Marketers may be thinking about privacy and data concerns today -- even as they look to the move to a metaverse -- but tomorrow the focus will turn to the best ways to reach consumers if the electronics supply chain cannot get a handle on the chip shortage that keeps on dragging on.
Here's the obvious and the not so obvious.
At the end of the supply chain, marketers either way will need to learn how to compensate as demand continues to surge. It will take time to build new factories and for brands -- even Apple, Google and Microsoft -- to catch up.
These chips are the heart of smartphones, laptops, connected TVs, automobiles, and other devices.
General Motors reportedly told The Street Journal, it will reduce its holiday season advertising budget this year as a result of supply chain issues stemming from the ongoing global microchip shortage and COVID-19 pandemic.
Two years into the COVID-19 pandemic, the global disruption deepens and continues to disrupt industries from consumer to medical devices to gaming consoles and networks such as cloud services.
Intel in July warned of a two-year chip shortage and in October, Apple blamed a chip shortage for declines in financial results. It is likely also the reason Apple and Google began designing and subcontracting out the manufacturing its own chips.
Demand, in short, for semiconductors continue increase based on the use of all the technology mentioned above.
The semiconductor market should grow by 17.3% in 2021 versus the 10.8% growth in 2020, according to IDC. The research firm estimates the industry will reach a balance by the middle of 2022, with a potential for overcapacity in 2023.
IDC estimates that mobile phones, notebooks, servers, automotive, smart home, gaming, wearables, and Wi-Fi access points, with increased memory pricing, will drive growth. If you haven’t got the message by now, the future of digital advertising and innovation relies on these small, yet powerful chips.
In The Wall Street Journal today, Austen Hufford writes about how the chip shortage has resulted in manufacturers turning to lower-tech models. It’s a backward step. “After pushing for years to add digital features like screens and wireless connectivity, makers of appliances and vehicles are reversing, temporarily, to continue supplying products to dealers and consumers amid a shortfall in semiconductors that industry officials project will last into next year,” he writes.
The same will happen with other industries, and advertisers will need to address how to reach consumers who opt in to purchase products with less than the latest technology.
Here’s one example, Boss Products used hand-held controls with computer chips to angle snow truck blades, but has not been able to find enough chips.
Employees started looking for ways to use fewer chips. Some remembered that joysticks, without computer chips, were used to control these features until electronics became affordable and commonplace.
I’m planning on buying a snowmobile this winter. Polaris, which makes snowmobiles, will temporarily ship some of its products without large GPS screens. When the screens arrive, they can be installed after by service technicians. The manufacturer is also using traditional shocks that use fewer electronics than more-advanced versions that allow for smoother rides. Polaris said it has been harder to produce higher-end and complex vehicles, though it continues to ship vehicles with electronic shocks.