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Supply chain issues threaten ad spending comeback

Supply chain issues threaten ad spending comeback
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Pass prices to the consumer

However, even as brands save money on ad spend, rising shipping costs still force some brands to raise their prices in order to stay in business. For example, National Tree has raised their prices by 25% this year.

The state also raised prices for adult merchandise ahead of this year’s back-to-school season to offset shipping costs, Tattleman says, noting that the increase was on a product-by-product basis and ranged from 5% to 12%. She expects to have to raise prices for baby products, too, even as the state begins selling new adult products like floppy packs and diaper bags this holiday season.

“I will be selective about what we raise prices on,” she says. “We have great strategy in this regard, but we have to bear some costs – we won’t succeed if we don’t.”

With the delay, State already had to offer some back-to-school items for “pre-sale,” which means focusing more on customer service for potentially grumpy customers wondering when to expect their purchases. It’s a process Tatelman doesn’t want to repeat for the holiday and next year, so it’s adjusting its calendar to account for delays by ordering merchandise early – but that means marketing has to be ahead, too.

“We have to make sure we have the money to pay for these things,” she says.

Some marketers are switching to more flexible advertising formats in order to have better control in the event of a stock lag. Spin Master, the Toronto-based toy company behind successes like Hatchimals and Kinetic Sand, is currently working with logistics companies to try to get merchandise early and put it on store shelves, according to executives who spoke on the company’s latest earnings call. The pandemic has taught the company to be digital first with marketing, and Spin Master has spent time building internal capabilities “to enable insight, speed and agility,” says Laura Henderson, executive vice president of marketing. “We have prepared this shift well to be smart in our response and to adapt our marketing to the changing dynamics of retail and the preferences of our primary consumers, and reach them with the right message, at the right moment, in the right medium.” She notes that many of this fall’s Spin Master campaigns are 100% digital.

Elaine Kwon, former Amazon CEO and co-founder of e-commerce company Kwontified, says there’s a lot of “competitive conversations” going on in terms of holiday marketing right now, which will lead to early ads as brands try to persuade customers to buy now. Or risk losing products that are not in stock. Holiday updates, which involve a holiday-themed makeover with specific banners and images on websites and social media accounts, are happening as early as September for some brands hoping to get consumers on the mind for holiday buying. These updates usually happen in November, Kwon says, but they happen earlier due to a lack of inventory. Brands try to sell what they have to avoid losing to competitors.

“They’re trying to target consumers and get them to think about things before the holiday period really starts,” she says. “They fear that if they don’t they will be left behind.”

Kwon also expects brands to offer fewer seasonally appropriate products and limited-edition items as another result of supply chain disruptions. Instead, brands will market tried-and-true bestsellers that are always available. For example, skincare brand Tula currently sells two limited-edition kits and seven kits labeled “new,” but it’s also a bestseller. In previous years, Kwon says, Tula has sold many limited-edition holiday kits.

“You’ll see a lot of limited-edition and under-selected products, a lot of which are our best sellers over the past 10 years, and that’s what we have in stock,” she says. “We’ll see a narrower overall section of the products available.”

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