Mondelēz's $40M AI Advertising Bet | Fast Five Shorts

Oreo maker Mondelez plans to use a new generative AI tool to slash its marketing costs.

According to Reuters.

Snack maker Mondelez is using this generative AI tool to cut their production and marketing content costs by 30 to 50%, an executive told the news outlet.

The packaged food manufacturer began developing the tool last year with it firm Accenture and expects that it will be capable of making short TV ads that would be ready to air as soon as next year's holiday season and potentially for the 2027 Super Bowl.

Mondelez has invested more than $40 million in this tool and it is using content generated by the new tool on social media for its Chips Ahoy cookies in the US and milk of chocolate in Germany.

An 8 second milk of video shows waves of chocolate rippling over a wafer along with different backgrounds depending on which consumer Mondelez is targeting.

Mondelez, however, is not putting human likenesses in its AI created content.

Chris, this is also the A and M put you on the spot question.

Mondelez, they've spent $40 million to get to the point of AI generated ads.

What are your short term and long term implications of the deep pocketed big brands stepping out from the pack to go in on Gen AI in this way?

Wow.

Okay.

Cpg put you on the spot based question.

All right.

I like what those guys are doing here trying to put me on the spot this week.

All right.

Truth be told, Ann, I'm very, very, very, very.

I think that's five areas if I'm keeping score at home.

Leery of the approach here.

I think it's, it's, it's a dangerous approach.

It feels like, feels like to me there's a fast approaching trap here.

And by trap, I mean the sunk cost trap.

And the reason for that is I think the technology is changing too Fast, that a $40 million investment with Accenture could honestly get obsoleted very quickly here or especially over the long run.

So I think the right approach is actually to test and learn your way in with various providers via very smart, controlled experiments, which it sounds like that's the approach they're taking with their own internal tool.

So I don't understand why they're spending $40 million because I think there's a lot of improvements that could be made with the range of software providers that we encounter every single day that wouldn't cost a fraction of that amount and still give you the same efficacy.

So, so given how many competitors are coming into the fray and every single day in this space, who's to say there's not going to be a better way to do things in just six months, in time.

So short term, I think it definitely galvanizes the CPG industry to think about AI differently.

That's one important point of this headline.

But long term, I do think it's the wrong approach.

Yeah, I mean, I think that the other part of this is you're also, like, having the Mondelez team or the Accenture team together.

Like, you're.

You're expecting that generative AI is going to be top of mind for these teams, staying on top of trends where this technology is going.

Like, I just, I don't think that's a tool that the CPGs have internally.

They're always going to be driven by what the overarching objectives are for their brand and for their business, not focused on the development and staying up to date with what's happening with the technology.

I just saw a demo from a company, Chris, this week called Genesis X.

They showed me some of the AI demos that they're doing with their technology.

And as a former producer of these commercials, I am astonished.

Like, yeah, and they have humans in the.

Like, they have humans in the.

In their ads.

They will at some point soon be able to, like, change the content of the ad in between.

Like, Monday night to Thursday Night Football.

Like, the.

There is stuff happening in these things that I have seen with my own eyes that I'm just like, there is.

And if you gave them $40 million to work with, like, I can only imagine what they'd be able to create for the lifetime of your brand.

Like, it just it doing this.

And this is another scenario for a retailer or a brand to beware.

This is a buy conversation.

This is not a build conversation.

This is where you go exactly what you were saying at this stage.

You.

You go to the experts who can do this and can stay on top of the trends in technology much better than your organization is going to be able to.

So to answer A and M's question, I definitely see the financial use case for this technology, but this is 100% a scenario where I would be going to the experts and not trying to build inside my own legacy organization.

Yeah, that's well, very, very well said.

And you understand that space much better than I do, so.