Alibaba has acquired a minority stake in Chinese digital advertising company Focus Media for $1.43bn. Alibaba’s investment will give the e-commerce giant a 6.62% share of the Shanghai based business which owns digital advertising screens in 300 Chinese cities and claims to reach 200 million consumers.
The online retailer will also purchase a 10% stake in an entity which controls 23.34% of Focus Media. New Retail Strategic Opportunities Fund, which is described as a “non-consolidated, related party of Alibaba”, will also acquire a 1.37% interest in Focus Media, bringing Alibaba’s total investment to $2.23bn which gives the company a 10.34% stake.
Alibaba said it plans to acquire another 5% interest in Focus Media within the next 12 months, according to Alizila.
Focus Media will use the investment to help it grow its reach to include five million terminals in 500 Chinese cities in a bid to connect with 500 million consumers.
The acquisition aims to further bolster Alibaba’s New Retail strategy, which integrates online and offline retail to create a seamless commerce experience for consumers.
The deal will also enable Alibaba’s digital-marketing platform, Alimama to partner with Focus Media to offer brands new digital channels to promote their products. It will also bolster Alibaba’s consumer analytics tool, Uni Marketing, which enables brands to identify, target, reach and retain their customers across Alibaba’s ecosystem of e-commerce and media sites.
Alibaba and Focus Media will work together to create ‘New Marketing’ which will provide brands with a way to merge offline media, digital marketing and New Retail.