Ecommerce sales in China are also giving the company a boost
eMarketer estimates that this year Alibaba, which will report earnings next week, will capture 6.5% of the $194.60 billion global digital ad market; that represents an increase from 5% in 2015. Baidu, meanwhile, is forecast to capture 4.6% this year, down from 5.5% in 2015.
Alibaba’s share of the $108.88 billion global mobile ad market, however, is expected to increase to 10.9% in 2016, up from 8.7% in 2015.
An expanding middle class, coupled with faster internet service and greater mobile uptake, will help Alibaba capture almost two-fifths (39.7%) of the $27.9 billion mobile internet ad market in China in 2016, up from 35.0% last year. Baidu, in contrast, will capture 19.7% this year, down from a share of 26.7% in 2015. Alibaba’s share of the digital ad market in China will be 28.9% this year, up from 24.8% in 2015.
Cross-border ecommerce is growing in popularity in China. In 2016, almost 16.0% of the population will make purchases from abroad, worth $85.76 billion. This growth is, in part, thanks to a higher standard of living in China combined with a greater exposure to, and knowledge of, foreign products. It is also attributable to Alibaba launching Tmall Global in 2014, and JD launching JD Worldwide in 2015, enabling overseas brands to sell their goods directly to digital shoppers in China.
“Even though China’s slowing economy and its potential impact on consumer spending remains a concern, Alibaba’s moves to keep consumers within its ecosystem of online media and entertainment, social network and commerce will continue to drive healthy sales growth for the time being,” said eMarketer analyst Andria Cheng.
For instance, by adding live streaming and late-night webisodes to its key Mobile Taobao shopping app, where three-quarters of the users are under 35, the move has helped to drive associated product sales and get average users to open the shopping app seven times a day. Increased numbers of mobile shoppers using its affiliated Alipay payment app to buy goods and services both online and offline, rural market demand, and cross-border shopping via Tmall Global will also be key sales contributors.
Still, as the company seeks to get more brands to sell through its platforms and encourage more cross-border commerce, it still has work to do to convince some in the international community its promise to fight counterfeiting doesn’t ring hollow.
The April purchase of China’s popular video streaming site Youku Tudou will continue to aid sales growth in the quarter as Alibaba embeds more ecommerce into digital entertainment and seeks to use its various platforms to build a more complete user profile for marketers interested in reaching their specific consumer targets. That will be a big selling point driving Alibaba’s ad revenues going forward.
Outside of the US, how the integration is going from its April purchase of a controlling stake in Southeast Asia ecommerce startup Lazada, and how Alibaba plans to grow its international ecommerce also will likely be an investor watch point.