2021’s global inventory and shipment challenges are intensifying in Q4, forcing changes in consumer experiences and advertising strategies. The product shortages and delays are the result of layered pandemic-induced complications across three key areas:
- Demand: Increased online purchases, especially for fast-moving consumer goods (FMCG), grocery, and bulk products.
Consumers accelerated digital shopping trends during the pandemic and are now buying online more than ever before. The ease of price comparison as well as exposure to quality and variety make for a faster purchase and re-order.
- Labor: A shortage of employees ranging from warehouse workers to truck drivers.
Americans are changing jobs for higher-paying roles, or career status to care for family. Q3 featured the highest-recorded departure, with 4.3 million Americans leaving their jobs in August for various reasons, according to the Department of Labor, which has been tracking job trends since 2000.
- Supply chain bottlenecks: Rate of growth exceeds logistical capabilities.
As manufacturers work to produce greater volume with fewer staff due to resignation, sickness, and safe-spacing/cleaning protocol, the front end of the process is operating in a lag. Compounded by the rising prices of shipment containers, the stuck barge in the Suez, and lengthy lines at ports, the delivery phases are also negatively impacted.
As these dynamics continue to evolve, marketers need to balance profit and loss by honing their advertising. Changes required will differ by vertical (automotive, food + beverage, etc.), as well as by objective. Upper-funnel programs tasked to build awareness or engagement pre-sale are long-term endeavors that are not so impacted by supply chain. Direct response-focused digital media programs optimized towards conversion are more stressed by these implications, given the difficulty of selling unavailable inventory.
Advertisers running these sales-focused media strategies must be nimble, adapting their flights to serve high demand with a limited supply and uncertain logistics—a tough economic situation across ad verticals, exemplified by the computer chip shortage, a vital component to products ranging from cars to coffee machines. However, the challenges are also opportunities to flex these optimization levers:
Channels: Capitalize on shift towards online shopping.
The public safety aspect of the pandemic accelerated the rate of digital transformation. Online advertisers benefit from the first-party data harvested from user behavior, and have been prioritizing digital channels - especially those with granular targeting capabilities to best leverage intent signals, like search, programmatic, and social. Moreover, traditional brands that rely on catalogs are limited by the paper shortage and needed to have print orders submitted earlier and at higher costs this year, giving digital advertisers an edge in terms of flexibility.
Products: Focus paid media support on key items.
Examine product sale performance by channel and plan to remove or limit paid support on items that are successful enough through organic, concentrating working media budget on other key items that require ad spend and exposure to sell against competitive pressure. Additionally, removing back-ordered, low-inventory, and high sell-through products from feeds can help maximize investment. Promoting higher average order value (AOV)/luxury products with a longer click-to-purchase timeline will increase ad effectiveness.
Audiences: Carve distinct targets within existing and new segments.
In anticipation of the upcoming cookieless future, prioritize first-party data collection and put it to work now by splicing campaigns based on user behaviors as well as relative performance. Taking CPG/FMCG as an example, consumers will purchase in bulk with predictable timing of when they’ll re-order or switch brands, so dedicating media to passive/lapsed users can help to re-engage users accordingly.
Creative: Personalize based on user behaviors and brand imperatives.
Serve audiences tailored messaging driving to specific landing pages to stimulate action. As product supply ebbs and flows, crafting messaging that speaks with urgency and timing could help generate conversion, pulling sales forward on available inventory.
Deals: Flight media to secure coverage during promo dates while supply lasts.
Big holiday sales may be less competitive than in past years, so brands must differentiate against their peers to capture revenue as inventory supports. Running teaser campaigns leading up to the promo could motivate shoppers to buy ahead of the deal, willing to pay full price to secure their order.
Gifting: Advertise gift cards while products are temporarily unavailable.
As supply chain issues mount closer to holiday, emphasize gift cards in ads and on site. Sell physical gift cards that can be shipped more easily and still be wrapped, or e-gift certificates that can be printed and included in envelopes in time for the holidays.
User Experience: Modify to accommodate customers and meet brands’ needs.
Consider program-level shifts to activate media now for future-realized performance with online pre-order and fund channels higher in the funnel that drive toward secondary or tertiary KPIs not as focused on direct return. Understand where customers are meeting your brand and buying your products, and weight your sales goals accordingly; a CPG, for example, may heavy up on Amazon and reduce direct-to-consumer support.
Consumer trends will continue to unfold and dictate how advertising needs to serve users in their moments of intent across the digital journey on their path-to-purchase. In the meantime, pulling these optimization levers and remaining agile will fortify advertising to collect rich first-party data to learn from and scale towards.