Advertising Management in light of inventory availability

Advertising Management in light of inventory availability

CEO & Co-Founder at Flieber

“Reverse every natural instinct and do the opposite of what you are inclined to do, and you will probably come very close to having a perfect golf swing.” Ben Hogan – considered to be one of the greatest players in the history of golf.

Digital marketers have a natural instinct of pushing sales. By using the latest technology in analytics, modern advertising platforms, and advanced data display tools, it has become a less complex task to attribute sales to an online campaign and understand its performance, which leads brands to allocate more budget towards pay-per-click campaigns.

With a higher investment in PPC campaigns, it is likely more products will be sold, the review count will increase and the brand awareness will skyrocket, leading the company to a new business scale. Although it might sound perfect, those campaigns can backfire if they’re not fully connected to the supply chain aspect of the business.

Can you imagine spending thousands of dollars pushing sales and your company suddenly runs out of stock of your top-selling products? This is usually what happens when information is siloed and the marketing team doesn’t have access to the company’s inventory level in real-time. On the other hand, the operations team doesn’t have access to marketing data, so they won’t be able to forecast sales and set up the replenishment process accordingly.

The impact of running out of stock is huge:

  • Marketplaces are likely to punish your seller account. Amazon, for example, has a score system called IPI (Inventory Performance Index) which analyzes how reliable a seller is. If the score goes below the threshold, inventory restrictions might be applied. 
  • It gives your competitors a chance to take away some of your customers as they will still look for products to fulfill their needs.
  • It is killing your margin. If the marketing team had access to real-time inventory data, it could reduce the PPC efforts, improving campaign performance in terms of acquisition cost (ACoS) and return of investment (ROI). On the other hand, if the purchasing team had access to real-time marketing data it could plan ahead, have a better negotiation position with suppliers, and save freight money.

The use of systems such as Flieber allows sellers to have a complete vision of their supply-chains by getting data points such as production lead times, freight lead times, and fulfillment centers’ processing times. With all those data points, managing the inventory replenishment process becomes more predictable and, most importantly, less prone to errors. 

With those available data points, marketers now have a unique opportunity to synchronize their PPC and outbound efforts with the inventory replenishment process and increase margins by not promoting sold out products and keeping the best-performing keywords active only whenever a stock-out situation is not avoidable. 

In our next blog post, we are going to provide you with some ideas to improve your PPC performance. 

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