Merchant competition drives PDD advertising take rate
The guest argued that Pinduoduo's rising advertising take rate is structurally driven by merchant-on-merchant competition rather than platform-dictated price hikes.
The argument
As the merchant base expanded to chase PDD's massive user demand, intense competition for finite user attention forced merchants to bid up ad space. This dynamic has nearly doubled PDD's estimated advertising take rate from 2-2.5% in 2019 to 4-4.5% today.
The thesis, stress-tested
✓ What validates it
- ✓Advertising take rate sustaining or exceeding the 4.5% estimate
- ✓Growth in Online Marketing Services revenue outpacing GMV growth
▸ Risks discussed
- ▸Merchant fatigue or margin compression leading to platform churn
- ▸Slowing user acquisition reducing the 'wall of demand'
Hear it yourself
"And that's mostly because PDD onboarded way more merchants, which obviously changes the supply and demand dynamic on the merchant side. So think about the ratio of orders to merchants inside a given product category, for example."
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