The launch by Alibaba Group, the parent of Hong Kong-listed Alibaba. com, of a new online advertising service, Alimama, drove up shares of Alibaba.com 9.89 per cent yesterday on speculation the new division would be injected into the listed firm.
Alibaba Group vice-president for corporate affairs Porter Erisman said the company had no such plans, but analysts thought otherwise.
'It is possible, especially when Alibaba's share price is weak and the company needs something to support it,' said Dick Wei, a China internet analyst at JP Morgan. 'If the new service is profitable, it would be even more suitable.'
Alimama, which allows small websites and personal blogs to reach advertisers, charges an average commission rate of 8 per cent for each transaction.
The commission rate, however, is low compared with other similar services. Baidu's Protheme and Google's Adsensed, which are major channels for small mainland websites to sell advertisements charge 60 to 70 per cent and 50 per cent respectively, said Mr Wei.
Other affiliated networks typically charged about 20 to 30 per cent, said T.R. Harrington, a director of Shanghai's Darwin Marketing.