Supply-Chain Issues Lead to Uncertainties About Marketing

Everything You Need to Know in Less Than 50 Words

Supply-chain issues make it more difficult for manufacturers to get what they need. This problem adds to inflation, causing prices to skyrocket for many consumer goods. These struggles impact the general population and harm job security as marketing budgets decrease.

Tell Me More

Before the pandemic, companies allocated 4% – 24% of the budget for marketing across all industries. Data from 2018 and 2019 shows that companies spent an average of 10.9% of their budget on marketing.

By June 2020, professional marketers weren’t optimistic about the future of their industry. Much was unknown, and thankfully those numbers are higher now—though not back to pre-pandemic standards.

Only 12% of marketing professionals are optimistic about the third quarter of 2022. This outlook is due to supply-chain issues and inflation, which prevent consumers from buying products they want in favor of prioritizing necessities. However, many industries feel the impact, such as:

• Financial services
• Healthcare
• Media
• Technology
• Travel and hospitality

Marketing companies are using previous analytical reports to inform their coming budgets. They’re unwilling to spend money on campaigns without a proven track record, so there are new limits regarding ideas and innovative approaches.

Job Security Issues

Some businesses increase their consumer prices while decreasing the in-house marketing budgets. While only 13% of polled companies have laid off employees, the combination of inflation and low marketing budgets causes many professionals to worry.

The marketing industry grew by 15% last year, but experts expect it to drop by as much as 7% next year due to supply-chain problems and inflation. These numbers more closely align with the marketing field’s pre-pandemic trajectory.

Potential Benefits

About 58% of marketing professionals report that they work from home occasionally, and 48% exclusively work remotely. The flexibility of the work without decreases in productivity bodes well for the industry, along with the opportunities for companies to flourish without the added expense of office space.

Companies are stepping back from the push for digital marketing. They’re now using an average of 44% of their advertising budgets for offline marketing. This division is more than in previous years, where the majority of marketing budgets focused on digital ads.

Budgets Across Industries

Manufacturers and sellers of consumer goods are facing the biggest problems with marketing budgets. Inflation and supply-chain issues affect them more than other industries. Some fields are already expanding toward their pre-pandemic budgets. 

For example, financial services are back at 10.4% of the budget allocated for marketing. Media marketing is back at 10.1% of the budget after a year of 5.8%. Healthcare is also recovering from the pandemic, with 9.7% of the budget allotted for marketing.

As the world recovers from the pandemic and the United States economy struggles to balance, many professionals are keeping their eyes on the marketing industry. The changes in the supply chain, inflation, and the job market make this a tumultuous time for many advertisers.

Source: Duke School of Business