Shein, Temu Pull Back on U.S. Ads
There aren’t many surprises in Tinuiti’s Q1 Digital Ad Report, but retailers will be interested to know what Temu and Shein are up to.
Both seem to be playing possum when it comes to digital ads in the U.S., according to Tinuiti. The performance marketing agency recently released insights around Temu’s sudden pullback from Google Shopping ads stateside.
Temu competitor in the fast-fashion space, Shein, also had a notable ad fall off in Q2. Based on Tinuiti’s daily tracking of Google Shopping impression share, Shein saw its visibility fall sharply—declining from 20% on March 31 to just 10% by April 15. Tariffs are the main reason.
However, the two companies aren’t ad shy when it comes to Europe. Both fast-fashion retailers increased their advertising spends in France, Germany, Italy, Spain, and the United Kingdom.
Mark Ballard, Tinuiti’s Research Director, said “Shein still has some activity in Google shopping ad auctions, but it appears to be ramping down similar to how Temu did.” This impression share data represents how often Shein’s ads appeared, making it a strong proxy for competitive ad intensity on Google Shopping.
Ballard sat down with StreetFight to provide more insight.
Are Shein and Temu pulling back in the ad market in anticipation of tariffs?
Tinuiti has been following Temu and Shein’s presence in Google ad auctions since they both became major competitors in the U.S. digital ad space. In mid-April, we saw Temu pull back sharply on its Google shopping ads, which was followed about a week later by Shein doing the same. The timing of the pullbacks strongly suggest that they were directly related to the increased tariffs on goods out of China, including the elimination of the de minimis tariff exemption. [De Minimis refers to a trade term referring to packages too small to qualify for tariffs.]
What could be another reason for their lessened visibility?
While it wouldn’t be unprecedented for a major brand like Temu or Shein to briefly pause its digital ads, we have not seen a major brand pull back on Google ads to this extent since the early days of the pandemic. It seems almost certain that tariffs are the driver of this change for Temu and Shein.
If you were to characterize Shein’s strategy in the U.S., what would that look like?
Shein has made a name for itself as a popular fast-fashion platform, particularly among younger generations. They’ve offered relatively inexpensive apparel and, until recently, benefitted from the de minimis tariff exemption for shipments to the U.S. valued at less than $800.
How much will tariffs hurt these fast-fashion Chinese retailers?
The new tariffs will effectively more than double the cost to consumers of Chinese goods from Temu and Shein, and the increased costs will significantly harm their competitiveness in the U.S. market. As a result, it appears that Temu has already completely halted shipments from China to the U.S.
Is the U.S. the biggest market for Temu and Shein?
There are estimates out there that the U.S. was the largest market for Temu and Shein.
Which other retailers besides Shein and Temu have pulled back on their Google ads?
We have not seen any other major brands pull back on their Google ads in the same way as Shein and Temu, but we are continuing to monitor the situation as many brands have exposure to the recent tariff hikes.
Which have increased their spends? Are these other retailers capitalizing on Shein and Temu’s pull back? To what extent will it benefit them?
We have not seen a clear indication that any one particular brand has decided to push its spending dramatically to capture the ad impressions that Shein and Temu have given up. Instead, it appears so far that the benefits of Temu and Shein dropping out of Google auctions has been pretty spread out across a wide and still very competitive landscape of advertisers.
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