Alibaba Buys Controlling Stake in Chinese Internet Marketing Firm
By Dow Jones Business News, January 13, 2015, 11:30:00 PM EDT
By Gillian Wong
HONG KONG-- Alibaba Group Holding said Wednesday it has bought a controlling stake in a Chinese Internet marketing firm in a move aimed at expanding its advertising business.
The e-commerce giant said its investment in AdChina, an online advertising firm, makes Alibaba a majority shareholder in the company. Alibaba didn't disclose the size of the investment it would take in Shanghai-based AdChina.
AdChina will work with Alibaba's online marketing technology platform, Alimama, to develop a digital platform that provides marketing services to businesses, online media clients and third-party service providers, Alibaba said in a statement.
Advertising accounts for more than half of Alibaba's revenue, according to estimates by iResearch.
Alibaba raised $25 billion in the largest initial public offering in history when it went public on the New York Stock Exchange in September. A major challenge the e-commerce giant faces is finding ways to shift its lucrative advertising platform to mobile apps from personal-computer websites.
Alibaba's advertising business involves selling search-linked ads. Merchants selling their products on Alibaba's Taobao marketplace, for example, would participate in auctions of search keywords--in a similar way to spending on Google's search-linked advertisements. It also charges for other ad spaces on its e-commerce platforms' home pages.
In 2010, investors led by Norwest Venture Partners and including News Corp, publisher of Dow Jones Newswires and The Wall Street Journal, backed AdChina with $40 million.
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Alibaba Buys Controlling Stake in Chinese Internet Marketing Firm