‘We own the contracts’: Hershey’s is taking control of its ad tech

After consolidating its programmatic buying into one ad tech vendor, Hershey’s is starting to see the benefits.

The advertiser spent much of last year deciding which ad tech vendors it would use to buy its ads. Eventually, it opted to spend most of its programmatic budget through one demand-side platform and then went live with The Trade Desk at the turn of this year.

Historically, Hershey’s bought most of those ads through one main DSP and then used specialist vendors to chase specific impressions. But that approach is no longer feasible. The more ad tech Hershey’s used to buy its ads, the harder all those bids were to track. Each DSP implements its own technology in its own proprietary way that makes it harder to compare and contrast what impressions are bought across several different vendors. Furthermore, there are fewer DSPs on the market now, which makes it easier for Hershey’s to inadvertently bid against itself and subsequently drive up the price it pays for impressions.

“We were using a mixture of DSPs, but then we decided to scale back to one or two providers instead of being agnostic,” said Vincent Rinaldi, head of addressable media at Hershey’s. “We learned quickly when we were agnostic that it’s harder to bring everything back together for reporting.”

Other advertisers have made similar moves. The number of DSPs used by advertisers dropped 40% between 2016 and 2018 to around four per month, per a Pathmatics study of its top 100 advertisers. Rinaldi declined to reveal how the consolidation of its own ad tech stack has impacted its programmatic buys, but did say the upturn had been significant compared to its old setup. “Switching DSPs allowed us to reassess the programmatic marketplace, and since we made the transition in January, we’re seeing strong improvements to where we were a year and a half ago,” said Rinaldi.

The overhaul also expedited the advertiser’s ads away from the long-tail of sites. “That number has heavily gone down because there are stricter criteria,” said Rinaldi. As it stands, Hershey’s spend leans slightly more toward private marketplaces over the open market. “We’re not turning our backs on the open marketplace because it’s an environment where we can learn while focusing on places where our audiences are,” said Rinaldi.

Having that insight is the result of managing the DSP directly. An internal programmatic trader at Hershey’s runs the tech day to day, which is an arrangement built on the advertiser’s ownership of the contract and, therefore, the performance data its programmatic bids generate. Agencies have traditionally owned this data, which has made it harder for advertisers to get rid of them.

“We own the contracts, which is the most important thing for us because then we own the data,” said Rinaldi. “Fee transparency was important but it wasn’t the only criteria we used to pick our ad tech partner.”

The data shared by the DSP influenced Hershey’s choice as did the user experience of the platform, given the advertiser’s trader would be the one logging into the system to manage campaigns. The tech used by the DSP to make bids was also important. Bid shading, for example, was briefly discussed during Hershey’s review of vendors, said Rinaldi, who said it could become an important tool amid changing auction mechanics and unfair auctions.

Phase one of Hershey’s plan was about understanding how its programmatic ads are bought, while phase two focuses on knowing how they are sold via supply-side platforms and exchanges. “We’re starting to assess the reality of supply-path optimization and what that really looks like because we don’t want to be stuck in the margin game,” added Rinaldi. “Transparency is much around fees as it does around the people you work with and the teams you’re budding around.”

Hershey’s has a small team managing its programmatic investments. Alongside Rinaldi and the programmatic trader there are four other marketers on the team: an audience planner who oversees the advertiser’s targeting efforts, a social media marketer, a media and integrated comms planner, and a data scientist, who manages the repository of ad server, bid and social media data generated by the advertiser’s ads. Despite having the in-house expertise, Hershey’s marketers still rely on its agencies to do tasks like curate massive volumes of impressions. Curation of inventory is another means for agencies to get closer to the sources of supply, and manage it now that the advent of ad tech has pushed them further away from publishers.

“I don’t see our in-house team becoming 20 or 30 people,” said Rinaldi. “Yes, we need to keep understanding the ecosystem, but we’ve seen a shift in our ad tech and agency partners in that there’s more willingness to listen to our challenges and really work together to tackle them.”


More in Media

AI Briefing: Senators propose new regulations for privacy, transparency and copyright protections

A new bill called the COPIED Act aims to pass new transparency standards to protect IP and guard against AI-generated misinformation.

Media Briefing: Publishers reflect on ad revenue midway through 2024 

Some publishers say ad revenue is pacing 15% up year over year while others are still managing their expectations for how 2024 will shake out.

Teads is exploring sale options as M&A in ad tech heats up

Sources state the Altice-owned stalwart of outstream video has recently held talks with private equity and strategic players.