China’s e-commerce major Alibaba Group announced on Wednesday that it has agreed to take over a minority stake in China’s Focus Media Information Technology with an aim to tap into the digital marketing segment.
The e-commerce giant will be acquiring about 6.62 percent in Focus Media for about 9.63 billion yuan ($1.43 billion) and expectedly yet another 5 percent stake in the next one year as stated by the company.
Alibaba also has plans to invest $511.1 million in an entity managed by Jason Jiang, Focus Media’s chairman, by subscribing to the newly issued shares of the company. Focus Media’s digital advertising screens can be seen on the streets, on subways and in elevators across 300 Chinese cities, reaching 200 million middle-class consumers.
By getting in association with Focus Media, which has set a medium-term target of having five million terminals in 500 Chinese cities and reaching 500 million middle-class consumers, Alibaba can offer new digital channels through which the brands selling on its e-commerce platforms can connect with these consumers and their rising spending power.
Founded in 2003, Focus media has its main business in China’s interactive digital media and online advertising space. It operates the biggest out-of-home advertising network in the country, consisting of digital signage screens, and the company claims to own the country’s largest Internet advertising agency.
After the completion of the acquisition, Alibaba will become the strategic investor of Focus Media. The company stated this approach to digital marketing, which offers more advanced and reliable marketing tools to brands than traditional marketing, has always been at the core of New Retail.
The two companies stated that they would collaborate for merging offline media and digital marketing, and also help brands transition to fully digital operations.