• Ad Age, Monday, October 23, 2006 12:15 PM

Despite analysts' suggestions that disappointing third-quarter sales could be linked to a cut in ad spending in favor of in-store promotions, Hershey president-CEO Rick Lenny insists that "[efforts] closer to the point of consumption and point-of-sale tend to have the higher return."

Analysts are concerned that Hershey might be trapped in the food industry's "cycle of doom," in which ad spending is cut to make the numbers, then restored when sales fall, then cut again. Analysts also worry that the marketer's lack of advertising might potentially be hurting the category overall.

Hershey's measured media spending fell from $147 million in 2004 to $122 million in 2005, and was $76 million for the first half of this year, according to TNS Media Intelligence.

Lenny laid the fault for less-than-expected sales numbers last quarter on poor "consumer and customer programming." He outlined a corrective plan including sampling, which will increase dramatically, and a fully integrated program for its dark chocolate offerings starting the day after Thanksgiving.

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