As if you didn’t know: supply chain issues are messing with advertising

As if you didn’t know: supply chain issues are messing with advertising

Steve’s breakdown: They are talking about some clients cutting ad budgets by 50%. Sounds terrible but keep in mind that’s mostly media spending. If you’re a creative shop, keep pitching more ideas to place on cheap/free media! Advertisers can let their brands “go black”.

BTW: There are a lot of links in this article to additional articles that many won’t be able to read. If there’s some you want to read, let me know and I’ll get them for you!!

EVERYWHERE, USA: Supply chain disruptions are wreaking havoc on industries from automotive to retail to consumer packaged goods, causing marketers to slash fourth-quarter ad budgets and scrutinize 2022 spending plans.

Insider spoke to executives at five advertising agencies who said at least a few of their clients have cut their 4Q marketing budgets, by anywhere from 10% to 50%. They spoke on condition of anonymity to protect their relationships with clients.

Some marketers have also had to change their marketing messages in light of stock shortages, putting additional pressure on their agencies that are struggling to keep up with work due to their own staff shortfalls.

One agency exec said plans created a year ago have been changed at the last minute, requiring employees to be taken off other projects to redo creative assets like product shoots.

“We go into a year with a specific plan,” the exec said. “With all the supply chain disruption this year, we’ve found ourselves having to pivot off what we thought would be the focus for a month. We’re finding ourselves going into planning sessions many times a year that were not budgeted for. It’s more cost on the clients and more labor requirements for us.”

Audi has been creating new ads to promote its brand and the future of electric vehicles instead of trying to sell cars they can’t make due to industry-wide challenges like a lack of material availability, cost increases on raw materials, and a labor shortage, said a person with direct knowledge. In doing so, it’s using TikTok for the first time to reach young people who might be future customers, this person said. Audi did not return a request for comment.

And according to another agency insider with direct knowledge, Bed Bath & Beyond has had its agencies swap in store brands in ads in place of products it doesn’t have. Bed Bath & Beyond CEO Mark Tritton said on the retailer’s second-quarter earnings call that he sees supply chain pressure continuing.

A Bed Bath & Beyond spokesperson, however, said the retailer is following the same strategy it laid out last year to promote its own brands.

WPP’s GroupM had earlier predicted that worldwide ad spending would jump 19% to $749 billion in 2021 after a crushing 2020. But supply chain pressures could thwart that rebound.

“It’s a short-term pain for sure, but if they can’t put products on the shelf, some budget cuts for this fourth quarter could carry into 2022,” one agency chief investment officer said.

Advertisers’ shifting plans has also further strained their ad agencies, whose employees are already burned out due to staffing shortages.

“It’s certainly caused more churn in our day-to-day when we have clients experiencing week-to-week challenges,” the chief investment officer said. “It’s causing less stability when we’re changing things and moving things around, which is causing more stress on staff.”

Agencies are uncertain how long these issues will last and if supply chain shortages will carry over into 2022.

But another agency source said supply chain woes have been brought up by marketers in every new business pitch they’ve been in recently as ongoing concerns for planning campaigns and advertising budgets.

Naturally, agencies hope to convince clients not to take their foot off the marketing pedal.

“While the supply chain issues have definitely put added pressure on [return on advertising spend], we don’t advise clients to go dark,” said Mike Farasciano, Crossmedia’s head of client service. “Pulling media spend will only result in share and awareness erosion. This period could be a great opportunity to shift some spend to more upper-funnel initiatives and away from performance-based ones that are more affected by the current challenges.”


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