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Hershey Picks UM for Global Media

Candy Maker Spending Big as it Eyes Overseas Growth

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The Hershey Co. has selected Interpublic's UM as its global media buying and planning agency following an eight-month review.

Hershey, which has significantly boosted its ad spending this year, had used multiple media agencies across the globe. U.S. incumbent media shop Omnicom Group's OMD participated in the invitation-only review along with Publicis Groupe's Zenith. The assignment includes paid media such as TV, print, digital and Hispanic for the U.S. business -- the company's largest -- as well as international businesses.

"After a comprehensive review, Universal McCann will be a strong partner for The Hershey Company and our portfolio of iconic brands," Denis Sison, VP for global marketing excellence and equity, said in a statement to Ad Age. "OMD has been a valuable partner to Hershey throughout the years. We would like to sincerely thank them for their work and dedication."

The decision comes about one month after Publicis Groupe and Omnicom announced their planned merger, so it is notable that,both holding companies came out on the losing end of the review. Asked if the merger played a role, a Hershey spokeswoman said no. It's a tough loss for OMD U.S., which has won and retained a few large accounts over the past couple of years in the U.S., including Experian and Walgreens in 2013 and Warner Bros. and Toys "R" Us in 2011.

The move is in line with the candy giant's goal to reallocate a much larger portion of its media spending to global markets, according to people familiar with the review. In the statement, the company said the review "created the opportunity for Hershey to transition to a globally integrated media planning and buying process to support its growth around the world." Currently Hershey spends the majority of its media budget in the U.S., where it achieves the bulk of its sales.

Hershey reported $6.6 billion in net sales in 2012, with 16.1% coming from consumers outside of the U.S. The marketer is the second-largest confectionery company in the U.S. with 24.2% share, trailing Mars Inc., which has 30.8%, according to Euromonitor International. Globally, Hershey ranks fourth, with 4.9% share.

But Hershey has put a big priority on overseas growth. The company earlier this year introduced,a new candy brand called Lancaster in China, representing the first time it has launched a new brand outside the U.S. Hershey also opened an innovation center in Shanghai. For this year, the company is forecasting a 20% boost in advertising spending, with outlays outside of North America expected to grow to 50% from 45%, executives said on a recent,earnings call. In 2012, the company shelled out $526.2 million on measured media in the U.S., according to Kantar.

In the States, Hershey has aggressively advertised flagship brands like Hershey's and Reese's, and also put money behind smaller brands such as Rolo and PayDay. The company has also invested marketing dollars in its line of Brookside-branded premium chocolate-covered fruit-juice pieces. Hershey agreed to acquire Canada-based Brookside Foods in late 2011.

Hershey Co. uses Arnold Worldwide for creative.

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