517: Breaking Updates With Google, AI, Amazon And More With Toni Herrbach

Podcast: Download (Duration: 45:29 — 52.3MB)

The ecommerce and content-creator news that actually matters in early 2024: Temu’s ad spend has jumped roughly 1000% year over year with 76% going to social media, the New York Times is suing OpenAI for copyright infringement over training data, Google eliminated third-party cookies in Chrome on January 4, LinkedIn discontinued lookalike audiences in favor of AI-driven predictive audiences, TikTok is now a real search engine for Gen Z (in specific categories), the FTC ruled TurboTax cannot advertise its service as free, and Google, Yahoo and every major inbox provider are enforcing new email authentication rules (DKIM, SPF, DMARC) starting February 1.

This is a Profitable Audience segment with my co-host Toni Herrbach where we walk through each story, what it actually means for online business owners, and whether you should change anything based on it.

Here is the full roundup, one story at a time.

Key takeaways

• Temu is losing an estimated $30 per order and burning capital to blanket every ad channel. Do not copy their strategy unless you have unlimited runway.
• The New York Times vs OpenAI lawsuit could reshape whether creators get paid for content used to train AI. Expect this to run for years.
• Google eliminated third-party cookies in Chrome as of January 4, 2024. Non-Google ad networks lose their cross-site tracking. Google keeps its own data.
• LinkedIn is sunsetting lookalike audiences in favor of AI-driven predictive audiences. Existing audiences still work but stop dynamically updating.
• TikTok is a real search engine for Gen Z in three categories: recipes, workouts and fashion. Boomers are not searching there at all.
• The FTC ruled TurboTax cannot advertise as free because roughly 70% of users do not qualify for the free version.
• New DMARC and email authentication rules are live as of February 1. Keep spam complaint rates below 0.1%, and never above 0.3%. Send in aggregate (not segmented by engagement) to keep complaint percentages low.

Temu ad spend jumped 1000%, and 76% of it is on social media

Temu’s advertising spend jumped an estimated 1000% year over year, and 76% of that spend is going to social media rather than search or display. Temu is running a second consecutive Super Bowl commercial, and its social ads use chaotic carousel creative (a headband in frame one, a drawer organizer in frame two, no product focus) rather than any of the traditional best practices.

According to reporting from Wired going back to May 2023, Temu is losing roughly $30 per order and is not trying to be profitable in 2024. They are trying to take share.

The strategic read for regular sellers is: do not copy Temu’s playbook. Their ad economics only work at their level of capital burn, and their spend is going to push ad costs up on every platform they touch. If you match their bidding, you lose.

The de minimis loophole that makes Temu’s US strategy work

Temu ships direct from China and most orders fall under the $800 de minimis threshold, which means no import duties and no US sales tax collection at the border. That is not a Temu invention (Shein, AliExpress and the whole cross-border ecommerce model use it), but the volume Temu is doing is drawing political attention.

US legislators are looking at closing or narrowing the loophole. If they do, Temu’s landed-cost advantage compresses fast, and the US-based sellers Temu is undercutting on price get some room back.

The New York Times is suing OpenAI for billions in copyright damages

The New York Times filed a lawsuit against OpenAI alleging that OpenAI trained its large language models on Times articles without permission and is seeking billions of dollars in damages. The outcome will shape whether content creators can charge AI companies to crawl their sites, or whether AI companies can continue scraping under fair-use precedent.

I know OpenAI has crawled my site because ChatGPT can produce content “in the style of Steve Chu” and knows who I am. If the Times wins, publishers may end up with a licensing regime similar to how music rights are handled; if OpenAI wins, the status quo holds and the flood of AI content gets larger and cheaper.

Either way, this case is going to run for years and could reach the Supreme Court.

The parallel image-generation lawsuits are harder to prove

The mid-2023 artists’ lawsuit against Midjourney and other image tools is a separate track and is harder to prove because the “style” argument is fuzzier than a direct-text extraction argument. Text-based fair-use arguments are cleaner than “these images look like mine”. The Times case is where the precedent is most likely to be set.

Google eliminated third-party cookies in Chrome (January 4, 2024)

Google eliminated third-party cookies in Chrome starting January 4, 2024, which means non-Google ad networks lost their primary cross-site tracking mechanism. First-party cookies (the ones a website you visit sets directly) still work. Third-party cookies (the ones ad networks and analytics tools drop when their code loads on someone else’s site) are gone.

The strategic effect: Google’s ad monopoly gets stronger. Google does not need third-party cookies to track you across the web because it owns Chrome, Android, YouTube, Google Search, Gmail and Google Analytics, and every non-Google ad network relied on third-party cookies to do what Google does natively.

The pitch Google used to sell the change (“we are protecting your privacy”) is technically accurate, but the practical outcome is that only Google gets to collect your cross-site behavior at scale.

Apple pulled the same move earlier with Safari and Intelligent Tracking Prevention. Google has been under pressure to follow, and January 4 is when the enforcement actually landed.

LinkedIn discontinued lookalike audiences (in favor of AI predictive audiences)

LinkedIn discontinued lookalike audiences and is transitioning ad buyers to AI-driven predictive audiences. Existing lookalike audiences still work but stop dynamically updating, so the exact list of people you had targeted in your bucket in January is the same list you will be targeting in May, with no new additions and no removals for behavior changes.

The headlines called this “LinkedIn kills lookalike audiences” without mentioning that predictive audiences replace them. Lookalike and predictive audiences do broadly similar work (find people who resemble your current customers) but predictive uses more behavioral signal, which should improve targeting quality if LinkedIn has enough data. Given that LinkedIn is where users voluntarily upload their entire employment history, they probably do.

Google, Yahoo and Microsoft are enforcing new email rules (DMARC, SPF, DKIM)

Google, Yahoo and every other major inbox provider are enforcing new email authentication requirements as of February 1, 2024. Bulk senders now have to implement SPF (sender policy framework), DKIM (domain keys identified mail) and DMARC (domain-based message authentication) or their mail goes to spam. They also have to make unsubscribe easy (one-click list-unsubscribe headers) and keep spam-complaint rates below a threshold.

Spam complaint rate: below 0.1%, never above 0.3%

The hard number to remember: keep your spam-complaint rate below 0.1%, and never let it cross 0.3%. Most legitimate senders with real newsletter content sit comfortably under 0.1% and never think about it.

If yours is climbing, cull your list of non-engaged subscribers before the deadline. Every ESP (Mailchimp, Klaviyo, ConvertKit, ActiveCampaign) is publishing implementation guides.

Why to send in aggregate, not segmented by engagement

A tactic I used to run and now recommend against: sending emails in engagement-based waves (most engaged first, then less engaged). It looks smart because you protect deliverability by hitting your best openers first, but it hurts you now because inbox providers evaluate spam-complaint rate on each send.

A small “least engaged” segment can spike its own complaint rate over 0.3% and get flagged even if your overall list is clean. Sending in aggregate dilutes bad actors across the total volume and keeps the percentage low.

TikTok is now a real search engine for Gen Z (in three categories)

TikTok is now a real search engine for Gen Z in exactly three categories: recipes, workouts and fashion. Outside those categories, older demographics are not searching on TikTok at all.

The clickbait headlines saying “TikTok replaces Google” are overstated. In the categories where TikTok wins, it wins because the answers are visual, short, and personality-driven.

I have started using TikTok as a search engine myself, mostly for product problems and restaurants. When my heat press threw an error code, Google’s results were affiliate roundups and YouTube’s results were 10-minute reviews.

TikTok surfaced multiple people who had hit the exact same error, with concrete fixes in under a minute. I ended up returning the heat press to Amazon because it was still under the 30-day return window, but TikTok is what got me to the answer.

Once you trust a specific TikTok creator, the answer quality jumps

Toni fell into “auto repair TikTok” and now follows five shops. The pattern is exactly like early YouTube: once you follow a specific creator you trust, the platform becomes a legitimate reference source.

One shop she follows is a 40-year veteran mechanic whose son fronts the videos. When he ranked the worst three-row SUVs and Toni commented (she drives a Suburban), he replied in the comments with model-year-specific warnings for her exact vehicle.

That is a better answer than a $500 in-person diagnostic.

The FTC ruled TurboTax cannot advertise as “free”

The FTC ruled TurboTax cannot advertise as a free service because roughly 70% of users do not qualify for the free version. TurboTax’s advertising has run “free” claims for years while the actual free version has a URL you cannot find on the site and eligibility narrow enough to exclude most people who click through the ad.

The FTC ruling matters beyond TurboTax because there are hundreds of digital businesses running “free trial” or “free version” advertising where the free tier is deliberately unusable and every user hits an immediate upsell. TurboTax is too big to hide, so it got the ruling. Whether the FTC extends the same logic to smaller online marketers is the open question.

The version I run at My Wife Quit Her Job (and Toni runs at Profitable Audience) is a free webinar that stands on its own. Someone can watch the webinar and act on it without ever buying our paid course, and people do. That is the “free” that survives FTC scrutiny.

Large publishers are already publishing AI-generated content (without disclosure)

Large news outlets are already using AI to generate content and publishing it without human bylines. This is happening at names you have heard of.

A friend of mine runs a company called Rizzle that takes any script, generates B-roll, narration, on-screen titles and statistic call-outs, and turns it into a finished video. The same company also handles podcast video (auto-switching between talking heads based on who is speaking).

The uncomfortable irony: the New York Times is suing OpenAI while other large publishers are running AI content pipelines internally. In a market this new, the enforcement bar is inconsistent and the top-of-page results can be pure AI on major domains. That is the reality of the media landscape in early 2024.

Frequently asked questions

Should I copy Temu’s advertising strategy?

No. Temu is losing an estimated $30 per order and burning capital to blanket every ad channel. Copying their placement and creative style without their capital position means you pay Temu-level ad costs without Temu-level margin subsidies, and you lose. Focus on your unit economics and ignore what Temu is doing.

How does the New York Times lawsuit against OpenAI affect content creators?

If the Times wins, expect a licensing regime where publishers can charge AI companies to crawl and train on their content. If OpenAI wins, the status quo holds and free AI content proliferates. Either way the case will run for years and could reach the Supreme Court, so do not restructure your business around a specific outcome yet.

What is the new email spam complaint rate threshold I need to keep?

Keep your spam complaint rate below 0.1% at all times. Never allow it to exceed 0.3% on any send. Send emails in aggregate rather than segmented by engagement to dilute bad actors across your total volume, and cull non-engaged subscribers regularly to protect the ratio.

Is TikTok a real search engine for my ecommerce business in 2024?

For Gen Z audiences in recipes, workouts and fashion, yes. For older audiences and other categories, not yet.

If your product fits one of those three categories or your buyer is 18 to 25, invest in TikTok content. If your buyer is 45+ and outside those categories, prioritize YouTube and Pinterest instead.

Are third-party cookies going away completely in Chrome?

Yes. Google eliminated third-party cookies in Chrome as of January 4, 2024, and first-party cookies (set by the site you are visiting) still work.

Non-Google ad networks that relied on third-party cookies for cross-site tracking have to migrate to Google’s Privacy Sandbox APIs or accept degraded targeting. Google keeps its own cross-site data via Chrome, Android, YouTube and Search.