Reports suggest that Temu, a subsidiary of Pinduoduo, made a splash in the advertising world by pouring over $2 billion into Meta last year, securing a spot among Google's top five advertisers.
On March 7th, sources revealed that Temu, under the umbrella of Pinduoduo, went all-in on advertising with Meta, potentially positioning Meta and Google as winners of Temu's financial bombardment.
Media outlets reported that Temu spokesperson contested the $2 billion figure but did not disclose the exact amount spent on Meta advertising.
Since entering the U.S. market in 2022, Temu's substantial advertising expenditures have caught Meta and Google off guard.
During a recent earnings call after Meta's latest financial report, Mark Zuckerberg acknowledged that, thanks to support from Chinese advertising giants, Meta delivered its strongest financial performance to date. Susan Li, Meta's CFO, attributed the significant revenue growth in the fourth quarter to high spending by Chinese enterprises and AI-recommended video content. In simpler terms, Meta's revenue surge was fueled by Temu's hefty advertising investments.
Buoyed by this robust financial report, Meta experienced a long-awaited surge, with its stock opening more than 20% higher. The overnight market capitalization increase of $200 billion set a new record in U.S. stock history.
Goldman Sachs analysts pointed out that Temu spent approximately $1.2 billion on Meta advertising in 2023 alone, and projections suggest a total annual advertising expenditure of $3 billion.
Wall Street reports indicated that in 2023, Temu became the second-largest ad spender, trailing only Amazon. In the final months of 2023, Temu's ad spending even surpassed the established U.S. e-commerce giant Amazon.
Data from Sensor Tower also revealed the impact of Temu's massive ad spending on user engagement. In the fourth quarter of the previous year, Temu users averaged a weekly stay of 23 minutes, surpassing Amazon and Walmart's 18 and 14 minutes, respectively, making Temu the "king of user stickiness."
In 2024, Temu, with its deep pockets, shows no sign of slowing down its advertising spending. Not only did they bombard viewers with brainwashing ads like "shop like a billionaire" six times during the Super Bowl, but they also offered giveaways worth $10 million.
Temu's Overseas Success Story
Since venturing into the U.S. market in September 2022, Temu's growth has been remarkable, putting pressure on other e-commerce platforms.
According to estimates by HSBC, in developed markets in the U.S., Europe, and Asia, Temu is poised to gain a market share of 3-6%. In 2023, Temu contributed 23% to Pinduoduo's total revenue, a figure expected to rise to 43% in 2024 and surpass 50% in 2025.
HSBC's report highlights Temu's rapid growth compared to competitors like Alibaba, Shein, and TikTok, projecting a GMV of $140 billion by 2027. Temu's aggressive and efficient marketing activities, coupled with solid execution capabilities, are identified as key drivers of its robust growth.
