Alibaba is expected to dethrone Baidu this year to become the largest player in China’s digital advertising market. It is expected that Baidu’s share in China’s digital ad market will fall to 21% this year compared to 28% last year. On the other hand, Alibaba’s share is expected to gain four percentage points, and it will eventually have a 29% market share, reports CNBC.
Alibaba to lead China’s digital ad market
China’s digital advertising market is growing fast, and eMarketer claims that mobile advertising is witnessing double-digit growth rates, but not all will benefit from it this year. Alibaba, Baidu and Tencent are three large internet companies, and together they command 60% of China’s $42 billion digital advertising revenue.
Market research firm eMarketer revised its forecast for Baidu’s digital ad revenues and cited negative press as the reason after Baidu’s search practices investigation prompted new regulations in internet advertising. Baidu’s digital ad revenues are expected to grow just 0.3% this year while for Alibaba and Tencent, the growth is expected to be 54% and 68%, respectively.
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China’s new regulations require all paid advertisements to be clearly marked in search results to distinguish between organic search results and advertisements. Prohibitions have also been imposed on prescription medication and tobacco ads, and it’s mandatory to obtain approval from the government for ads for medical supplies and certain health products.
eMarketer analyst Shelleen Shum told CNBC, “We think the impact will be larger on Baidu than on the other search engines given Baidu’s larger market share and its dominance in medical service ads.”
Alibaba the most valuable tech firm in Asia
Alibaba has also surpassed its rivals Tencent and China Mobile to become the top Asian tech company in terms of value. The South China Morning Post reported that Alibaba’s market value on the NYSE went up to $266 billion. This is higher than that of Tencent at $255.98 billion, while China Mobile secured the third position with $249.38 billion.
Experts attribute Alibaba’s significant growth to the increased attention that the tepidly growing e-commerce and internet market in China is getting. In the second quarter, Alibaba’s revenue increased 59%, its strongest growth since its IPO in 2014. Another tech firm included in the list of Asia’s 10 most valuable companies is the South Korean electronics giant Samsung. Four of the top ten spots are held by China’s largest state-owned banks.
On Wednesday, Alibaba shares closed up 4.48% at $106. Year to date, the stock is up almost 30%, while in the last year, it is up more than 61%.