Alibaba acquires stake in digital ad platform Focus Media
Alibaba will acquire about 6.62 percent stake in Shenzhen-listed outdoor and digital advertising service provider Focus Media for 9.63 billion yuan (US$1.42 billion) to strengthen synergies between e-commerce and digital advertising businesses.
There is also the possibility that another 5 percent stake will be purchased in the next 12 months.
The e-commerce firm would also invest US$511.1 million in an entity controlled by Focus Media’s chairman Jason Jiang by subscribing to newly issued shares, according to Focus Media's stock exchange filing yesterday.
The two companies said they would collaborate on ways to merge offline media and digital marketing, as well as help brands transition to fully digital operations.
Alibaba positioned the investment as part of its larger new retail strategy, as the e-commerce giant seeks to integrate the best aspects of online and offline commerce to make shopping more engaging and convenient for consumers, while offering enhanced marketing tools and more-detailed consumer analytics to merchants.
Focus Media's digital advertising screens can be seen on streets, in subways and in elevators across 300 Chinese cities, and the e-commerce giant has been driving effective channels to connect online and offline platforms.
The deal also offers synergies with Alibaba’s digital-marketing platform Alimama and is poised to offer new digital channels through which the brands selling on its e-commerce platforms can connect with these consumers and their rising spending power.
Alibaba’s investment in the media and entertainment sector dates back to its merger with Youku Tudou in 2015, which later served as a core component of its media and entertainment business group.
It also holds a minority stake in microblogging site Weibo, which allows online vendors on its retail platform to better engage with their social media followers.