Temu’s Super Bowl Ad Worked Despite Criticism. Should Amazon Be Worried?

Temu’s six identical Super Bowl spots might have been repetitive for some viewers, but new data shows they were also effective.

More than a month after the Big Game, Attain sales data revealed that Temu’s Big Game bet succeeded at increasing sales from net-new purchasers. Average transaction frequency, or how often people purchased goods from Temu, increased 26%; transaction amount, or how much people spent at checkout, also grew 21% from the previous month. More impressively, 74% of Temu transactions came from new customers a month after Temu’s Super Bowl commercial.

Older Americans also continue to be Temu’s most loyal customers, as the number of transactions made by Boomers grew 16%, while their transaction totals dipped slightly to 3%. 

Additionally, Temu’s campaign helped nudge adoption among younger generations: In the month following the Big Game, the number of transactions made by Gen Z and Millennials grew a respectable 5%, while their transaction totals grew by more than 23%.

The data is a welcomed development for Temu, a company that has struggled to catch on with US consumers and whose growth has been uneven since its debut nearly two years ago. Whether it can dethrone Amazon in the long term, however, is up for debate.  

"Lower prices plus higher status would be a killer depositioning for both Walmart and Amazon,” says Patrick Hanlon, founder and CEO of Primal Branding Co. “Temu can achieve this by ramping up what every generation wants: positive experiences and fun rather than straight price item transactions and lots of products.” 

While Temu’s overall GenZ performance did improve, it still ranks the lowest by index, meaning there are still significantly fewer GenZ shoppers on Temu when compared to all other generations. Meanwhile, Temu’s slogan to “shop like a billionaire” may have failed to resonate with American consumers, given recent headlines of increasing layoffs and inflation.

Competing With Amazon

Temu’s lightning-fast growth was mostly due to its massive paid media budget ($3 billion in 2023), yet it still has only captured 1% of the US e-commerce market, while Amazon has locked in 40%, according to research firm Bernstein. When looking at US retail sales as a whole, Temu claims only 0.2%. Early in 2024, Morgan Stanley released a pessimistic memo about Temu’s growth “cresting.” The larger question might be concerning churn and lifetime value: how long are Temu customers going to stick around, and can they achieve Amazon-level stickiness?

It took Temu only one year to grow its American user base from 10 million to 51 million, while it took Amazon decades to grow to 67 million, but competing on equal footing with Amazon is going to take more than billions of ad dollars. Amazon Prime renewals at one year hit 97% in Q1 2023 and year two renewals were an unthinkable 99%, according to Statista. According to Attain data, 38% of Temu customers had more than one purchase in the last 12 months and only 5% of consumers had made both an Amazon and a Temu purchase. 

If Temu keeps cementing its niche with older generations, its path to world domination will be a long one. Yet if it can majorly reinvent its image in the US, there could be hope. Striking that balance will take more than just a large ad budget.

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