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Alibaba will overtake rival Baidu in mobile search advertising revenue for the first time this year. Photo: Reuters

Alibaba knocks Baidu off top spot following aggressive expansion into mobile advertising

E-commerce giant Alibaba is poised to corner the largest share of mobile internet advertising revenue in China this year, overtaking search giant Baidu.

Alibaba

E-commerce giant Alibaba is poised to corner the largest share of mobile internet advertising revenue in China this year, overtaking search giant Baidu, often known as the “Google of China”.

That milestone by New York-traded Alibaba would buttress a year in which China is forecast to record nearly double the spending on display and search advertising delivered to internet-connected smartphones and media tablets, according to research company eMarketer.

It predicted total mobile internet advertising expenditure on the mainland to reach US$13.98 billion this year, up from US$7.38 billion in 2014.

The mainland's rapid economic growth, the massive size of the country, and its vast population of internet-connected smartphone and media tablet users have helped turn it into the world's second-largest market for mobile advertising, behind the United States.

"Mobile commerce, location-based search, mobile messaging, social networking and mobile video services are the biggest drivers of this market," Wang Haxia, the vice-president of forecasting at eMarketer, told the South China Morning Post.

Hangzhou-based Alibaba is expected to see a 117 per cent increase in mobile internet advertising revenue this year to US$4.75 billion, up from US$2.19 billion in 2014.

"Given increasing mobile ad loads and higher budget allocations to mobile, we expect the monetisation gap between [Alibaba's] mobile and PC [business platforms] to narrow further," Daiwa Capital Markets analyst John Choi said in a research note.

Monthly mobile active users on Alibaba's e-commerce platforms reached 265 million at the end of December last year, representing a 95 per cent increase from 136 million at the end of December 2013.

Alibaba has recently showed a sharper focus on expanding its mobile internet-related operations, and the advertising opportunities there. In February, the company invested US$590 million to take a minority share in mobile smartphone maker Meizu Technology Corp.

Baidu is estimated to post a 78.6 per cent rise in mobile internet advertising revenue to US$4.52 billion, from US$2.53 billion a year ago.

While Alibaba is expected to surpass Baidu in mobile internet advertising revenue this year, eMarketer pointed out that the Beijing-based online search market leader will continue to lead in the wider digital advertising market.

Baidu's online search-related advertising revenue is already predicted to rise 34 per cent to US$7.1 billion this year, from US5.3 billion last year.

According to eMarketer, Alibaba and Baidu will each corner about one-third of all mobile internet advertising revenue in China this year. In 2016, the gap between the two companies is expected to widen even as other domestic internet players gain some market share.

Mainland internet powerhouse Tencent Holdings, which is listed in Hong Kong, is projected to advance its mobile internet advertising sales to US$513.6 million this year, from 307.3 million in 2014.

Sohu, which runs a leading online games portal and mainland search engine Sogou, is expected to post US$474.9 million in mobile advertising revenue, up from US$265 million a year ago.

Mainland video-sharing platform operator Youku Tudou is estimated to record US$271.8 million, from US$180.2 million the previous year.

Even with the strides made by Alibaba on the mainland, eMarketer said US internet giants Google and Facebook remain well ahead in mobile internet advertising revenue. It forecast Google to record US$24.31 billion in mobile advertising revenue this year, while Facebook will post US$11.01 billion.

 

This article appeared in the South China Morning Post print edition as: Alibaba to take Baidu's mobile advertising top spot
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