Online marketing costs rise as Temu and Shein bid on search keywords, impacting retailers

From Investing.com: 2024-11-27 01:21:33

Heavy online marketing spending by Temu and Shein is driving up costs for other retailers on Black Friday by bidding on search keywords used by competitors, making it harder to reach shoppers. Retailers must bid higher on keywords to appear in search results, leading to increased cost per click and decreased return on investment.

Temu bid on keywords like “Walmart Black Friday deals” in the U.S., while Shein bid on keywords such as “Walmart clothes”, causing the cost per click to skyrocket. Generic keywords like “cheap clothes online” have also become more expensive, affecting retailers who rely on paid search ads for business. Paid search ads can drive up to 30% of online sales.

Shein and Temu are bidding on a wider range of competitors’ keywords than average, with more aggressive strategies in search marketing. Rising costs are prompting businesses to shift marketing spend to other channels like Facebook, TikTok, and influencers. Brands are focusing on targeting high-margin customers rather than those seeking only low prices.

In response to the rising costs, some retailers are diversifying their marketing strategies by investing in loyalty programs, cinema ads, and influencers. Asos, a British online fast fashion retailer, is focusing on reaching customers in more engaging ways beyond performance marketing. The shift reflects a move towards targeting specific customer segments for long-term growth.



Read more at Investing.com: online marketing costs jump in bidding war with Temu and Shein By Reuters