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GroupM: No `Meaningful Impact’ of Supply Chain Problems on Ad Spending

(Image credit: Stock)

NEW YORK—As the world struggles to shake off the economic impact of COVID-19, supply chain issues have pushed up prices on some products and have been a problem for many sectors, including the broadcast equipment sector, where chip shortages have caused some manufacturing bottlenecks

In a recent commentary Brian Wieser, global president, Business Intelligence, at GroupM noted that “supply chains supply chains were top-of-mind for many in the past week as product and labor shortages along with other bottlenecks have become increasingly prevalent" and that “concerns around the impact of these supply chain issues on the advertising industry have been building for many months, especially as the automotive sector and others dependent on semiconductors have been at the forefront of facing these challenges for most of this year.”

Wieser stressed, however, that “we still don’t see much of an impact. While there will undoubtedly be performance-based marketers who budget for advertising with highly short-term-oriented objectives and who would reduce spending directly when they cannot drive immediate cause and effect, we are skeptical that these attributes are common to the bulk of advertising.”

Wieser also explained that even though some goods are not in stock, many of them are available in economies where consumer spending is growing. 

“While the direct connection between advertising and economic activity has been strained by degree during the pandemic, correlations are still high in many markets,” he concluded. “And for good reason: most marketers budget for advertising with some relation to the percentage of revenues they generate, which means that growing revenues should mean growing advertising spending. Consequently, it’s hard to see supply chain issues as having a meaningful impact on media owners, at least without more meaningful disruptions than have occurred to date.”