Chinese online retailer Temu has seen its mobile marketing efforts take a significant hit in the wake of President Donald Trump's sweeping tariffs on trade partners. The company, owned by Chinese e-commerce giant PDD Holdings, had been aggressively promoting its platform through targeted ads and social media campaigns to attract deal-hungry American shoppers.
Ad Spend Slashes and App Rankings Plummet
Temu's marketing strategy, which focused on offering discounted prices for clothing, jewelry, home goods, and electronics, was highly effective. The company topped Apple's list of the most downloaded free apps in the U.S. for two consecutive years. However, with the introduction of tariffs, Temu has dramatically slashed its online ad spending in the U.S., leading to a significant drop in app rankings.
Tariffs Upend Business Model and Advertising Strategy
Packages shipped from China are now subject to a tariff rate of 145%, while the de minimis provision, which allows shipments worth less than $800 to enter the country duty-free, is set to go away on May 2. As a result, Temu and rival fast-fashion marketplace Shein plan to raise their prices in response to the tariffs.
Mobile Marketing Shifts Focus
The shift in mobile marketing strategy has not gone unnoticed. A recent analysis by SimilarWeb showed that Temu's paid traffic, which drove visits to its website through search, display, and social media advertising, has dropped 77% since April 11. This decline is even more pronounced when compared to non-paid traffic to the website, which had previously outpaced paid traffic by 2.5 times.
Impact on Mobile Advertising Platforms
The impact of Tariffs on mobile marketing platforms like Meta's Facebook and Instagram is significant. Temu was one of Meta's largest advertisers, but it appears to have dramatically scaled back its spending on the platform. As of Wednesday, Temu is running six ads across Meta platforms in the U.S., a review of Meta's ad library shows. This could be troublesome for Meta's advertising business, which has gotten a significant boost from the discount retailer.
Mobile Marketing Insights
E-commerce analyst Juozas Kaziukenas expects Temu to turn its ads back on in the U.S. at some point, but that the company appears to be shifting its dollars to other markets in the interim. "It doesn't mean Temu usage has dropped as significantly as the app did," he said in an email. "But it means that new user acquisition is gone."