Hershey Bets on Agentic AI to Rethink $2B in Marketing Spend

but once you improve the product, you need to tell people that you've improved it.

I know that articles like this, and the broader dialog, doesn't go too in-depth on how these things work. The phrase, "one agent understand marketing econometrics" from the article makes me wonder what exactly they mean.

This could be anything from "we put a prompt in front of chat-gpt that says 'you are an expert in marketing econometrics'" to "we built a model trained exclusively on marketing econometrics material"

No matter what they actually did, the agent (assuming its an LLM) doesn't understand marketing econometrics, instead it's tuned to produce output tokens that I suppose make more sense when the topic is marketing econometrics.

I'm not an LLM detractor, but I find the kind of thinking that's become prevalent to be so squishy. Humans are great anthropomorphizers and it seems today that no one is attempting to hit the brakes on that instinct. The models don't understand anything, in the way that we commonly use the term understand.

It seems we've confused ourselves because the box that doesn't understand marketing econometrics can produce marketing econometrics analysis and when we ask it why it came to such and such conclusion it can produce convincing explanations.

As an aside, I also feel like I've heard this for 30 years about marketing. Marketing is everywhere, the surveillance economy tracks our every move in more and more invasive ways every day, and still companies go "Aw shucks, we just can't make sense of this data." It reminds me of a time when I was working for Abercrombie and Fitch and there was this massive report our team was partially responsible for generating. 500+ pages, generated everyday, sent to a high speed printer from a COBOL job every morning at 5am so that 10-15 copies could be made for the executives. It had *all the data* and each executive had their own little ritual around which bits they thought were important.

Throughout my career as an engineer I've been asked to get more data, more data, more data. Process the data, analyze the data, create some graphs and tables and help people understand the data.

One thing I've realized is that the people demanding all this data, all this insight, all this analysis, are unlikely to actually need it or use it when available. They are tasked with making decisions, and decisions are scary because you can make the wrong one. They would love to not make the decision and maybe you can find enough data that the choices get cut down to just one. Then if it ends up wrong they aren't to blame, the data made them make that decision.

So all of this surveillance, all of this analysis, all of this data is likely just to make some person feel a bit more comfortable about making a decision.

You’re confusing two different things. The “sour taste” objection to Hershey’s chocolate has nothing to do with “cost optimization.” You’re thinking about the 2006 recipe changes, which never applied to Hershey’s solid chocolate bars (and flagship products like peanut butter cups). That sour taste is in Hershey’s original recipe. If you got rid of it, it wouldn’t be Hershey’s chocolate anymore.

If you grew up with European chocolate the unfamiliarity maybe makes it taste off. But characterizing it as tasting like “vomit” and the result of over “processing” is spin. Butyric acid arises from processing milk products, which is why the compound is in Hershey’s chocolate and also in parmesan cheese. The opposite marketing spin: “Hershey’s chocolate bars use traditional techniques that result in a hint of parmesan with the sweet” would be equally correct.

Apart from the possible line items others have noted, it's also worth calling out that a ton of the paid media they're talking about is highly targeted digital media.

General awareness campaigns are not in vogue these days, especially for CPG companies. You're not seeing a lot of billboards or train wraps for these brands anymore. Instead, you're probably just not deemed by the all-knowing models to be a likely buyer (count yourself lucky--it's probably a good sign for your diet and health).

But it's not inconceivable at all that the $2B spend it invisible to a high portion or even a large majority of the population if they can get more ROAS by targeting specific subsets.

Edit: one more ps that I thought was funny. The one brand you called out (Kit Kat) is only owned by Hershey in the US so it's entirely possible that the online ads you've seen are actually Nestlé's, depending on what sites you're viewing and/or where you live.

I’m always confused why some companies have to advertise so much.

Some companies like Kleenex or Band-aid… they’re synonymous with the product. Hershey is very well known for chocolate and probably many other products under their umbrella.

The only marketing you really need is if you see some concerning dips in sales due to competition, or to push a new product. Instead of spending billions on marketing, keep your prices low and competitive, don’t cut corners on quality. I’m tired of companies cutting costs to maximize profits but still marketing to consumers all the same while degrading the products.