Dive Brief:
- Chinese e-commerce giant Alibaba is investing $2.23 billion for a stake in Focus Media, an outdoor digital advertising company based in Shanghai, according to company filings reported in TechCrunch.
- Focus Media says its advertising platform reaches 200 million middle-class consumers across 300 cities in China and plans to expand that reach to 500 million consumers in 500 cities.
- The investment is part of Alibaba's "New Retail" marketing strategy that combines key elements of online shopping, including fast delivery, easy payments and streamlined browsing, to the customer service offered in physical stores, per TechCrunch. Consumers could see a product advertised on a Focus Media display and use QR codes, which are highly popular in China, to scan the ad to access details about locating it in a brick-and-mortar store, for example.
Dive Insight:
Alibaba's stake in Focus Media highlights the growing number of companies looking to blend their online and offline strategy to expand their reach. It's something U.S. marketers are also paying attention to as many focus much of their campaigns on Gen Z consumers, who embrace both online and in-store shopping. A recent Criteo study found that 80% of Gen Zers enjoy in-store experiences, but 75% prefer shopping online out of convenience. The ability to touch, feel and try out products lures these consumers into stores, but they like to compare prices online.
While Alibaba's latest investment attempts to reach new consumers among China's growing middle class and their increasing spending power, the company's recent moves show it has its sights set on a global market. The company launched its first Olympic-themed ad campaign during the 2018 Winter Olympics, which included spots introducing Alibaba to the world and telling stories that spotlight small feats that lead to greatness. The campaign ran on digital and social channels in the U.S., U.K. and Japan, and TV and digital in China.
Digital out-of-home (OOH) displays, like Focus Media's offerings, let marketers modernize classic display advertising, and it's a growing market. About $4.5 billion is projected to be spent on digital OOH marketing in the U.S. by 2019, according to Zenith forecasts referenced by Ad Age. PricewaterhouseCoopers projects that the format will surpass traditional media spend by 2020, growing 15% a year.
