Alibaba takes third of digital adspend

10 March 2017

SHANGHAI: Alibaba, the Chinese e-commerce giant, is expected to attract almost one-third (31.9%) of all digital advertising expenditure in China this year, according to the latest estimates from eMarketer.

The New York-based research firm said that figure equates to $16.04bn and that Alibaba is expected to continue to see strong growth because of its core e-commerce business as well as its consolidation of recently acquired outlets, such as video platform Youku Tudou.

In addition, the company can expect strong demand for its marketing services as a result of its improved data technology, the eMarketer report added.

"Alibaba's ad revenues show no signs of slowing down as user engagement on the Taobao app increases and the company continues to deliver highly relevant ads to consumers," said Cindy Liu, eMarketer's forecasting analyst.

While Alibaba is the major draw for digital adspend in China, eMarketer made clear that other major Chinese online players can expect to earn significant and growing digital advertising revenues.

Tencent, for example, China's largest online entertainment and social network, is expected to draw $6.02bn digital adspend in 2017, up 59.1% year-on-year.

The company is expected to see further strong growth over the next few years as it continues to monetise its WeChat messaging platform with the addition of more interactive advertising formats and by expanding inventory to local advertisers.

Meanwhile, web services firm Baidu is forecast to generate $9.31bn in digital ad revenues this year, up 14.4% year-on-year.

The report also noted that overall digital adspend in China increased by 27% this year, reaching just over $50bn and accounting for nearly 60% of paid media spending.

And mobile, by 2021, is expected to account for almost 60% of total media adspend and close to 82% of digital adspend.

"Ad spending in China continues to shift rapidly toward digital formats, fuelled by rising time spent online and greater advertiser spending on mobile formats, especially on video and social media," Liu said.

"We think this trend will persist in the coming years, especially as publishers continue to introduce new and innovative ad formats and improvements to data technology," she added.

Data sourced from eMarketer; additional content by Warc staff