“As a result, this increases everyone’s CPA (cost per acquisition) on platforms like Meta and Google because large advertisers like Temu are monopolizing ad inventory and heightening the costs of the advertisers targeting the same audiences.”
The strategy behind the spend
Temu’s campaign is not just about ubiquity; it’s a calculated strike at the heart of consumer desires, merging its “Shop Like a Billionaire” tagline with an inventory that promises bottom-dollar prices. It’s interesting to see an approach where items can be purchased for a few dollars, while over 9,000 active Temu ads are running across platforms.
This approach, which peaked with high-profile campaigns including a Super Bowl ad, has garnered the desired attention. However, it has stirred debate regarding the enterprise’s labor practices and sustainability, as well as fears about data privacy.
After all, these ads are not just an opportunity to influence consumer purchasing habits, but also to gain the data that comes with those interactions.
Mike Ryan, head of insights at Smarter Ecommerce, has been watching Temu’s advertising patterns this year and found that “Temu took a notable step back in their marketing activity across Q1. At first, it seemed related to the Super Bowl, and they ramped back a bit, but then they were very soft again in March.” Ryan observed this in both the EU and U.S., and across both Google and Meta.
“This potentially deserves a mention in the earnings statements of those platforms, because Temu spends so much money. I wouldn’t expect this to hurt in year-over-year terms, but Q/Q could be softer than you would expect from normal seasonality.”
Ecommerce impact
So, what does Temu hope to accomplish?
Ryan believes that Temu’s approach could convert as many consumers as it alienates. “This whole thing is a Trojan horse strategy. Temu’s goal is to poach consumers from these platforms and bring them into its ecosystem. It’s hard for these platforms to stop Temu from doing this and, on a short-term basis, it is very attractive for platform revenue. But in the long term, this [tactic] can alienate both users and advertisers, so I view it as unhealthy for all parties.”
Varbanova worries how this will impact small businesses that will never have a similar ad budget. “How will [Google and Meta] ensure small businesses can remain competitive and reach their goals?’
Future impact
As the conversation around Temu’s marketing push unfolds, the industry is keyed into the ongoing narrative of market adaptation, customer retention and the balancing act of aggressive advertising. The trajectory for Temu, amid scrutiny and speculation, is a subject of interest and debate among consumers and professionals alike.
David Hermann, media buyer and president of Hermann Digital, has advice for other advertising pros experiencing the effects of Temu outspending them. “Be prepared for shifts. These systems (Meta’s auction) are volatile, and businesses should always be prepared to pull back when need be, and have a toolkit of options for where to place their online ad dollars.”