOTT: Even from the beginning, when we were founded in 2013, we were a CDP.

The most common definition of the category – vendors that capture data from different sources, create unique profiles and either share data back out or create access to that profile – is so broad that it covers hundreds of mar tech companies.

To sharpen that, I think the core thesis around the CDP has always been, or should be, intelligence, not data. If the core thesis of the CDP is data and portability, and all you need to do to be a CDP is get into a database, create profiles and sync with other tools, then Google Cloud, AWS Redshift and Azure is all you need to be considered a CDP.

What is your typical customer?

We have a lot of media and entertainment companies. So that could be like The Economist, but also, AEG or sports leagues. We’re also focused on CPG and retail.

It’s very hard for media companies to compete with Facebook, or retailers and CPGs to compete with Amazon. For the platforms, the content decisions and the audience data are all part of one system. So to compete with a company like Facebook or Amazon your brand needs to have the same level of personalization and frictionlessness.

How many customers do you have?

We have about 150 customers.

We work with agencies as well. They’ll become a more important part of the CDP process.

Why is that?

They’ve had a hard time figuring out how to interact with CDPs, which are highly data oriented. So CDPs port to other data companies and mar tech ecosystem companies, but not so much agencies.

But agencies have started to see a much easier way to interact with CDPs, since we review and curate insights along with them and customers. Many holding companies also now own data companies.

How long does it take to onboard a new enterprise brand?

About 60 to 90 days. We’re focused on getting customers a set of insights at the end of 90 days. So by then they’ve run a test use case to show that if they use these insights to deliver certain experiences that they’ll get an ROI.

The pressure on the team on their side to prove value within 90 days is extreme.

What data sources do you commonly connect?

One key piece for us is we’re focused on the marketing domain. It’s a marketing tool. So we see a lot of emails, mobile notification tools like Twilio or Braze, info from the site or mobile app and often CRM, where there’s structured data about customers.

The goal is to create more intelligence on a person that unlocks use cases for a marketer.

Who are your main competitors?

Well there’s a real difference between the ways that CDPs think about the market.

Some efforts are really about email marketing – triggering messages to subscribers with some personalization. The marketing 2.0 set as I’d call it is you’re using a CDP or tag manager to collect data from the site, email tool or app that triggers a message or action based on context. In the 3.0 world, the marketer is essentially building customer intelligence inside a central tool and sending that to other applications.

An mParticle or Segment operates in that 2.0 world, passing data between applications and creating those rules to route data from one tool to another.

Who we compete with most often is ActionIQ. More and more it’s Adobe and Salesforce, though. They’re really telling a broad story about trying to use the intelligence you have on consumers to deliver experiences.

So what are you seeing from the big marketing clouds getting into the category?

The marketing clouds are under pressure as they compete to win the marketer.

A big headwind for mar tech in the past 10 years is that the cost of customer acquisition is going up and customer lifetime value is going down. As a whole, marketers are under pressure because they’re not delivering the results they need to build a business. The attention of consumers has become much more expensive and results have gone down.

Adobe, Salesforce and Oracle have had this death grip on the tools marketers have been using, so there’s pressure on those suites to prove and deliver results. And really they’re still early, even though they’ve invested aggressively.

When we see them in the marketplace, their solution is still completely fragmented and challenging for a company to get up and running. They’re talking about a 12-month journey.

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