August 2024: What's new in the world of digital

Welcome to the August edition, where we share the updates in the world of digital. 

What is it?: Temu, a Chinese e-commerce giant owned by PDD Holdings, has recently opened its marketplace to European sellers. This strategic shift marks a significant departure from its original manufacturer-to-consumer (M2C) model, which previously relied heavily on consignment. Now, Temu is moving toward a local-to-local model, allowing international merchants to sell directly to consumers in their respective local markets. 

Under this new structure, merchants on Temu's platform will take on more responsibilities, including managing their own inventory, product assortment, and shipping logistics. However, one major aspect remains controlled by Temu: consumer pricing. While Temu is offering an attractive proposition by waiving base fees and sales commissions for sellers, it retains the power to set the prices at which products are sold. 

This change comes in the wake of PDD Holdings missing its quarterly revenue estimates, leading to a nearly 30% drop in its stock price and a significant decline in the net worth of its founder, Colin Huang. This context underscores the urgency behind Temu's efforts to expand its reach and diversify its revenue streams, particularly in more affluent Western markets. 

 

Why is it important?: Temu's decision to invite European sellers to its platform is significant for several reasons. Firstly, it signals the company's intention to become a more global player in the e-commerce space, directly challenging established Western platforms like Amazon and eBay. By allowing local merchants to participate, Temu can offer a more diverse range of products that cater specifically to local tastes and preferences, potentially giving it a competitive edge in various markets. 

Secondly, the move is a clear response to the financial pressures facing PDD Holdings. With the company’s revenue falling short of expectations and its stock taking a hit, Temu’s expansion into European markets is a strategic attempt to stabilise and grow its revenue base. This is especially crucial as PDD Holdings co-CEO, Lei Chen, has publicly committed to focusing on high-quality development and fostering a sustainable ecosystem. However, this ambition to build a trustworthy and quality-focused platform might come at the cost of short-term profitability, as evidenced by the company’s willingness to accept potential declines in profits. 

Despite these potential benefits, the new model presents challenges that could hinder its success. The most notable concern is the loss of pricing control for merchants. Dean McElwee of Stanley Black & Decker highlights this as a potential obstacle, as merchants typically prefer to have autonomy over their pricing strategies, especially when they bear the bulk of the operational risks. If sellers feel that the platform's pricing policies undermine their profitability, they may be reluctant to join or remain on Temu, which could ultimately limit the platform's growth. 

 

What action should you take?: For merchants, understanding the implications of joining Temu’s platform is crucial. The first action should be a thorough assessment of how Temu’s pricing policies could affect your profit margins. Since Temu controls the consumer prices, merchants must evaluate whether the expected sales volume on the platform can compensate for any potential reductions in profit per unit sold. 

Additionally, merchants should weigh the benefits of free listing and zero commissions against the increased responsibilities for inventory management, shipping, and product assortment. The allure of expanded market reach must be balanced against the operational demands and potential risks associated with these new responsibilities.For competitors, particularly other e-commerce platforms in Europe, this is a wake-up call. Temu's expansion could signify increased competition, especially in the budget and discount sectors. These companies should consider enhancing their value propositions, perhaps by offering more flexible pricing models or better support for sellers, to retain their market share.Finally, consumers should stay informed about the quality and pricing of products on Temu. While the platform may offer competitive prices due to its scale and new business model, the control Temu exerts over pricing could influence the range and quality of products available. Consumers should compare prices and product reviews across platforms to ensure they are getting the best value for their money. 

In conclusion, while Temu’s invitation to European sellers represents a bold move towards global expansion, it brings with it a complex mix of opportunities and challenges. Both merchants and competitors need to carefully consider their strategies in response to this new market dynamic, while consumers should remain discerning in their purchasing decisions. 

What is it?: Meta's expansion of ad attribution tools is a strategic enhancement aimed at providing advertisers with more detailed and accurate data about how their ads are performing across Meta's platforms. Ad attribution, in simple terms, refers to the process of identifying which ads are responsible for driving specific user actions, such as clicks, conversions, or purchases. The expanded attribution tools now offer more insights into the customer journey. This includes multi-touch attribution models that account for various touchpoints a user interacts with before completing a desired action. These models go beyond the traditional last-click attribution, offering a more comprehensive view of how different ads and interactions contribute to conversions over time. 

 

Why is it important?: Enhanced Understanding of Customer Journeys: The traditional last-click attribution model often overlooks the complexity of modern customer journeys, where multiple touchpoints influence the decision-making process. By incorporating multi-touch attribution, Meta’s tools allow marketers to see the bigger picture, understanding the role of each ad in the conversion path. This leads to more informed decisions about where to allocate budgets and how to optimise campaigns. 

Improved Campaign Optimisation: With detailed attribution data, marketers can identify which ads and strategies are most effective at various stages of the customer journey. This enables more precise targeting, better budget allocation and higher ROI. For example, if a certain type of content consistently performs well in the early stages of the funnel, marketers can invest more in that content type to encourage leads. 

Greater Transparency and Accountability: As digital advertising budgets grow, so does the need for accountability. Advertisers need to justify their spending by demonstrating the effectiveness of their campaigns. Meta’s expanded attribution tools provide the transparency needed to show how every dollar spent contributes to overall business goals, making it easier to justify budgets and strategies to stakeholders. 

Adapting to Privacy Changes: With increasing privacy regulations and changes in how data is tracked and shared (iOS updates limiting tracking), having robust attribution tools is more critical than ever. Meta’s expansion helps advertisers adapt to these changes by offering more reliable ways to measure campaign effectiveness, even with limited data. 

What action should you take?: Familiarise Yourself with the New Tools: Take the time to understand the expanded attribution models and features. Meta provides resources, guides, and webinars that can help you get up to speed. Ensure your team is well-informed in these tools to make the most of the data available. 

Reevaluate Your Attribution Strategy: If you have been relying on last-click attribution, now is the time to explore multi-touch models. Consider how these new insights could alter your current understanding of campaign performance and how you might adjust your strategy accordingly. 

Optimise Campaigns Based on Insights: Use the newfound insights to refine your targeting, creative, and budget allocation. For instance, if you discover that certain ad formats drive more upper-funnel activity, consider increasing investment in those areas to nurture prospects more effectively. 

Monitor and Adjust Regularly: Attribution is not a set-it-and-forget-it tool. Regularly monitor your campaigns and the insights provided by Meta’s expanded attribution tools. As you gather more data, continue to refine your strategies to ensure you are maximising your campaign’s performance. 

5 Communicate Value to Stakeholders: With better attribution data, you can more effectively communicate the value of your campaigns to stakeholders. Use the data to build a compelling narrative around how your ad spend is driving business results and what strategies are working best. 

 

Discover more: Meta expands ad attribution tools to boost campaign performance 

In the search engine optimization (SEO), Google's core updates are significant events that can drastically alter how websites rank in search results. Recently, Google confirmed that AI-generated overviews, a feature increasingly integrated into search engine results, are indeed affected by these core updates. This confirmation is crucial for content creators, SEO professionals, and digital marketers who rely on AI tools to generate summaries and overviews. AI overviews refer to brief summaries or descriptions generated by artificial intelligence, often seen in search engine results pages as featured snippets or quick answers. These overviews provide users with concise information directly on the search engine results pages, without requiring them to click through to a website. Google's AI is trained to pull this information from various sources, synthesizing it into a quick and easily accessible format. Google's core updates are broad changes made to its search algorithms and systems, designed to improve the quality and relevance of search results. These updates can shift how content is ranked, which directly impacts the visibility of certain pages and the AI-generated overviews that Google displays. When Google confirmed that AI overviews are affected by core updates, it highlighted that changes to the search algorithm could alter which sources are deemed most authoritative and relevant for generating these summaries. For example, a website that previously ranked well and frequently contributed to AI overviews might see its influence diminish if a core update deems its content less relevant or valuable compared to other sources. Watch this space to see how traffic from both Organic Search and affiliate marketing partners, who are reliant on Google Search as a major traffic source could be impacted. 

 

Whilst having a view beyond the last click is essential, there is always scepticism that goes with the in-platform measurement. Meta’s new release will be one which will raise questions into the validity of the data. Is this representing the reality or favouring Meta, to encourage increased ad spend? 

 

With the many question marks on tracking performance across all platforms, we are spending time reviewing the market, looking at existing and new to market solutions, to identify the optimum single source of truth, if there is even one single source to use ... watch this space!!! 

 

For further information on any of the latest product updates or anything new that is on your mind, get in touch with our team of digital experts today.