Despite Supply Chain Issues, Now Is Still a Great Time To Advertise

It’s no secret that consumers are becoming increasingly frustrated by the ongoing supply chain issues. As a result, many marketers are slashing advertising spend. But there’s an inherent danger to cutting ad spend during a crisis. Despite the current supply chain disruptions, here’s why brands should avoid cutting back on ad spend right now.

A study conducted by Oracle found that 92% of consumers believe more disruptions are coming, 66% are scared that they will never end, while 80% say delays and shortages could cause them to cut ties with favorite brands. As a result, many marketers are slashing their advertising spending for fear of being unable to fulfill the promise of an advertising message. However, there is an inherent danger in this cutting back of spending, for as one industry leader put it: “Pulling media spend will only result in share and awareness erosion.”

This is all on top of the fact that many brands severely cut back on their ad spending during the height of the pandemic. Case in point Coca-Cola. During a Q2 Earnings Call in July 2020, CEO James Quincey asked aloud, presumably rhetorically: “Why would I want to spend money in a period if I can’t get the return, particularly if there’s a strong lockdown?” adding that they (Coca-Cola) believed “no marketing is going to make much difference in the second quarter, so we pulled back heavily.”

On the flip side, there were brands like P&G and PepsiCo, who not only did not cut ad spending but also increased the amount they were spending on advertising and marketing. By the end of 2020, P&G and PepsiCo each saw an increase in net revenue with a 4% and 5% growth, respectively, compared to Coca-Cola, which saw a reduction in net revenues of 11% for 2020.

See More: A Path Toward Greater Transparency — 5 Steps To Maintain Your Ads.txt

Start With the Why

The obvious two questions to ask are: Why and How.

Why should brands not only NOT cut ad spending but increase it, and exactly How is the best way to go about this?

To quote Simon Sinek, let’s start with the why — why keep advertising and even increase the amount a brand spends on advertising?

The first reason goes back to the decision by Google to block third-party cookies from its Chrome browser. While Google delayed the moveOpens a new window from 2022 to late 2023, the fact remains they will, at some point, take this action, thereby significantly impacting advertisers’ ability to reach new consumers in the same way they have before.

So, smart advertisers will take full advantage of the time left before Google “flips the switch” and increase the amount of first-party data they capture, with a clear value exchange for the consumer. But even agnostic of the eventual Google third-party cookie deprecation, brands need to create more explicit value exchanges with their audiences to survive and thrive in today’s world. Consumer expectations are at an all-time high and will only increase. They expect brands to ‘know’ them; to know their likes, dislikes, preferences and so on. The best way to truly ‘know’ your customer is to capture first-party data. And one way to do this is by, you guessed it, reaching more prospective customers through advertising and offering them something of value to create that relationship.

An example of this is Heinz. This past Halloween, the brand turned its signature product, Ketchup, into a relationship-building, data-generating tool as it packaged it under the guise of fake blood. They created an ecommerce microsite where they offered consumers the chance to buy merchandise such as Tomato Blood costume kits, masks, and other outfits appropriately themed around Halloween, such as mummies and pirates.

The coming holidays offer yet another reason why to increase ad spend. While not everyone celebrates the same holidays — and some do not celebrate ANY holiday — the fact is during this time of the year, a great number of people are looking to buy gifts, and not just for others.

While gift-giving is top of mind for many, other relevant topics that trend during the season include home entertaining, cooking, travel, holiday décor, and more. The point is that the holidays are not just about buying for others; there are also many other “things” and reasons people make purchases for this time of year.

Moreover, the fact is this year will be markedly different from last year. Instead of relying mostly on virtual get-togethers, this year for many will be about getting back to in-person gatherings. This in itself equates to even more reasons to advertise, for more people will be looking to buy a bottle of wine, fruit basket, or some other item that lends itself to in-person vs. virtual, not to mention airfare and hotel accommodations.

And Now for the How

So now you know why brands need to keep advertising and even up their ad spend. Now comes the how.

The easy answer is to go spend more money on advertising! Of course, it’s not quite that easy, for as John Wanamaker once famously said: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

I was actually reminded of that quote reading a fantastic article entitled The errors of efficiencyOpens a new window . In the piece, the author astutely points out the misconception many advertisers have regarding paid social media and online video. Because these formats can be targeted to reach defined audiences while providing a measurable response, there is a perception they deliver the best ROI.

However, there are more nuanced strategies that need to be considered when determining the ROI of a campaign. For example, different media drive different levels of attentionOpens a new window and engagement and incremental reach. There is also the social capital that some media can drive. As the article mentioned above adds quite succinctly: “Traditional broadcast communications not only reach a large audience, but they also reach that audience publicly. In mass media, not only do many people see your advert, but they see many other people see your advert as well”, which can make some items more covetable.

The lesson is how you allocate your media should be driven by your objectives for both brand and demand, the ability of each to drive the right engagement, and how they add reach instead of over-saturation.

Aside from increasing their ad spend, savvy advertisers are also looking for other ways to collect first-party data. That’s why, as a recent Marketing Brew piece put it: “brands like Cheez-It, Dunkin’ Donuts, and Panera are suddenly selling swag; and why brands ranging from McDonald’s to Taco Bell are investing in loyalty programs.” This all goes back to something I said earlier; brands need to create more value exchange with their audience, whether existing or prospects.

See More: Ad Spending in 2022: Things To Consider Before Your Next Campaign

Final Thoughts

The short term is the holidays are fast approaching. I know that’s not breaking news, and like every other year, the holidays will come and go. The long term, however, is coming to grips with the fact that we’re looking at extended supply chain disruptions.

Regardless of short-term or long, the fact remains now is not the time to cut your advertising dollars. It is simply not worth the aforementioned “share and awareness erosion” any brand will surely encounter should they go down the path of least resistance.

How are you allocating your media spend this holiday season? Share with us on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d be thrilled to hear from you.