Why Continue Advertising When Inventory is Low?

From the early days of the pandemic where panic buying left toilet paper shelves empty to the dozens of cargo ships currently waiting more than a week off the coast to unload, it’s clear the pandemic has caused chaos in the global supply chain. And experts predict those interruptions won’t stop any time soon.

The conditions causing problems across the globe are complicated. More than a year ago, stay at home orders helped shift consumer demand in previously unexpected delays—while also delaying production at businesses deemed non-essential. As organizations pivoted to meet demand, goods were produced quickly. However, there hasn’t been enough logistical equipment to get products where they need to go.

All of this combined is increasing the cost of moving products and dramatically increasing delivery times. As result, inventory is low in many industries—and will likely continue to be so for the near future. This creates a challenge for companies: Why continue advertising when inventory is low?

As marketers, our top priority is generating qualified leads for sales and increasing brand awareness for our clients. But when inventory is low due to worldwide shortages, it can be tempting to pull back on marketing efforts to save money. But for long-term success, consistency is key.

A Real Example 

When two Strategic America clients took different approaches to advertising in the pandemic, we saw firsthand the difference consistency can make. Both clients are in the same industry, operating as branches of a national brand.

As the pandemic changed consumer demand and interrupted the supply chain, Branch A initially pulled marketing spend but reinvested. Eventually, they also added incremental spend.

Branch B pulled out their marketing spend and did not reinvest.

For the first few months, the branches performed similarly. Eventually, though, Branch B lost the tailwind benefit of years of investing in marketing. Their brand appeared in front of the consumer less and less frequently. As a result, the market share started to shift.

At the end of the fiscal year, Branch A was up 20% compared to their plan. Branch B was to plan.

Inventory Impacts Marketing Metrics

While low inventory prompted brands to shift their strategies, it also forced them to evaluate the metrics that measure success. Here are a few impacts brands could see over time as shortages continue. 

• Negative online reviews: When consumers are frustrated with wait times or lack of information, they can turn to your reviews to air their grievances. You may see an increase in negative reviews.
• Decreased consumer response to marketing efforts: Even when you stay in the market, you might notice a decrease in responses. This could be lagging responses to direct mail offers, more cancelled appointments or a decrease in online form fills.
• Increased marketing costs: Your costs to advertise could increase in a few ways. First, new competitors might enter the market when supply is low and demand is high. Your cost-per-click could go up as you have to compete. You also may spend more per lead to close, as consumers are weighing new options and increased prices.
• Decreased profit margins: As the cost of materials go up and you have to spend more to close, your margins may get tighter.

When brands keep these industry shifts in mind, it may be easier to judge the success of efforts in a changing landscape.

How to Adjust Marketing When Inventory is Low

There are a few things you can do to increase brand awareness and create leads while working through supply chain issues.

• Maintain brand visibility: Make sure you’re still in front of your audience, whether through organic, earned or paid efforts. The relationships you’ve built over time are valuable. Don’t let supply chain issues break them.
• Keep customers up to date: Consumers are anxious to know when the products they want might be back. Keep communication positive and offer concrete information when you can. If you can’t offer specific information, make it clear you’re working on the product and will offer more information when you can.
• Take advantage of digital options: With digital advertising, you can make real-time changes as your inventory changes. Whether you’re working with social media advertisements, paid search or SEO, switch up your strategy to highlight the products you still have in stock.
• Focus on what you can offer: While you’re waiting for the supply chain to catch up with your needs, is there anything else you can do to meet customer needs? If so, make sure to highlight those items or services.

While global supply shortages are here to stay, there are still options for companies to continue growth. Need some help from the experts to navigate these changes? Get in touch with the Strategic America team. We’re happy to meet for a no-cost, no-obligation consultation to see what we can do for your brand.