Black Friday Bidding Wars: Temu, Shein Drive Up Online Marketing Costs
Thursday, Nov 28, 2024 10:17 am ET
3min read In the run-up to the unofficial start of the holiday shopping season, Black Friday, online marketing costs have been surging due to a fierce bidding war between fast fashion giants Temu and Shein. Retailers, both traditional and emerging, are grappling with the implications of this intense competition on their marketing budgets and customer acquisition strategies.
The escalating cost per click (CPC) in online marketing has been driven by Temu and Shein's aggressive bidding strategies, with both platforms targeting a wide range of keywords used by competitors. According to data compiled by online marketing platform Semrush, Temu has bid on keywords such as "Walmart Black Friday deals" and "Kohls Black Friday," while Shein has targeted keywords like "Walmart clothes" and "Zara jeans." As a result, the cost per click for generic keywords like "cheap clothes online" and "shopping" has skyrocketed.
The rising CPCs have significantly impacted traditional retailers' marketing return on investment (ROI). Erik Lautier, an e-commerce expert at consultancy AlixPartners, notes that higher CPCs decrease marketing ROI and may render paid search ads unprofitable. With paid search ads driving 15% to 30% or more of online sales and accounting for up to half of marketing budgets, these increased costs pose a substantial challenge for traditional retailers.
To mitigate the impact of higher CPCs, traditional retailers are adopting alternative marketing strategies and diversifying their channels. Shifting marketing spend to platforms like Facebook, TikTok, influencers, and loyalty programs is becoming increasingly popular. British retailer Asos has launched a new loyalty program, employing cinema ads and influencers to target customers in more engaging and emotional ways.
The shift from paid search to other marketing channels is driving traditional retailers to reevaluate their customer acquisition strategies. As online marketing costs surge, retailers are exploring alternative channels to reach targeted customers and maintain profitability. By focusing on high-margin, loyal customers, these strategies aim to drive recurring sales and reduce reliance on expensive paid advertising.
In conclusion, the intense bidding war between Temu and Shein has significantly increased online marketing costs for retailers. To remain competitive, traditional retailers must adapt their marketing strategies, diversify channels, and target high-margin customers. By embracing a more holistic approach to marketing, retailers can navigate the challenges posed by fast fashion giants and maintain long-term growth.
The escalating cost per click (CPC) in online marketing has been driven by Temu and Shein's aggressive bidding strategies, with both platforms targeting a wide range of keywords used by competitors. According to data compiled by online marketing platform Semrush, Temu has bid on keywords such as "Walmart Black Friday deals" and "Kohls Black Friday," while Shein has targeted keywords like "Walmart clothes" and "Zara jeans." As a result, the cost per click for generic keywords like "cheap clothes online" and "shopping" has skyrocketed.
The rising CPCs have significantly impacted traditional retailers' marketing return on investment (ROI). Erik Lautier, an e-commerce expert at consultancy AlixPartners, notes that higher CPCs decrease marketing ROI and may render paid search ads unprofitable. With paid search ads driving 15% to 30% or more of online sales and accounting for up to half of marketing budgets, these increased costs pose a substantial challenge for traditional retailers.
To mitigate the impact of higher CPCs, traditional retailers are adopting alternative marketing strategies and diversifying their channels. Shifting marketing spend to platforms like Facebook, TikTok, influencers, and loyalty programs is becoming increasingly popular. British retailer Asos has launched a new loyalty program, employing cinema ads and influencers to target customers in more engaging and emotional ways.
The shift from paid search to other marketing channels is driving traditional retailers to reevaluate their customer acquisition strategies. As online marketing costs surge, retailers are exploring alternative channels to reach targeted customers and maintain profitability. By focusing on high-margin, loyal customers, these strategies aim to drive recurring sales and reduce reliance on expensive paid advertising.
In conclusion, the intense bidding war between Temu and Shein has significantly increased online marketing costs for retailers. To remain competitive, traditional retailers must adapt their marketing strategies, diversify channels, and target high-margin customers. By embracing a more holistic approach to marketing, retailers can navigate the challenges posed by fast fashion giants and maintain long-term growth.
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