By Helen Reid
LONDON (Reuters) – Heavy online marketing spending by Temu and Shein is making it more costly for other retailers and brands to reach shoppers on Black Friday, marketing and industry experts say, with both platforms bidding heavily on search keywords used by competitors.
Typing a few words into a search engine is a key starting point for shoppers looking online for gifts or buying for themselves in Black Friday sales, the unofficial start of the holiday shopping season on the day after U.S. Thanksgiving.
Retailers compete for their advertised products to appear high up in online search results, by bidding on keywords. The greater the demand for a keyword, the more the search engine charges for each click on an ad appearing in those results – a metric called “cost per click”.
In the United States, for example, Temu has bid on keywords including “Walmart Black Friday deals”, “Kohls Black Friday”, and “Bed Bath Beyond”, according to data on Google search ads compiled by online marketing platform Semrush for Reuters.
Shein has bid on keywords including “Walmart clothes”, “Zara jeans”, “Mango dresses”, and “Nordstrom Rack shoes” in the U.S., the data showed. The cost per click for “Walmart clothes” increased by 16 times from August 2022 to August 2024.
Generic keywords like “cheap clothes online” and “shopping”, have also become much more costly, the data showed.
“It’s brutal out there, it’s really hard,” said Erik Lautier, ecommerce expert at consultancy AlixPartners.
“By definition, when you increase the cost per click, the return on your marketing investment decreases. In some cases, that may mean it becomes unprofitable, and that can be highly impactful for retailers that depend on paid search ads to drive their business.”
Paid search ads can drive anywhere from 15% to 30% or more of a retailer’s online sales, and account for as much as half of the marketing budget, Lautier said.
‘AGGRESSIVE’
Brands bidding on other brands’ keywords is not unusual, but Shein and Temu stand out because they bid on a much wider range of competitors’ keywords than average, said Olga Andrienko, vice president of brand marketing at Semrush.
“We are seeing a fundamental shift in search marketing dynamics and the fast fashion brands are now outbidding the traditional retailers, and it does look like their strategies are a lot more aggressive,” she said.
In response to Reuters’ questions, a Temu spokesperson said that the platform is committed to fair competition and responsible advertising practices, and maintains a “negative keyword list” to prevent ad targeting of brand names.