Friday, February 23, 2024

China e-commerce player Temu is about to run its second Super Bowl ad — and do $10 million in giveaways

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Temu, the e-commerce application of a Chinese company Securities in PDD portfolioplans to air a Super Bowl ad on Sunday, a spokesperson told CNBC, as it appears to continue growing rapidly in the United States.

It’s rare for a Chinese company to buy a Super Bowl commercial, which costs millions of dollars. But this will be Temu’s second ad at the football event: it aired its first ad last year, highlighting how aggressively its parent company PDD is trying to capture the US market.

In addition to advertising, Temu will offer $5 million in coupons and credits, an initiative already underway. On Super Bowl day, Temu plans to give away an additional $10 million in gifts, the spokesperson said.

The spokesperson gave no further details on the content of the ad or the price paid for the spot.

Temu launched in September 2022 and shortly after aired its Super Bowl commercial in 2023. This commercial features a young woman amazed by the cheap prices of clothing and accessories that Temu has to offer.

“The prices blow my mind. I feel so rich. I feel like a billionaire. I shop like a billionaire,” says the ad’s jingle.

In a survey of 150 people by market research firm Zappi, 51% said they “liked” last year’s ad, giving it an eight or higher on a 10-point scale. This number is in line with the average for other ads Zappi has surveyed. However, 21% of respondents “hated” the ad, giving it a rating of four or less on the same scale. That’s significantly above average, Zappi said. More than one in three viewers (34%) found the claims made in the ad to be unbelievable.

Nevertheless, Temu continues to spend a lot of money on marketing to acquire users through platforms like Facebook. Temu’s ad spend in the United States increased 318% and 101% year-over-year in Q4 2023. MetaFacebook and Instagram, respectively, according to data from Sensor Tower.

And those expenses paid off. Sensor Tower said Temu was the No. 1 most downloaded app in the United States last year. Temu’s monthly active users reached 51 million in January, an increase of almost 300% year-on-year.

Temu’s challenge now is to retain those users and increase its share of the U.S. e-commerce market as it seeks to take on players like Amazon.

Morgan Stanley said in a note to clients last month that, according to its survey, the number of households shopping on Temu was 20% lower in January than in September. The investment bank also said that U.S. stock’s gains in 2024 would likely be “modest” and that growth “may depend more on capturing a higher share of its existing buyers’ wallets.”

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