Closing the Consumer Chasm : How Data Clean Rooms Bridge the Gap for CPG Brands in a Privacy-First World

In the rapidly evolving landscape of consumer packaged goods (CPG), one significant challenge persists: the lack of direct connection with the end consumer. Unlike industries that thrive on direct customer interaction, CPG brands often find themselves distanced from the actual buyers of their products. This data gap, largely due to reliance on suppliers, distributors, and retailers, has long impeded CPG companies from gaining a holistic understanding of their consumers. As we approach a post-cookie era, bridging this gap has never been more crucial.

The Traditional Data Gap: A Legacy Issue

For decades, CPG brands have navigated the market using a patchwork of data sources. Information from surveys, panel reports, and other probabilistic methods have provided a glimpse into consumer behaviour, but these sources are inherently limited and often outdated almost all proxies for actual consumer .

With roughly 85-90% of CPG purchases in markets like India still occurring offline, the data gap is particularly pronounced. This lack of first-party data hampers brands' ability to accurately measure the effectiveness of their marketing efforts and to understand the nuanced and dynamic purchase s of their consumers.

As per BCG, advanced analytics and AI can drive more than 10% of sales growth for consumer packaged goods companies, of which 5% comes directly from marketing. The value at stake for developing advanced data capabilities is significant. Yet because CPGs traditionally sell through retailers, they face a fundamental challenge in acquiring data from consented consumer connections which limits the impact of their outsized marketing budgets. As a result, advanced analytics and AI tactics remain a largely untapped resource for CPG companies.?As is evident in the image below, the CPG data story needs an overhaul with new tools in this privacy era.

The Urgency of First-Party Data Collection

The impending deprecation of third-party cookies and other signal losses has magnified the urgency for CPG brands to collect first-party data (While some brands have started to pivot towards Direct-to-Consumer (DTC) strategies), both online and offline, to gather valuable consumer insights (apart from other advantages). By capturing data directly from consumers, whether through loyalty programs, online transactions, or in-store engagements, brands can begin to fill the data void. The ultimate goal is to understand consumer ?in the market, whether offline or online, to plan Go-To-Market strategies, alter awareness campaigns, refine targeting, and gain a clearer picture of the consumer landscape.

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True power lies in understanding how consumers behave across the entire purchase journey – online and offline. Additionally, advanced analytics and AI have shown the potential to drive more than 10% of sales growth for CPG companies by enabling more targeted and effective marketing strategies.(BCG).

While BCG way back in 2020 came up with a Data Value model for CPG brands, BCG did not say in certain terms how to exactly to calculate this except for dropping in words like third-party measurement , pilots or? historical data shared by customers.

What if I told you that this can actually be measured now in deterministic terms using Data clean rooms?

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Data Clean Rooms: A Privacy-Compliant Solution

Enter Data Clean Rooms (DCRs) – a sophisticated and privacy-compliant method for integrating multiple data sets without moving them from their respective locations. These environments enable brands to merge their data with that of retail partners, creating a comprehensive view of the consumer journey.

Imagine a partner tracking over a lakh sales per day across offline retail stores in India, with complete consented transaction details of brands, products, SKUs being purchased at the pin code level, store level, category level, and competition level, along with complete basket details and purchase ?tracking. Now add the conversion data from your own D2C and other online retail mediums to it . Add the media exposure data from OTT, CTV or other publishers and you have a superb data set to close the entire loop to measure the impact of Media exposures on real business outcomes -Purchases/Sales.

The Dynamic Nature of DCRs

Unlike traditional methods, DCRs offer dynamic and ongoing insights. They allow CPG brands to deterministically measure media exposures against actual business outcomes. This continuous feedback loop enables real-time optimization of marketing strategies, from upper-funnel brand awareness campaigns to lower-funnel direct response efforts. By integrating offline as well as online purchase data, brands can make advertising more addressable, actionable, and accountable.

?Leveraging DCRs for Strategic Advantage

?DCRs answer critical questions that have long plagued CPG marketers. They help optimize spending across the funnel for maximal sales impact, evaluate the role of media in supporting DTC initiatives, and assess whether digital advertising drives consideration. By closing the loop between media exposure and in-store sales, brands can make data-driven decisions that enhance their go-to-market strategies.

Here’s how DCRs can revolutionize the CPG industry:

Group 1: Granular Insights and Measurement

1. Granular Insights: Imagine tracking daily sales across offline retail stores at the pin code, store, category, and SKU levels. DCRs enable this by securely sharing consented transaction details. Brands gain a comprehensive view of purchases, including basket details.

2. Deterministic Measurement: With DCRs, CPG brands can directly link media exposures to actual business outcomes. Whether it’s upper-funnel awareness campaigns or lower-funnel conversions, DCRs provide real-world impact data.

3. Measuring Campaign Impact: By attributing marketing touchpoints to conversions, DCRs provide a clear Return on Ad Spend (ROAS) figure. Brands can optimize their spending based on real data.

4. Measure media exposure's impact on offline purchases: Imagine deterministically measuring how your media campaigns translate to actual sales in brick-and-mortar stores. DCRs make this possible, allowing for ongoing dynamic analysis.

Group 2: Media Optimization and Strategy Adaptation

1. Dynamic and Ongoing: Unlike static reports, DCRs operate dynamically. Brands receive continuous insights, allowing them to adapt their strategies in real time.

2. Media Optimization: DCRs reveal the role of media in supporting DTC (Direct-to-Consumer) and CPG brands. Are DSP (Demand-Side Platform) ads driving consideration/purchase? DCRs provide answers.

3. Closing the Loop: By connecting media exposure to store sales, DCRs make brand advertising more addressable, actionable, and accountable. Brands can fine-tune their targeting and measure ROI effectively.

4. Media Mix Optimization: By connecting granular transaction data with media exposure data, brands can analyze the impact of marketing campaigns and optimize the ideal mix of upper and lower-funnel tactics to drive sales. CPGs can finally measure which channels and creative are truly moving products off shelves.

Group 3: Inventory and Sales Insights

1. Inventory Insights: Leveraging DCRs, brands gain visibility into inventory levels and sales trends. This information enhances demand forecasting and inventory management, reducing stockouts.

2. Inventory Forecasting: CPG brands typically have to wait weeks or months for sales reports from retail partners. By tapping into retailer data cleanrooms with daily transaction feeds, they can precisely analyze sales velocities and inventory levels to forecast demand and avoid out-of-stocks.

Group 4: Customer and Trade Analytics

1. Customer Analytics: Through secure data collaboration, CPGs and retailers can build a unified view of shoppers using anonymized purchase histories and browsing activities. This allows creation of high-value audience segments like "brand loyalists" or "value shoppers."

2. Promotions & Trade Spend: Cleanrooms make it possible to measure promotion effectiveness by mapping trade/offer data against retailer sales lifts. This enhances distribution trade optimization and ROI.

Group 5: Operational Efficiency

1. Faster Turnaround: No more waiting for brand track reports! Partners equipped with DCR capabilities can deliver timely insights, empowering marketers to make informed decisions swiftly.

2. New Product Launches: Prior to launching new products, CPGs can leverage clean rooms to model the demand by looking at profiles of buyers for similar products. This reduces launch risk.

A Case in Point: Publicis at the Forefront

At Publicis, we are at the forefront of leveraging DCR technology to help CPG brands bridge the consumer data gap. We are partnering with leading data providers who track millions of daily sales across offline stores in India. This allows us to offer CPG brands anonymized, pin-code level insights into:

·????? Brand/Product/SKU purchases

·????? Store level performance

·????? Category and competition analysis

·????? Complete basket details and purchase ?trends

By securely collaborating with anonymized transaction data from retail partners , brands can attribute specific marketing touchpoints to conversions, providing a clear return on ad spend (ROAS). For instance, a CPG brand working with Publicis might discover that a particular ad campaign drove significant sales among “value-conscious shoppers,” leading to more targeted and effective future campaigns. Brands can directly understand how many of them who bought the brands were exposed to ?various media (e.g OTT, CTV, YT) and at what frequency levels and many such analytics.

The Solution to the Data Gap is here! We are ready. How ready are you to adopt it?

The future of CPG audience analytics lies in the ability to decode online consumer , uncover patterns, and leverage real-time observations for informed marketing and positioning strategies.?

The evolving landscape of consumer ?in the CPG industry requires an industry wide shift in data intelligence practices. The significant increase in online transactions and revenue for CPG retailers underscores the growing importance of optimizing digital channels along with offline ones. As a result, consumer’s purchase paths are complex with many touchpoints and often involve both online and offline channels. CPG companies must continue to evolve their data intelligence practices by leveraging first-party permissioned data to obtain a 360-degree view of consumer behaviour which cannot happen without the use of Privacy Enhancing Technologies (PETs) in the privacy era.

CPG brands must step up their game to take full advantage of these new tools. Harnessing the power of first-party data and Data Clean Rooms can deliver faster, more accurate insights, enabling brands to make informed decisions that drive sales, improve ROI, and enhance market share. The time to act is now.

?In conclusion, the integration of first-party data collection and Data Clean Rooms represents a paradigm shift for the CPG industry. By embracing these innovations, brands can close the data gap, transform their marketing strategies, and build deeper, more meaningful connections with their consumers. As we move into a new era of privacy and data management, those who adapt will thrive, setting new benchmarks for success in the CPG space.

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Anil Pandit

Executive Vice President

Publicis Media Services

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