Ad description
A TV ad for Argos, broadcast on 23 November 2015, stated, "save £100 on this Toshiba 15.6 inch laptop, just £179.99". Images of the product were shown, and the savings and price statements appeared as on-screen text.
Issue
A viewer, who had not been able to find an instance of the product being in stock when the ad was aired, challenged whether the ad breached the Code.
Response
Argos said that at the start of the promotion (20 November) they had 6016 units of the laptop in stock, 4798 of which were available in stores, and that in the five weeks prior to the offer they were selling an average of 100 a week. During the first week of the promotion (which started on a Friday) they sold 3234 units and had 3252 left – the sales figures included items that had later been returned, so the two figures were not expected to tally. During the second week of the promotion they started with 3252 units (3230 of which were in stores), sold 3322, and had 537 left at the end. Had stock sold out they would have removed the marketing, but their sales showed a relatively consistent rate across the promotion. They said that consumers would know that they needed to act quickly to get the advertised deal. The fact that they didn't sell out within the first few days showed they had made a reasonable estimate of what demand would be. They noted that their 'check and reserve' system would reserve a piece of stock for a customer for a limited period of time, during which that particular unit would be unavailable until the reservation window had ended, at which point it would be released. Argos said they were unable to check individual store stock levels historically, but believed that they had made a reasonable estimate of demand because the product did not sell out by the end of the promotion, on 1 December.
Argos said they had expected to sell 6000 laptops and had therefore forecasted the demand appropriately. They said that when items were nominated for a TV promotion (which was usually several weeks in advance) this consideration included an assessment of likely demand based on the promotion, the likely uplift in sales, revenue and margin. They said they had been aware that product demand would be high during a Black Friday promotion and there would be no point in nominating a product that would sell out within the first day of a 12-day promotion. They said Black Friday demand was hard to estimate accurately, and that technology products were also difficult to predict demand for, because their prices and specifications changed frequently. Products would only be selected for promotion if the forecast was not too high or too low, and stock levels were managed and monitored in the run-up to ads being prepared for clearance, with the potential for products to be changed if there were stock problems. Argos said that this process was done through discussion with their teams, whose knowledge of their product area was relied on, and that learning from previous campaigns was used to plan future ones. They had applied knowledge of the 2014 Black Friday promotion to the 2015 campaign, and this had included assessments of demand for the same or similar products previously offered. They gave details of how they had calculated that they could satisfy demand and provided a spreadsheet that stated their expected uplift in demand and subsequent stock requirements. They had taken the average daily sales of three previous promotions for the line of laptops in question and multiplied it by the number of days the promotion would run for. They then applied an uplift of an additional 42.5% to reach a total of nearly 6000 units. They said that their forecast would have been higher, but they were aware that other market competition on Black Friday was likely to be very high and that they were running other, stronger deals in the same category, which they understood would reduce demand. They stated that their availability against the forecast was 96%, which they felt demonstrated how effective this methodology was.
Clearcast said that Argos had provided a statement confirming that they had adequate stock to satisfy expected consumer demand and that they would monitor stock levels before and during the promotion. They had also confirmed that stock was distributed around the country to reflect expected demand, and that should the stock become drastically low or unavailable at a particular store, customers would be able to order online or from a different store. If stock became low to the point that demand outweighed their ability to supply, Argos had confirmed that they would remove the ad from air. Clearcast said that they were therefore confident that Argos had enough stock to meet demand and had approved it on this basis, and the understanding that it would be removed from air if stock levels rendered this necessary.
Assessment
Upheld
The ad depicted the promotional offer with no indication that availability was limited, and we considered that consumers would therefore understand the product to be generally available. As such, we would expect to see evidence that the product was widely available and that they had sufficient stock to meet expected demand. The BCAP Code required broadcasters to be satisfied that advertisers had made a reasonable estimate of demand, and we understood that to this end Argos had provided Clearcast with an assurance that sufficient stock was available. However, we considered that the amount of stock available could not be understood to be sufficient to meet likely demand, if that demand had not been estimated. Argos had noted the level of unit sales prior to the promotion, but had not demonstrated how they had used this data to estimate what the promotional demand was likely to be. We noted their explanation of internal discussions and acknowledged their statement that previous Black Friday promotions and other promotions from the same product line had been taken into account. We noted Argos' explanation of how they had calculated the uplift in customer demand that had lead them to understand that 6000 laptops would be sufficient stock for the promotion, but they had not outlined why an uplift of 42.5% had been chosen or demonstrated that this reflected an appropriate increase in demand. We acknowledged their statement that the decision to implement the promotion at this stock level had been based on their experience of similar offers, but considered that an estimate of demand should demonstrably be based on a robust methodology that used available data from prior promotions to arrive at a reasonable projection of likely uplift. As such, we understood that a reasonable estimate of demand had not been made, and that Argos had instead relied on what they considered to be a high level of stock availability.
We acknowledged that, in hindsight, the available stock had been sufficient to cover the sales that were made, but understood some customers who had attempted to purchase the laptop may nonetheless have been unable to do so because the website and stores in their region had no stock left (even though national stock remained). We were therefore concerned that Argos had not demonstrated that they had been capable of meeting actual demand, despite the left-over stock. We understood that the complainant had been unable to find the laptop available in any of the stores that they had checked online, including stores that were a considerable distance from their locale. We understood that, as Argos had not made an estimate of likely demand, they also had not determined how much stock was likely to be required across their stores and their website. We noted that Argos were not able to show the availability of the laptop across their stores during the promotion, and had therefore not demonstrated that the laptop was generally available during the promotional period. Because Argos had not made a reasonable estimate of the likely demand for the product and had not demonstrated availability across their sales channels, we considered that the ad’s implication of widespread product availability was misleading and concluded that the ad breached the Code.
The ad breached BCAP Code rules 3.1 3.1 Advertisements must not materially mislead or be likely to do so. (Misleading advertising) and 3.28 3.28 Broadcasters must be satisfied that advertisers have made a reasonable estimate of demand. (Availability).
Action
The ad must not appear again in the form complained about. We told Argos Ltd to ensure that for future ads featuring promotional discounts the product was generally available unless otherwise stated, and that a reasonable estimate of demand was made.
