What’s going on here?
Chinese retailers made expensive bets on US-focused advertising, but Google and Meta should be wary about trusting their newfound hands.
What does this mean?
The head honchos in the US and China might be keeping their distance from each other, but Chinese retailers seem as keen as ever on stateside shoppers. Digital marketplace Temu, fast-fashion empire Shein, and video streaming and gaming platforms have been funneling cash into ads on Facebook, Youtube, and X (formerly Twitter). No wonder: China’s economic problems have convinced local shoppers to keep their money firmly in their wallets. So Temu alone spent nearly $2 billion on ads, determined to bring in customers from the land of the Red, White, and Blue – enough to become one of Google and Meta’s biggest advertisers. In fact, Meta said that 10% of its ad revenue comes from Chinese brands now, up from 6% just two years ago.
Why should I care?
Zooming out: It’s tough to run a small business.
Meta and Google have been struggling to bring in their usual buckets of ad money, with Apple’s tightening policies making it harder for them to target folk with MI5-level algorithms. This recent rush of Chinese business is just what they need, then. Plus, now that Meta and Google can afford to up their prices, smaller players like Etsy have to cough up more for the same coverage.
The bigger picture: Temu’s far from reliable.
Big Tech can’t relax yet, mind you, because Temu’s spending habit might not stick. They’ve seen that before: Wish – an American ecommerce company that sells cheap products made in China – used to line social media companies’ pockets, but then it suddenly cut back. Temu could do the same. The platform reportedly loses $7 on each order, compromising profit to make a name for itself, so it could feasibly switch into money-saving mode without a moment’s notice.
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Originally Posted March 7, 2024 – Chinese Retailers Made Expensive Bets On US-Focused Advertising
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