Temu, a Chinese e-commerce giant, has been scaling back its paid social advertising efforts due to the ongoing tariff tensions with China. This reduction in spending has significant implications for both Temu itself and the broader social media advertising market.
According to recent market research, Temu’s U.S. ad spending on Meta fell 10% year-on-year in the first quarter of 2025, with its share of American monthly active users on its app dropping from 30% to 15%. Additionally, Temu’s share of Google Shopping ad impressions has dropped to zero.
While Temu’s pullback is a significant blow to the social media advertising space, it also presents an opportunity for rival retailers. The reduced competition for audience eyeballs and dollars leaves advertisers with fewer threats to worry about, potentially allowing them to negotiate lower cost-per-thousand rates (CPMs).
Industry experts suggest that Temu’s exit from the market could slow the rise of CPMs or even cause them to drop, providing relief for advertisers. However, this relief is temporary, as other companies affected by tariff changes may soon follow suit.
The impact of tariffs on social media advertising is expected to be significant, with U.S. social media ad spend potentially falling 10% due to the policies. Marketers are now looking for alternative solutions, such as AI-powered creative tools, to optimize their ads and mitigate the effects of reduced advertising opportunities.
Source: https://digiday.com/marketing/temus-tariff-induced-ad-retreat-opens-a-window-for-retail-rivals