No, Reverse ETL And Composable CDP Are Not The Same Thing

If you’ve followed the marketing technology market, you’ve certainly heard about Reverse ETL [1].

Marketers, don’t worry—you didn’t need to know about this!

Data engineers, we feel your pain—the term might not make sense, but it’s here to stay.

I prepared this post to help you differentiate between “Reverse ETL” and “Composable CDP.”

Multiple vendors started with Reverse ETL before rebranding themselves as Composable CDP providers, which has contributed to the confusion.

But guess what? Reverse ETL and Composable CDP are two completely different concepts, each aiming to achieve different goals! 🎯

Below, we’ll break down the definition and architecture of Reverse ETL and Composable CDPs.

Reverse ETL: A Data Sync Feature

The primary purpose of a reverse ETL tool is to simplify the lives of data engineers.

System integration is complex. By integrations, I mean data pipelines: transferring data from one system to another via flat files or APIs.

Many IT organizations spend large amounts of resources to build and maintain these integrations. If the data warehouse, data lake, lakehouse, or data cloud (choose your term, but we’ll refer to it as a data warehouse in this post) is your source of truth, it means two things:

1. Any system collecting data needs to be able to share it with the warehouse
2. You need to provide data to downstream systems that need to leverage it

Some companies have focused their efforts on the first point. Take Fivetran, for example.

Reverse ETL solutions focus on the second part: how to get data out.

Reverse ETL makes sense for mid-market marketing teams who only leverage one marketing automation or ESP tool. These tools typically require hosting a copy of the data locally, and reverse ETL makes it easier for data engineers to move data. However, this wouldn’t be manageable if you have to start maintaining copies in an enterprise stack composed of many delivery channels.

Reverse ETL is also an interesting solution for martech vendors themselves who want to simplify the data ingestion process from a data warehouse. Consider the partnership between Hightouch and Iterable. Iterable uses Hightouch’s reverse ETL solution to ingest data into their platform, which they call Smart Ingest. Census Embedded follows the same concept.

As you can see, there’s no denying that the reverse ETL feature can greatly benefit data engineering teams. However, this has little to do with enterprise marketers looking to access customer data to support their customer experience (CX) use cases.

Composable CDP: A CDP Integrated with a Warehouse

The primary purpose of a composable CDP is to provide business teams with access to customer data via a no-code application, without the need to first copy data into the CDP application. Contrary to Reverse ETL, Composable CDPs are focused on customer experience channels.

This means the CDP becomes an integrated business layer on top of the data warehouse, eliminating the need for data pipelines to be set up between both systems.

Beyond that architectural difference, you should expect the same capabilities and opportunities from a composable CDP as you would from a traditional CDP. Users should be able to easily gain insights from their customer data, build audiences, orchestrate campaigns, and activate them across marketing channels. The Composable CDP approach is more suitable for enterprise organizations looking to integrate multiple systems and channels.

You will find reverse ETL companies exploring new horizons by building CDP capabilities. However, if your goal is to unlock opportunities for your business teams, you will likely find that these reverse ETL solutions lack the maturity required to evolve into a fully-fledged composable CDP.

Do Not Confuse Reverse ETL and Composable CDP

Both reverse ETL and composable CDP solutions access the data stored in your warehouse, and both are valuable for organizations. However, they cater to different users and use cases:

• Reverse ETL: Facilitates copying data from the warehouse into other applications
• Composable CDP: Provides a business application for marketing teams to define and execute their CX strategies

In some scenarios, we may see organizations choosing to have both a Composable CDP and a Reverse ETL solution in their stack.

Test ActionIQ’s Composable CDP Today

ActionIQ is celebrating the two-year anniversary of its composable CDP, built on the strong foundation of its enterprise CDP for business teams. With ActionIQ, you have the flexibility to deploy a CDP with the architecture of your choice, while maintaining the same robust UI, regardless of where your data is stored.

Want to check it out for yourself? Reach out to our team for more information and try it for free.

[1] If you haven’t, this post may not be for you, but you could learn more about reverse ETL in another post: Why Reverse ETL is Only One Piece of the Data Puzzle.