China Tech Briefings: Alibaba Invests in Chinese Outdoor Marketing Firm Focus Media
- Focus Media will draw on Alibaba’s strengths in New Retail infrastructure and big data analytics to foster highly accurate targeted advertising.
- Alibaba will leverage Focus Media’s outdoor marketing strength to enhance its offline advertising capacity, including providing new channels to brands and merchants that sell through its e-commerce platforms.
Alibaba Invests in China’s Leading Outdoor Advertising Firm, Focus Media
On July 18, Alibaba Group agreed to purchase a stake in Focus Media, China’s largest out-of-home advertising network, for $1.43 billion. Alibaba will acquire 6.62% equity in the firm, and it will have the option to purchase another 5% stake next year. Alibaba’s non-consolidated New Retail Strategic Opportunities Fund will purchase a 1.37% stake in Focus Media, too.
Alibaba will also purchase a 10% stake (worth $504.7 million) in Media Management Holding, which is controlled by Focus Media Chairman Jason Jiang. Alibaba’s total investment in Focus Media, excluding the potential additional 5% acquisition, will give Alibaba 10.32% equity in the firm (worth $2.23 billion).
Founded in 2003, Focus Media advertises through out-of-home advertising screens, including liquid crystal displays (LCDs) in offices and apartment buildings, in 300 cities throughout China. The company plans to cover 5 million terminals in 500 cities eventually, potentially reaching 500 million urban consumers.
Focus Media to Leverage Alibaba’s New Retail Infrastructure and Big Data Analytics
Focus Media said that it will leverage Alibaba’s strengths, including its New Retail infrastructure and big data analytics, to enhance its own marketing capacity. Focus Media can draw large volumes of data from Alibaba’s online and offline platforms to display targeted marketing content to consumers. These data include transaction data from Alibaba’s marketplaces, payment data from Alipay, logistics data from Cainiao Network and data from Alibaba’s media entertainment properties such as the Youku online video hub.
Investment in Focus Media Boosts Alibaba’s Offline Advertising and Big Data Analytics Capabilities
Alibaba said that Focus Media’s dominant position in out-of-home marketing will enhance Alibaba’s offline advertising capacity. Focus Media has 190,000 TVs and posters located in elevators in China, accounting for 95% of the elevator TV market in the country as of June 30, 2016. Alibaba said that this investment also provides synergies with Alimama, Alibaba’s digital marketing platform. With Focus Media, Alibaba can provide new advertising channels for brands and merchants selling on its e-commerce platforms, enabling the companies to better connect with consumers.
Alibaba will also work on intelligent marketing with Focus Media in order to develop the capacity to see the real-time conversion rate generated by each advertisement in a particular venue. For example, Alibaba seeks to measure how ads for products sold through Tmall affects sales of those products.
Alibaba’s investment will enable Focus Media to leverage Alibaba’s strengths in New Retail infrastructure and big data analytics to better target ads to specific audiences. For Alibaba, the investment will enable it to expand its offline advertising capacity and provide new channels for brands and merchants selling on its platforms to connect with consumers.