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- Temu reportedly spent nearly $2 billion on ads on Meta last year, per WSJ.
- The Chinese ecommerce platform has made a splashy entrance into the US.
- Analysts say it's likely losing money on every sale thanks to hefty marketing spend.
Temu reportedly spent nearly $2 billion on ads on Meta in 2023.
According to a report from The Wall Street Journal, the Chinese online shopping platform — known for its rock-bottom prices that rival a dollar store — was the top advertiser by revenue for Meta in 2023. The newspaper cited sources familiar with the matter.
One source told the Journal that Meta staffers joked that Temu has spent so much on ads on its platforms that it should thank the company by rewarding it with one of its own gift cards.
A spokesperson for Temu denied the $2 billion figure when contacted by Business Insider but would not disclose the company's advertising spend.
As the company is privately owned by Chinese firm PDD Holdings, it doesn't have to release its financials. As a result, very little is known about the performance of the company.
Still, it's no secret that Temu has been going all out on its advertising campaigns to grow its reach in the US.
After launching in this region in September 2022, it made a splashy entrance at the 2023 Super Bowl with an ad that invited consumers to "shop like a billionaire" on its app.
The message was that shoppers had the power to buy whatever they wanted on Temu without worrying about the cost. It may well be true — the store is known for its ultra-low prices on a wide assortment of goods.
Analysts say that these pricey ad campaigns — including spots at the 2023 and 2024 Super Bowls — alongside its rock bottom prices, likely mean the company is making a loss right now.
Goldman Sachs estimated that its marketing spend alone contributed to an average $7 loss per order in 2023, the Journal reported.
While its strategy to bombard shoppers with ads and woo them with low prices seemed to pay off initially as customers flocked to the app, data suggests that Temu may be losing momentum.
Observed sales for Temu fell 12.5% month-on-month in December and 4.8% in January, per Bloomberg Second Measure data.
The data showed that the number of Temu users in the US was also declining.
BI contacted Meta for comment but did not immediately hear back.