Retail in Asia

In Trends

Alibaba invests in digital advertising with recent acquisitions


In a matter of days, Alibaba is investing in two separate China-focused digital advertising firms, as the e-commerce giant continues to increase the span of its company portfolio in 2018.

Alibaba confirmed that it has agreed to acquire a minority stake in China’s Focus Media Information Technology, effectively tapping into the online marketing sector with the news.

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The transaction will see Alibaba take a 6.63% stake in Focus Media, costing the Chinese firm some 9.63 billion yuan (US$1.4 billion) in the process. In a filing, the Shenzhen-listed firm said the deal would see Alibaba become Focus Media’s strategic investor.

Founded in 2003, Focus Media operates in China’s interactive digital and advertising landscape.

In the latest move into digital marketing, media reports were released over the weekend outlining Alibaba’s acquisition of WPP’s Chinese unit.

Sky News reported on Saturday that Alibaba has partnered with Tencent and China Media Capital Holdings for early-stage talks to buy a minority stake in the advertising giant’s local subsidiary.

For an estimated 20% minority stake, which is much higher than Alibaba’s share in Focus Media, the deal is said to be worth approximately $2.5 billion.

Alibaba looks collate its Chinese agency operations into a new holding company and retain majority ownership and control, said Sky News.

WPP is the world’s leading advertising group. The group has been facing headwinds in recent months, with the news that company founder, Martin Sorrell, has left his post at the helm back in April, on misconduct allegations.

His replacement is yet to be disclosed.

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Alibaba continues to ramp up its investments in 2018, a continuum from the year prior. The spending comes as Alibaba fights increased competition from Chinese rival The latter this year has partnered with social media giant Tencent on offline retail, marketing and payments.

For the last fiscal fourth quarter, Alibaba said in May that March-quarter revenue grew 61% to 61.9 billion yuan ($9.73 billion) from a year earlier, beating analyst estimates of a 53% increase.