This article was really inspired by a conversation I had with a PPC ads customer not too long ago. The meeting started off by discussing the performance of our agreed KPIs as well as the strategy for the month ahead, really nothing special. Except as the meeting drew to a close, I had asked if there was anything in particular they wanted to ask or had any questions about.
Here’s what they said: “I love the work you guys have been doing but I wonder if there is more we could be doing. I keep seeing these ads from Temu everywhere and every time I search for something I start seeing their ads everywhere I go. How do we do that? Is it an algorithm thing? How do we get ads like Temu?”
To be honest, this isn’t too far out there from the feedback we’ve had from clients. This type of outrageous expectation is pretty commonplace for the marketing industry.
However, after having gathered myself, I realized that I didn’t actually know what Temu’s total ad budget was. Obviously, I know it is pretty substantial given the performance of their ads online as well as the sheer volume of them that I get on a daily basis. I tried to relay this message, which was well received, but I was curious as to what the actual number was. So here are my findings.
What is Temu?
When Temu set up shop, it did so seemingly overnight. Right on the heels of the Shein shopping frenzy, Temu sought to establish itself as a dominant player in the online megastore space.
Temu is an online marketplace operated by the Chinese e-commerce company PDD Holdings, which is owned by Colin Huang. It offers heavily discounted consumer goods, mostly shipped to consumers directly from the People’s Republic of China.
The Temu platform first went live in the United States in September 2022, and soon after its inception ran ads during the February 2023 Super Bowl. Its seemingly overnight success as it burst onto the online retail market raked in massive amounts of attention and quickly worked its way to becoming the most downloaded app on both the App Store and Google Play Store, passing TikTok, YouTube, and other tech giants.
The company’s main selling point is their prices. Delivered directly from Chinese suppliers and manufacturers, the platform cuts out many of the middlemen companies that have been peddling Chinese products for forever, giving customers direct access to Chinese manufactured goods and bringing the overall cost of goods down significantly.
Temu, since its launch in 2022, has grabbed a massive market share, particularly as a result of its aggressive digital ad spending strategy, pumping hundreds of millions of dollars into campaigns on a yearly basis.
What is Temu’s total ad spend?
Temu’s approach to advertising has been nothing short of astronomical in terms of spending. According to ad intelligence platform MediaRadar, which tracks campaigns and spending, Temu spent a staggering $505 million on advertisements in 2023 alone. This represents an eye-popping 1000% increase in marketing spending within just their first full year of operation in the US market.
The shopping app’s Super Bowl debut in February 2023 exemplifies their “spend big” philosophy. Their colorful animated ad featuring the catchy “shop like a billionaire” jingle aired three times during the game and twice afterward—a media blitz that potentially cost around $21 million for just that single event. This aggressive approach paid immediate dividends; EDO, which measures online activity driven by Super Bowl ads, found that Temu’s commercial generated 1,343% more engagement than the median ad shown during the game.
The results of this massive spending spree speak for themselves. While younger consumers were already familiar with Temu through its digital ads and presence on social media, the Super Bowl campaign instantly transformed it into a household name for consumers of all ages. Following the Big Game, Temu ranked as the number one downloaded free app across major platforms, surpassing established tech giants.
As Forbes senior contributor Peter Cohan notes, this incredible marketing investment suggests a specific strategy: PDD Holdings is likely taking a loss on most Temu sales at the moment, prioritizing rapid market penetration and customer acquisition over immediate profitability. It’s apparent that Temu has been “spending on marketing like a billionaire,” but as Forbes points out, “it remains to be seen if it will be earning like a billionaire” on its U.S. shopping app.
Temu’s biggest challenges
Despite Temu’s explosive growth and massive advertising investments, the company is now facing significant challenges that threaten its business model and market position.
In South Africa, regulatory changes are set to impact Temu’s operations dramatically. The South African Revenue Service (SARS) has announced its intention to withdraw all forms of concessions currently used by traders that operate outside of current regulations. This would mean that products from Chinese retailers like Temu can no longer be cleared at customs using a simplified process with a 20% flat duty rate—a concession implemented in 2007 that was one of the main mechanisms the e-commerce giant used to import goods into South Africa.
The mechanism, which only applies to shipments valued under R500, was intended to help logistics companies cope with an influx of imports as international e-commerce began accelerating. However, local retailers have flagged this concession as being highly damaging for local businesses that face much higher taxes and cannot compete with cheaper prices. SARS has given stakeholders until April 23, 2025, to comment on this proposed withdrawal.
Even more concerning for Temu are the developments in its largest market—the United States. The company has warned US customers that they will face price hikes as Donald Trump’s hefty tariffs on Chinese imports come into force. These new import levies will mean taxes of up to 145% being applied to Chinese goods. Temu will also suffer from Trump’s cancellation of the “de minimis” exemption, under which shipments worth less than $800 could be imported duty-free—a crucial factor in helping the low-cost retailer make inroads into the US market.
Under Trump’s expanded plans, previously exempt packages will be hit with a tariff rate of 90% or $75 an item, rising to $150 per item by June 1, 2025. This dramatic shift in the economic landscape has already prompted changes in Temu’s strategy. The company has significantly cut spending on US social media advertising, which was previously a cornerstone of its rapid growth. According to digital marketing firm Sensor Tower, Temu’s daily average US ad spend on Facebook, Instagram, TikTok, Snap, X, and YouTube declined by a collective average of 31% in the two weeks from March 31 to April 13 compared to the previous 30 days.
Additionally, Mark Ballard, director of digital marketing research at Tinuiti, reported that Temu had sharply reduced ads on Google Shopping since April 12. These reductions in advertising spend suggest that Temu may be bracing for a significant impact on its business model and preparing for a more challenging competitive environment as its price advantage diminishes.
While some experts say the tariffs are unlikely to deter all customers, given that items from Temu could still end up cheaper than some rival retailers, the combination of higher prices and reduced marketing presence may significantly slow the meteoric rise Temu has experienced since its 2022 launch.
