CPG

Marketingat

theAlgorithmicCrossroads

CARAT

DESIGNINGFRPEOPLE

?2025Carat|allrightsreserved

Contents

TwotimelesstruthsofCPGmarketing04

Sharedscalehaschanged05

TheAlgorithmicEraofmarketing07

Sixconsiderations:

-Winthebattleforalgorithmicavailability10

-Pioneernewwaystofindgrowthaudiences11

-Createequalopportunityacrossalltouchpoints13

-Fueltheriseofalgorithmicplanning15

-Anticipateoutcomes,don’tjustmeasureKPIs17

-Reimaginetheretailmediavalueexchange19

Themostinnovativebrandswin21

AboutCarat22

2

CPGMarketingattheAlgorithmicCrossroads

CPG

Marketingat

theAlgorithmicCrossroads

Carathasbeenapioneerinthemedia

industryfor60years,helpingtheworld’s

mosticonicCPGbrandstogrow.Ateveryinflectionpointinthemedialandscape,webackedthecraftofcommunicationsplanningtomakeatransformative

impactonbrands’topandbottomlines.Asmediachangesagain,Caratleads

CPGbrandsintotheAlgorithmicEra.

CPGMarketingattheAlgorithmicCrossroads3CARAT

CPGMarketingattheAlgorithmicCrossroadsCARAT

Twotimelesstruths

CPGbrandsaremarketing

marvels,makingseemingly

mundanemomentsfeeljustthatlittlebitmorespecialbecause

theyunderstandtwotimelesstruthsbetterthananyone.

02

01

Theyknowtheeffectivenessof

marketingcommunicationsis

builtonachievingnotjustscale,

butsharedscale,i.e.,fame.2Adsaremoreeffectivewhenalarge

audienceseesthemandknows

thatmanyotherpeoplehaveseenthem,too.3

Theyembracethelawsofgrowth.Brandsmustbeeasytorecall

andfindinbuyingsituations,somarketing’sjobistobuildmentalandphysicalavailability1-at

scale.

CPGMarketingattheAlgorithmicCrossroads4CARAT

Sharedscalehaschanged

Thewaymarketerscanachieve

sharedscalehaschanged

dramatically.

Priortothemid-2000s,shared

scalewasbuiltinlinearbroadcastchannels.Newsanchorssetthe

agenda,30-secondadsshapedtastes,andlivetransmissionsbuiltcollectivememories.DuringthisBroadcastEra,theworldgot

smaller,andpeoplegrewcloser.4

Inthemid-2000s,thelandscape

shifted,fueledbytheexplosive

growthofsocialplatformsandtheadventofthesmartphone.Whenglobalsmartphonepenetration

hit50%in2012,wedisappearedinourownfeeds.Thismarked

thestartofthePrecisionEra,inwhichmarketerstriedtotacklethesharedscalechallengebychasingmasspersonalization,performancemarketing,andROAS.

Between2012and2024the

numberofglobalmartech

solutionsgrewby4000%,5whiletheaveragemarketingbudget

asapercentageofnetrevenuedeclinedby26%.6Thisputatax

oneffectiveness:lowerthan

50%datamatchrates,756%of

advertisingdollarsvanishinginthesupplychain,8andperformancemedialackingincrementality.9

Brandswerepushedfurther

downthefunnel,sacrificingtheoptimalbalancebetweenshort-andlong-termgrowthonthe

altaroftheirquestforoptimizedconversion.10

CPGMarketingattheAlgorithmicCrossroads5CARAT

Inshort,itbecamemuchhardertoachievesharedscale.

“

52%ofCPGCMOsareunsurewhethernewvideosolutionsdeliveraseffectivelyasbroadcastTV.

43%arenotevensureinwhich

channelstheyshouldinvest.11

ThePrecisionEraalsochanged

thewaywesocialize.Today,

friendsaremoreimportanttousthanever,butwespendlesstimewiththemandsocializeinmediainstead.12Whilein2011,people

usedsocialmediatoconnect,it’snowasourceofentertainment.13Associalconnectionschangedfromactiverelationshipsto

nurtureintopassivecontentto

consume,loneliness,anxiety,andpoliticalpolarizationgrew.14

ThePrecisionErawasdoubleedged:ithelpedmarketersbecomeseriousabout

measurementanditmadeit

easierforpeopletostayintouch.butitalsocreatedsignificant

mediaandsocietaldisruptionthatwecontinuetofeeltoday.

It’stemptingtofocusonlyonchange.Butwhilechange

canleadtobreakthroughs,youcanbuildbusiness

strategyonthatwhichis

stableovertime.WeusedourproprietaryAudiencePanelinkeyglobalmarketstoidentifyconsumer

attitudesthathaven’t

changedinthelast14years.Herearethreethathavenotbudgedsince2011:

?Futureprospects:

consumersdon’texpecttheirstandardoflivingtochange

?Brandapathy:

internationalbrands

don’thavegreater

premiumstatusand

consumersbelieve

own-labelproductsareasgoodasbranded

products.

?Consumerdefault:

Onceconsumersfindaproducttheylike,theywillsticktoit.

Formoreinformationontheconsumertrendsthatdon’tchange,aswellasthose

thatchangedsignificantly

butgraduallyoverthelast14years,pleasegetintouch.

Downloaddentsu’s

CMONavigator

CPGMarketingattheAlgorithmicCrossroads6CARAT

Thenew

marketing

communications

era

Today,wefaceagenerational

shiftintheinformationtechnologylandscape.

Algorithmsincreasinglygovern

thedistributionofinformation,notjustinoursocialfeedsbutacrosseverysingleMediatouchpoint.15Theyalreadyinfluence59.5%of

advertisinginvestments,andthisisprojectedtogrowtoawhopping79%globallyby2027.16

Weare

enteringthe

AlgorithmicEraofMarketing.

Theseautomatedrecipesfordecision-makingincreasinglygovernhowinformation

flowsthroughthemedia

landscapeandwhogetstoseewhat.TheInstagramalgorithm,forexample,isfantasticatunderstandingourpreferencesandthenservingtheperfectmixofcontentfromourfriends,

memeaccounts,and

genuinelygreatproductrecommendations.

Analgorithmisadecision-makingframeworkfor

completingataskor

solvingaproblem.Thinkof

itasarecipe.Algorithmslistingredients,asetoftoolstouse,asetofactionstofollowinaspecificorder,and,

dependingonthenatureofyourcooking,adegreeoffreedomforinterpretation.

CPGMarketingattheAlgorithmicCrossroads7CARAT

Lastyear,wereleasedour

ConsumerVision2035report,whichpredictedthatintheAlgorithmicEra:

?Brandswillachieveshared

scalebyhelpingpeopleformcommunityaroundthethingstheycareabout.17

?Low-interest,low-involvementcategorypurchaseswillbe

handledbyAIonourbehalf,creatinganarrowerwindowforbrandstoinfluencethe

preferencesofthehumanswhoemploythetechnology.

?Cultureisshapedatthe

communitylevelwiththe

algorithmasthegatekeeper,sowe’llincreasinglyhaveto

buildbrandswithcreators,

collaborators,andpublishers,aswellasthroughadvertising.

?Brandsalllookatthesamedata,playinthesame

walledgardens,andare

encouragedtoletthesamealgorithmsdothesame

things,sothebrandsthatwinaretheonesthatfindvaluebeyondthataverageby

anticipatingpeople’sneeds.

?Marketerscannotrelyonthetools,methodologies,and

waysofthinkingwe’vecometorelyoninthePrecisionEra;itwouldbelikeshowingup

toplayagameoffootballdressedinfullskigear.

consumerlandscapeintenyears’time,drawingonthelivedexperiencesandexpectationsof

Let’srecap

Brandsstillneedtobeeasyto

recallandfind.Sharedscaleis

pivotaltomarketingeffectivenessbutthecombinationofmartechfragmentationanddeclining

marketingbudgetshasmadeitmuchmoredifficulttoachieve.Aswefacethisgenerationalshiftintheinformationtechnology

landscape,themillion-dollar

questionforCPGbrandsishowcanweachievesharedscaleintheAlgorithmicEra?

Dentsu’sConsumerVision2035researchexploresthemacrotrendsshapingthe

30,000consumersacross27markets,aswellas20subjectmatterexperts.

Inthereport,weoutlinedthe12trendsthatwill

determinethefutureof

consumers,technology,

culture,andbrand.Tofindoutmore,downloadthereport.

DownloadConsumer

Vision2023

CPGMarketingattheAlgorithmicCrossroads8CARAT

Consideration

02

PioneerANew

WayToFindGrowthAudiences

Consideration

04

FuelTheRise

OfAlgorithmicPlanning

Consideration

06

Reimaginethe

RetailMediaValueExchange

TheAlgorithmicEracomespreloaded

withalotoftechnological,societal,andmarketingjeopardy,butit’saunique

opportunitytopressresettomakesure

brandsarefightingfit.TherearesixthingseveryCPGmarketermustconsideriftheyaretowin.

SixconsiderationsfortheAlgorithmicEra

Consideration

01

WintheBattleforAlgorithmicAvailability

Consideration

03

CreateEqual

OpportunityAcrossAllTouchpoints

Consideration

05

Anticipate

Outcomes,Don’tJustMeasureKPIs

CPGMarketingattheAlgorithmicCrossroads9CARAT

Consideration

01

WintheBattleFor

AlgorithmicAvailability

Algorithms,fueledby

artificialintelligence,havea

transformativeimpactonboth

thedemand-andthesupply-sideoftheCPGvalueequation.

Inthefuture,somelow-interest,

low-involvementbuyingdecisionswillbehandledintheirentirety

byAI.Thiswillchangeourlives

forthebetter,makingusfaster,

freefrommundanechores,andmorethoroughlyentertained.

Atthesametime,algorithmswillarbitratephysicalavailability:theretailsupplychainisincreasinglymanagedbyalgorithms,as

areconsumer-facingproductsuggestionsandadvertisingplacements.

Marketingbybotstobots

influencingbuyingdecisionsmadebybotsonourbehalf.

Achievingsharedscalein

theAlgorithmicErastartswith

masteringthenewfundamentalsofalgorithmicavailability.

Becausealgorithmsmake

decisionsbasedonvastamountsofpubliclyavailabledatafrom

awiderangeofchannels,it’skeythatbrandsfightthebattleforalgorithmicavailability.

Whatthismeansforyoutodayisthatyoumustgettheboringstuffright:tagging,taxonomy,namingconventions,SEO,andlinkstrategyacrossallexternaltouchpoints.

Next,buildingonthesefoundations,brandscan

unlockpredictivemodelling

bycombiningcultureand

commercesignals,leveraging

thefullpotentialofAItocreateamediabrainthatsupports

andsteersdecisionmaking.Thisrequiresatruepartnershipwith

ITtoimprovecross-functional

transparencyofdataandinsight.

Andtoavoidseriousissuessuch

asAItrainingdatabiasand

breachesofconsumerprivacy,

brandsshouldconsiderforming

AIethicscommitteeswitha

mandatetomakebinding

decisionsarounddatausageand

governanceforthepurposesof

traininganddeployingAIsolutionsacrossthebusiness.

CPGMarketingattheAlgorithmicCrossroads

10

Consideration

02

PioneerANew

WayToFindGrowth

Audiences

Masspersonalizationalonewon’tachievesharedscale.Themarcommslandscapeistoofragmentedandwhiletheplatformsprovideeasy

in-platformtargeting,thewalls

aroundtheirgardensmake

deduplicatingaudiencesacrossplatformsnearlyimpossible–evenwiththehelpofAI.

Thereisarealtemptation,

encouragedbythosesame

platforms,tosimplyhandover

controlofmarketingbudgetsandletthealgorithmsdoitsthing–

fromoptimizingmediabudgetstogeneratingcreativetailoredtotheindividual.18

Cedingcontrolisnottheanswer,however.

CPGMarketingattheAlgorithmicCrossroads11CARAT

02

Consideration

Instead,brandsshould

recognizethatpeopleformtightcommunitiesaroundshared

passionsandidentifythemostvaluablecommunities.This

communityintelligencewillcreatemoreopportunitiesforbrandstobringpeopletogetherinculturallyrelevantways.

Wecallthisgrowthmapping

anduseourproprietaryidentitysolutiontocombineinterest

graphswithpropensityscoring,therebycreatingadynamic

mapofabrand’stotalaudienceuniversethathelpsusprioritize

high-valuecommunities.

Growthmappinggoesbeyondtheconceptofbecomingniche.It’snotaboutbeingvisibleto

fewer,rather,it’saboutbeing

relevanttomore.Thegoalis

tocreateaninfrastructurethat

empowerssmart,data-driven

andconsumer-centricbusiness

decisions.Thisinfrastructureis

designedaroundcomprehensiveaudiencesignals,whichenableclientstoeffectivelypredict

consumerbehaviors.

Thiscreatesadynamicsystemofmarketingcommunications,onethatacknowledgesandadaptstotheever-evolvingnatureof

audiences.Itprovidesforagile,dynamicadjustments,ensuring

activityremainsalignedwith

consumerneedsandmarket

shifts.Growthmappingisa

pathwaytoachievinggenuine

consumer-centricity,puttingtheaudienceattheheartofevery

decisionandfosteringmeaningfulconnectionsatscale.

Growthmappingbecomes

particularlypowerfulwhen

coupledwithourbest-in-class

buyingcapabilities.DentsuisthemarketleaderintheutilizationofembeddedAIsolutionsgloballyandwearebuildingmarket-

leadingproductstocomplementthebuyingplatformsandtruly

harnessthepoweroftheiralgorithms.

CPGMarketingattheAlgorithmicCrossroads12CARAT

Consideration

03

CreateEqual

OpportunityAcrossAllTouchpoints

IntheAlgorithmicEra,thereis

noboundarybetweenshopper

andbrandmarketing.Google

ShoppingleveragesAItohelp

peoplefindthemostrelevant

productsmuchmorequickly,

effectivelycreatingasocialfeedinsteadofclassicsearchresults.19AmazonarescalingRufus,their

newgenerativeAI-powered

conversationalshoppingassistant,addingemotionandpersonalitytowhatusedtobeanentirely

functionalplatform,20andlast

year,Walmartlaunchedanew,fullyshoppable23-partcontentseriesonTikTok.21

We’reinanewrealityof

culturalconversionwhereeverytouchpointcanswitchbetweendeliveringbothculturaland

commercialoutcomes.

Tounderstandhowmuchto

investineverytouchpoint,brandsmustcreateaholisticviewof

howallcultureandcommerce

touchpointscometogetherto

delivervalue.Today’srealityis

thatmanybrandsareinvesting

heavilyinretailmediabasedonlimitedevidenceofhowthose

touchpointscometogetherwithallothertouchpointstodeliveranincrementalcontributionoran

effectivenessmultiplier.

CPGMarketingattheAlgorithmicCrossroads13CARAT

03

Consideration

Toomanybrands‘flyblind’

inshoppermarketing,soto

helpthemunderstandthe

realopportunity,werecentlylaunchedanewcustom

studyoftheretailtouchpointsof35US-basedretailers.We

lookedatshopperbehaviorsandmotivationsinadditionto

categoryandbrandchoices

tounderstandhowshopper

touchpointsimpactthetotalmix.

Usingthisstudy,wecalibrated

ourproprietaryplanningtool,

foroneofourCPGclientsand

usedittoimprovetheirbaselinechannelmix.Ouroptimized

touchpointmixreallocated8%ofthetotalbudgetfromshoppertobrandtouchpoints,deliveringaprojected1.6%incrementalnetreachanda+5.3frequency.

Wearenotjustdoingthisforourbrandclients,we’realsoworkingcloselywithretailerstofullymapeverytouchpointattheirdisposalandcalibratePlannertoenableustoplaneverycommunicationstouchpointonequalfooting.

Thisisabigshift.Insteadof

assessingeverytouchpointin

isolation,wecanconnectdotsandassessthemonalevel

playingfield–comparingappleswithapplestohelpbrandsmakesmarterinvestmentdecisions.

Atdentsuweuse

aproprietarycross-touchpointplanningtool.

Firstbuiltin1998,thistoolisfueledbyourIdentitySolutionandplugsdirectlyintoourmediabuyingarm.What’smoreit:

?Isglobally

consistentandlivein70+markets

?Enablesbalanceddecision-makingbecauseall

touchpointsare

measuredonthesamerespondents

?Caterstolocal

nuance,giventhatdataiscollectedineverymarket

?Iscreativelyneutral

?Facilitatesscenarioplanning

CPGMarketingattheAlgorithmicCrossroads14CARAT

04

FuelTheRiseOf

AlgorithmicPlanning

Themarcommslandscape

hasgonethroughastoundingchangesoverthelastfive

years,andit’scrucialthat

communicationsplanning

keepspace.Thedawnofthe

AlgorithmicEracreatesauniqueopportunitytotransformthecraftofplanning:

?Fromapaidmediadisciplinetoleadingend-to-end

experienceplanningcraft

?Fromone-size-fits-allanswerstocustom-built,continuouslyevolvingsolutions

?Frommakingfragmentedchoicesinisolationto

algorithmicallyconnectedmarketingcommunications

Algorithmicplanninggivesusa

newdecision-makingframework.Ratherthanlookingatbasicpaidmediaparameters,weunitetwodisciplinestocreateexperiencealgorithms:

1.Communicationsplanning

assessesalltouchpointsonanequalplayingfieldtocreatetheoptimaltouchpoint

mixtoachievecultureandcommerceoutcomesalongaconsumerjourney.

2.Contentplanningensures

thatforeveryaudienceat

anytime,eachtouchpoint

isarmedwithanassetthat

mosteffectivelyexpressestheconnectingidea.

“

Weareforginganew

craftofcommunicationsplanningforourclients

intheAlgorithmicEra.

CoretothisishowwelinkAIand“PI,”orpeople

intelligence.BecauseAI

raisesthebaronspeed,

accuracy,andabilityto

producealimitlessnumberofoptions,theadvantagecomesasmuchin

executionasitdoesin

strategyandplanning.

ContrarytotheideathatAIwillkillplanning,weseeitbringinginanewgoldenageofplanning.

—

HamishKinniburgh

ChiefStrategyandConsultancyOfficer,dentsu

Consideration

CPGMarketingattheAlgorithmicCrossroads15CARAT

04

Consideration

“

49%ofCPG

Downloaddentsu’s

CMONavigator

CMOssurveyedareexploringnewwaystomonetizetheirexperiencesandtouchpoints.

Thisalsomeanswemustretirethetraditionalmediaplan.Instead,wedeliver“ForYou”experiencesthatwinthealgorithmforeach

audience.

Theroleofthehumblecomms

plannernowfocusesoncreatingdynamicdecisiontreesthatsetouractivityinmotionandgiveusarecipeforhowwerespondtotheperformanceofthatactivity.Then,oncetheactivityislive,

oncetheplanmeetstheactualbidstreamsineachtouchpoint,weoptimizeonanongoingbasistoachievetheoutcomeswe

forecast.

Fromthatmomentonwards,

ourfocusturnstoongoing

reweightingofplanningand

activationalgorithmswithinanintegratedteamscrum–clientandagency,acrossdisciplines.Weworktobeattheforecastsanddeliverthebestpossibleset

ofoutcomesfrombrandtosalestoincreasedpurchasefrequency.

Algorithmicplanningclosesthe

gapbetweenplanningand

activation,anditisthekeyto

buildingdistinctivenessandbrandpowerintheAlgorithmicEra.

CPGMarketingattheAlgorithmicCrossroads16CARAT

Consideration

05

AnticipateOutcomes,Don’tJustMeasureKPIs

IntheAlgorithmicEra,

communicationsplanning

isaboutanticipatingwhere

consumerswillbetomorrow,notwheretheywereyesterday.Toembracealgorithmicplanninganditsrequirementtobeabletoreweightplansandactivationalgorithms,brandsmustadoptanoutcome-driven,predictiveapproachtomeasurement–

onethatlaysthefoundationfor

realtimecoursecorrectionsacrossalltouchpoints.

Thisforecastingshouldinclude

notjustperformancemetrics,

butalsoculturalshifts,consumersentiment,andemergingmarkettrends.We’redevelopingnew

methodologies,adaptive

forecasting,andacollaborativeapproachtounitingplanners

andbuyersacrossalldisciplines-agencyandclient-side-tobeattheforecast.

CPGMarketingattheAlgorithmicCrossroads

17

05

Consideration

Thismeansbuildingsimulations

basedonanticipatedshiftsin

behavior,brandperception,andcompetitivepositioning,then

aligningthesetodynamicallyupdatedforecasts.Tobuildthisoutcome-drivenmodel,we:

1.EstablishReal-Time

MonitoringandFeedbackLoops:

Wecontinuouslyadjust

forecastsandactionsbasedonimmediatedataand

insights,creatingaresponsivesystemthatlearnsasitgoesacrossowned,earned,

shared,andpaidmedia,andacrossbrand,performance,andanyformofpoint-of-salemarketing.

2.SetAdaptiveSuccess

Criteria:

Wedefinewhatsuccesslookslikeinadaptableterms,goingbeyondconventionalKPIs

toincludemetricsonbrandhealth,customerloyalty,andlong-termvalue.

3.FosterPlanner-Buyer

Collaboration:

Weencourageplannersandbuyersacrossallmarketingcommunicationsdisciplines,bothontheagencyand

clientsides,toworkasa

singleteam,alignedina

commongoaltoanticipateandsurpassforecastsratherthansettlingforstaticKPIs.

4.EnableAgilityinAction:

Weestablishflexiblecriteriaforsuccess,ensuringbrandscanpivotquicklyand

capitalizeonreal-time

opportunitiesastheyarise.

IntheAlgorithmicEra,success

isamovingtarget,soby

embracingreal-timeoutcome

anticipationtoclosethegap

betweenplanningandbuying,

brandscanoutmaneuverthe

competitionandbecometruly

futureproof.Thebrandsthatwinwillbethosethatcanbeattheirownexpectations,creatingmoreroomforagility,adaptability,andgrowth.

CPGMarketingattheAlgorithmicCrossroads18CARAT

06

ReimaginetheRetail

MediaValueExchange

IntheAlgorithmicEra,CPGbrands’traditionalstrengths

continuetobeincredibly

important.Abrandneedsbig,

boldconnectingideasthatshowitknowsitsplaceintheworldandhastheconfidencetoletpeoplebuildonthatpositioning.

Agreatbrandisbuiltona

greatbrandexperience.The

touchpointsthatmakeupthe

brandexperiencecontribute75%ofbrandstrength,threetimesthatofpaidmarketing.22Thismakes

theretailexperienceacrucial

battlegroundandcreatesahugeopportunityforCPGbrandsto

buildthealgorithminemergingspaces.

Howeasybrandsaretorecallandfindinbuyingsituations

isincreasinglydetermined

byalgorithms.Theleading

retailersacrossgeographies

arecapitalizingonthisshiftbybuildingretailmedianetworks.

Intheory,retailmediaistheonlymarketingchannelwherethe

buyerandthesellerhavethe

sameobjective,whichistodrivegrowthwiththeirsharedend

customer.Retailersfacehuge

pressuretofindincremental

revenuestreamstoremain

competitive,andthispressure

canleadthemtomaximizetheirownreturnsattheexpenseof

thoseoftheirbrandpartners.

“

Whenaskedwhich

transformationstrategytheyarepursuingto

deliverbusinessgrowth,41.3%ofCPGCMOs

surveyedsaythey

arebuildingtheirownmarketplacetore-selladditionalproducts

Downloaddentsu’s

CMONavigator

andservicesfromthirdparties.

Consideration

CPGMarketingattheAlgorithmicCrossroads19CARAT

06

Consideration

Thismakesretailmediaanirrationalmarketandleadsretailerstorarelyactingastruepartners:brandshaveimperfectinformation,andretailersusetheirleveragetoturnbrandbudgetintotradebudget.Brandshave

anopportunitytoredefinewhatcategoryleadershipinretailpartnershipmeans:

1.Buildameaningfulvalue2.Exploitagencydata3.Foroff-andon-trade

exchangewithretailersbyopportunitiestosuperchargeretailersthatdon’tcurrently

combiningagencyandthealgorithmforcompetitivehaveretailmedianetwork

clientdatatobringcategoryadvantage–forcompetitivecapabilities,particularlythe

insight,incrementalcustomer-advantage.Forexample,longtailofindependently

leveldataattributes,contentretailmedianetworksofferownedoutlets,brands

capabilitiesthatenhancepaidplacementsthatcanhaveanopportunitybuild

theshopperexperience,stimulateorganicpromotionthealgorithmandcreate

andprovetrueincrementalwhichcanbeusedtotrickanincrementalsourceof

categorygrowthandthesystem.revenue

enhancedretailerlifetimevalue.

CPGMarketingattheAlgorithmicCrossroads20CARAT

IntheAlgorithmicEra,the

mostin