Morning Report: Another day, another giant deal struck by Alibaba.
In a bid to expand its online e-commerce outreach offline, Alibaba Group today announced a $2.23 billion investment in Focus Media, a Shanghai-based outdoor advertising business. The investment gives Alibaba 10 percent stake of Focus Media, and the giant is also considering an option to buy an additional five percent of the smaller company in the next twelve months.
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Focus Media distributes advertisements on screens in elevators, shopping floors, or movie theaters. The company claims to have reached 200 million city residents through 1.5 million screens in over 150 cities.
On Focus Media’s website, the company quotes (link in Chinese) a set of data by Nielsen that people in China spend 24 minutes looking at ads every day, 19 percent of which is spent on elevator ads. This 19 percent is the attention graph the e-commerce giant Alibaba is trying to tap into.
Why would Alibaba invest in offline ads? Imagine you enter an elevator where all three walls are covered by prominent ads hanging at eye level. Chances are you will eventually, if not immediately, read them. Not to mention that all ads come in with convenient QR codes so that you can scan and purchase, all in one elevator ride.
More than half of the population in China lives in cities, according to a 2016 Associated Press report. If half of those people use elevators once a day, it would represent daily traffic of 384 million. Alibaba is betting that this seamless online-to-offline shopping experience and the huge traffic can boost its already extensive business.
Illustration: Li-Anne Dias
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