Alibaba Sees Growth in Advertising, Ecommerce Business - eMarketer

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Alibaba Sees Growth in Advertising, Ecommerce Business

Digital display ad revenues to rise more than 34% this year

August 9, 2016

Chinese ecommerce giant Alibaba reports quarterly earnings this week, with revenue gains expected again after more than 18 quarters of double- or triple-digit growth.

Alibaba Net Digital Display Ad Revenues Worldwide, 2014-2016 (billions and % change)

Alibaba’s net digital display ad revenues will reach $6.50 billion this year, eMarketer forecasts, representing growth of 34.1%—faster than 2014’s 26.1% growth rate. Growth is expected to accelerate further next year, to more than 35%, as ad revenues approach $9 billion.

In 2015, eMarketer estimates, Alibaba captured 5.1% of the worldwide digital ad market, up from 4.5% in 2014. Baidu, in comparison, took in 5.6% of worldwide digital ad revenues last year, up from 5.1% a year earlier.

An expanding middle class coupled with faster internet service and greater mobile uptake helped Alibaba to capture more than one-third (35.8%) of the $16.5 billion mobile ad market in China in 2015, up from 26.4% in 2014. Baidu, in contrast, captured 27.6% in 2015, down from 32.5% in 2014.

“Increased mobile shopping and rural market demand will continue to drive Alibaba’s China ecommerce sales growth,” said eMarketer analyst Andria Cheng. “On the international front, Alibaba’s April investment in Singapore-based ecommerce player Lazada will give it access to rising middle class consumers in key Southeast Asian markets and further its goal to drive growth outside of China.

“Cross-border ecommerce also remains a key growth opportunity, but it’ll be crucial for Alibaba to convince luxury and other brands it’s serious about fighting counterfeit product sales on its sites, in particular on the Taobao consumer-to-consumer platform,” commented Cheng.

eMarketer estimates retail ecommerce sales will reach just under $900 billion in China this year, up 35.6% over 2015 levels.

“Alibaba’s competition with China’s other big internet giants Baidu and Tencent also is further heating up with the company’s April purchase of video streaming site Youku Tudou and investment in food delivery service to drive online to offline sales,” said Cheng. “Alibaba is extending its tentacles in areas from media and entertainment to cloud computing and mobile payment to hook consumers within its own ecosystem of ecommerce and services.”

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