Hershey's bet on in-housing is yielding sweet results, with overhead costs down 25%, output up fivefold and over $4 million saved in agency fees
- The Hershey Company's CMO Jill Baskin overhauled the brand's marketing department and launched its in-house agency C-Sweet in July 2018.
- The agency handles everything from research and creative development to production and media planning and buying for big and small brands in Hershey's portfolio.
- C-Sweet has resulted in the company reducing overhead by 25%, improving return on media spend by 10%, and increasing output by fivefold, and contributed to Baskin's being named to Business Insider's 25 most innovative CMOs list.
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When Jill Baskin took over marketing at The Hershey Co. in fall 2017, she quickly realized that she needed to shake things up. So in July 2018, she overhauled the iconic candy-maker's marketing division, unifying disparate teams into one organization with focus on digital.
She also launched an in-house agency called C-Sweet (a nod to the company's products and a play on the term C-Suite), to produce content more easily and cheaply, reinvent outmoded ways of working, and work directly with vendors.
"I felt like there was a lot of work that we could do internally, and do it faster, less expensively, and better," said Baskin, who was just named to Business Insider's list of the 25 most innovative global CMOs. "And our agencies weren't making it. I literally couldn't get what I wanted."
C-Sweet provides agency-style services to Hershey's brands
C-Sweet provides agency-style services to Hershey's brands, bridging its corporate marketing and individual brand departments. The 34-person agency employs experts in everything from strategy and design to production and editing.
C-Sweet was behind Reese's effort to champion people's cravings last year, for example, which featured ads showing real Reese's cups for the first time instead of animations. Since the changes were rolled out, Reese's sales have increased 3.1% year-over-year, according to the brand-which is a big lift for a $2 billion brand.
"No one thought that showing real products would work before that," said Baskin.
The agency acts as a full-service agency for smaller brands including Brookside, Heath and Rolo, handling everything from research and creative development to production and media planning and buying. Heath and Rolo have upcoming campaigns that were developed entirely by C-Sweet.
Hershey has also used the agency to understand how it spends its digital dollars and where its programmatic impressions are coming from and optimize more of its media campaigns in-house, Baskin said.
For a recent Brookside campaign, for example, C-Sweet used IRI data to determine where sell-through was the strongest and the weakest, redirecting its media buying to ZIP codes with poor sell-through. In this way, C-Sweet reached twice as many consumers with roughly the same spend.
"We've done a ton of research to understand when does increasing spending work and where does it work, and it does seem connected to sell-through," she said.
In another campaign for Kit Kat, the agency is running three types of creative that are optimized based on times of day when people are likely to take breaks and when its spending would be most effective. Doing this work internally saved the company more than $250,000, it said.
Hershey's best on in-housing is paying off
The need for greater speed, efficiency and savings has prompted a number of marketers including Liberty Mutual, Marriott, Unilever, and Verizon to build their own agencies. 78% of advertisers in an October 2018 survey by the Association of National Advertisers said they had some form of in-house agency.
In-housing doesn't always go smoothly, with some advertisers seeing mixed results. Media-buying in particular can get complicated, with navigating through different pricing models and ad sets can getting complex for lean in-house teams. And it's hard to get people who want to work on just one brand rather than a range of brands, which agencies allow. Hershey continues to use content companies like Tenor and Whalar, and media agencies like Accordant for support, acknowledged Baskin.
But Hershey's says its bet is paying off. When C-Sweet first launched, it was housed in a repurposed closet at the company's Hershey, Pa., headquarters. Now, it is getting its own space. It now serves as the agency-of-record for five Hershey's brands, including Almond Joy, Bark Thins, and Brookside.
Individual campaign results aside, C-Sweet has resulted in The Hershey Co. reducing its overhead by 25%, improved return on media spend by 10%. It has increased output by fivefold, and saved more than $4 million in agency fees, estimated Baskin, with the agency churning out more than 127 pieces of content in its first 10 months. It has also started to do more work for bigger and more prominent brands like Reese's and the flagship Hershey's brand.
C-Sweet has also boosted employee morale, said Baskin, noting that the marketing department has had zero attrition since the agency kicked into gear last year. That may be because C-Sweet also doubles as Hershey's talent development program, with the company's brand managers doing a rotation at the agency as a part of their training.
"They're getting their hands dirty, seeing how social content is created, learning how to direct creative feedback and how to write a great brief that results in great work, and understanding the creative process," said Baskin. "And in a world where talent retention and development is important, it adds a competitive advantage that other brand management programs don't have."
While Hershey's still uses agencies for its biggest brands including Hershey, Reese's and Kit Kat almost entirely, Baskin sees C-Sweet taking on more responsibilities.
"That's the future, not just for us, but for everybody," she said. "The agency model has to work itself out."