By Kristina Monllos • September 18, 2024 •
Ivy Liu
As President Joe Biden’s administration takes aim at cheaper Chinese products — think about the continually growing popularity of sellers like Temu and Shein — by increasing tariffs on said products, ad buyers hope the eventual ripple effects will be cheaper CPMs on Meta platforms.
Earlier this year, an ad blitz from Temu had ad buyers, particularly those who work for direct-to-consumer brands, abuzz. Throughout the first quarter of 2024, Temu spent $46 million on paid social ads with 98% of that spend dedicated to Facebook, according to data from MediaRadar. Buyers at the time said that Temu’s increased ad spending on Meta had allegedly disrupted the market and boosted CPMs.
Among the Biden administration’s proposed crackdown on Chinese goods is an end to a trade loophole known as the de minimis exemption which allows foreign countries to sell goods directly to consumers without paying tariffs as long as it’s under $800 worth of goods. Those kinds of shipments have increased dramatically in recent years hitting one billion last year, per a White House statement, as the popularity of sellers like Temu and Shein have surged in the U.S.
It will take time for the ripple effects of the proposed rule. The timeline for it to be implemented is yet to be determined; there will be a public comment period forthcoming. Ad buyers speculate that should the rule go into effect, it’s likely that Shein and Temu will have to raise their prices to manage the tariffs and that they could potentially pull back on ad spending in the U.S. That said, consumer behavior will dictate what happens next. Representatives for Shein and Temu did not immediately respond to a request for comment.
If there is a pull back in U.S. spending, “then I would expect some relief in Meta,” said Katya Constantine, founder of performance marketing shop DigiShopGirl. “But if that doesn’t deter them, then my guess is that we’re going to continue seeing what we’ve been seeing from them with aggressive spending in verticals like apparel, home goods, etc.”
While ad buyers are hopeful that the tariffs could help free up some ad space on Meta and, best case scenario, help with costs, the impact is still yet to be determined.
“Let’s say they start advertising less on Meta, that opens up some ad real estate for other advertisers,” said Eric Farmer, CEO of digital ad agency Wallaroo Media, adding that the shop has seen rising costs this year but isn’t expecting that to change. “But I wouldn’t say it’s necessarily going to become cheaper.”
It’s left buyers in a wait and see mode. With new questions: “How will they change? Will they change? Does that change impact CPMs elsewhere?” mused Kevin Simonson, CEO of ad agency adMixt.
Should there be a true shift in ad spending from sellers like Temu and Shein on Meta, Simonson believes it could benefit quality, premium brands. “There’s less crap in your feed that you’re competing against,” Simonson said.
Regardless of what happens with Temu and Shein, ad buyers are hoping to find ways to cut costs amid a more challenging economy as consumers pull back on spending.
“The biggest challenge this year is the rising costs in CPCs and CPMs across ad platforms,” said Duane Brown, founder of performance marketing shop Take Some Risk. “Even if you don’t have Temu in your ad auction, everyone is fighting for fewer consumer dollars.”
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