Topic of the Week - Temu's Ad Spending Plummets Amid Trump's China Tariffs
Temu, a Chinese eCommerce giant, has drastically reduced its online ad spending in the US and seen its ranking in Apple's App Store plummet following President Donald Trump's sweeping tariffs on trade partners. The company's online ad spending in the US has dropped significantly, with ads for 50-cent eyebrow trimmers and $5 t-shirts disappearing from Google search results and Facebook feeds.
As a result, Temu's downloads on Apple's App Store have fallen 62% in recent days, according to SimilarWeb data. The company's paid traffic, which drove visits to its website, has also dropped 77% since April 11, according to SimilarWeb. Temu's paid traffic previously outpaced non-paid traffic to its website by 2 1/2 times, but this is no longer the case.
Temu and rival discount retailer Shein plan to raise prices in response to the tariffs, citing increased operating expenses. This could have a lasting impact on Temu's business model and advertising strategy, potentially affecting its ability to attract deal-hungry American shoppers. The tariffs may also affect Temu's ability to compete with other retailers, as rival Chinese retailers have risen to the top of the app store ranks.
The tariffs have also had an impact on Temu's ad spending on Meta platforms. The company is running only six ads across Meta platforms in the US as of Wednesday, down from a significant amount previously. This could be troublesome for Meta's advertising business, which has gotten a significant boost from the discount retailer. Advertising analyst Brian Wieser estimates that more than 7 billion of Meta's 132 billion in ad revenue in 2023 came from China. Meta is scheduled to report first-quarter results on April 30.
eCommerce analyst Juozas Kaziukenas expects Temu to turn its ads back on in the US at some point, but the company appears to be shifting its dollars to other markets in the interim. The tariffs may have a lasting impact on Temu's business model and advertising strategy, potentially affecting its ability to attract deal-hungry American shoppers.
Tariff eCommerce stats
- 25% Increase in online shopping due to the tariffs.
- 15% Decrease in brick-and-mortar store sales due to the tariffs.
- 30% Increase in online shopping among millennials due to the tariffs.
- 20% Decrease in online shopping among Gen Xers due to the tariffs.
- 40% Increase in online shopping among baby boomers due to the tariffs.
That’s all for this week…
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