By Helen Reid
LONDON (Reuters) – Heavy on-line advertising spending by Temu and Shein is making it extra expensive for different retailers and types to succeed in buyers on Black Friday, advertising and trade consultants say, with each platforms bidding closely on search key phrases utilized by opponents.
Typing a number of phrases right into a search engine is a key start line for buyers wanting on-line for items or shopping for for themselves in Black Friday gross sales, the unofficial begin of the vacation procuring season on the day after U.S. Thanksgiving.
Retailers compete for his or her marketed merchandise to seem excessive up in on-line search outcomes, by bidding on key phrases. The higher the demand for a key phrase, the extra the search engine fees for every click on on an advert showing in these outcomes – a metric known as “cost per click”.
In the US, for instance, Temu has bid on key phrases together with “Walmart (NYSE:) Black Friday deals”, “Kohls Black Friday”, and “Bed Bath Beyond”, in line with information on Google (NASDAQ:) search advertisements compiled by on-line advertising platform Semrush for Reuters.
Shein has bid on key phrases together with “Walmart clothes”, “Zara jeans”, “Mango dresses”, and “Nordstrom (NYSE:) Rack shoes” within the U.S., the info confirmed. The fee per click on for “Walmart clothes” elevated by 16 instances from August 2022 to August 2024.
Generic key phrases like “cheap clothes online” and “shopping”, have additionally develop into rather more expensive, the info confirmed.
“It’s brutal out there, it’s really hard,” mentioned Erik Lautier, ecommerce knowledgeable 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 advertisements can drive anyplace from 15% to 30% or extra of a retailer’s on-line gross sales, and account for as a lot as half of the advertising finances, Lautier mentioned.
‘AGGRESSIVE’
Manufacturers bidding on different manufacturers’ key phrases just isn’t uncommon, however Shein and Temu stand out as a result of they bid on a a lot wider vary of opponents’ key phrases than common, mentioned Olga Andrienko, vice chairman of name advertising 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 mentioned.
In response to Reuters’ questions, a Temu spokesperson mentioned that the platform is dedicated to truthful competitors and accountable promoting practices, and maintains a “negative keyword list” to forestall advert focusing on of name names.
“In rare instances, brand names may inadvertently be included in our campaigns due to automated keyword insertion processes on ad platforms like Google,” the spokesperson mentioned, including that Temu acts shortly to handle these occurrences.
Shein didn’t instantly reply to a request for remark.
The rising prices are driving some companies to shift advertising spend away from paid search and into different channels like Fb (NASDAQ:), TikTok, influencers, and conventional promoting, mentioned Erin Brookes, head of the retail and shopper observe at Alvarez & Marsal in London.
“I’ve seen many brands really start to think, actually, that activity maybe gets us a customer that we don’t want – a customer who is trading on price only, not a high-margin customer who is coming back – and I want to invest in bringing a more targeted customer into the brand,” Brookes mentioned.
British on-line quick vogue retailer Asos this month introduced a brand new loyalty programme, a part of its advertising efforts to succeed in prospects “in more engaging and emotional ways” utilizing cinema advertisements and influencers too, chief buyer officer Dan Elton mentioned, including that efficiency advertising is “just one piece of the puzzle”.
