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26 October 2021
Supply chain issues affect adspend
Social media platforms are feeling the effects of the global supply chain crisis which is making many advertisers rethink their Q4 spending plans.
Supply chain disruptions, which include a lack of components, reduced working at overseas manufacturing locations because of COVID-19 and rising energy prices, and shipping delays at crowded ports, mean companies can’t be sure of their stock levels ahead of the busy Christmas period.
A new Adobe analysis found that out-of-stock product messages have risen by 172% compared to the pre-pandemic period, with apparel, sporting goods, baby products and electronics hardest hit.
Why it matters
Businesses won’t want to advertise products that might not be available, so promotional spending is likely to be muted, the Financial Times reported; at least one social media group anticipates taking a hit as a result. Advertising groups, meanwhile, are monitoring the situation and will hope that brand advertising holds up.
“We expect that some [advertising partners across a wide variety of industries and geographies] may opt to slow their marketing spend given the diminished need to drive incremental demand at a time when their supply chains are not able to operate at peak capacity” – Jeremi Gorman, chief business officer at Snap, in a Q3 earnings call.
“Supply chain issues and labor shortages... have left many consumer businesses with less inventory. This has reduced their appetite to generate demand from consumers, which has impacted advertising spend” – Sheryl Sandberg, COO at Facebook in a Q3 earnings call.
Sourced from Financial Times, Seeking Alpha, Adobe