Alibaba Group Holdings Ltd. (BABA), China’s leading ecommerce retailer, received 40% of all mobile advertising spent in China last year, and that trend is expected to continue for the next three years, amounting to $24.1 billion from 2016 to 2019.
That’s according to eMarketer, the market research firm that is forecasting mobile will become the leading ad-spending channel in China with 60% of all media ad expenditures and nearly 82% digital ad spending on mobile by 2021. In 2016, the total mobile advertising spending in China hit $27.31 billion with eMarketer forecasting it will reach $60.25 billion by 2019.
“Ad spending in China continues to shift rapidly toward digital formats, fueled by rising time spent online and greater advertiser spending on mobile formats, especially on video and social media,” said eMarketer forecasting analyst Cindy Liu in a report releasing the new forecast data. “We think this trend will persist in the coming years, especially as publishers continue to introduce new and innovative ad formats and improvements to data technology.”
Alibaba Wins In Mobile Ad Spending
An increase in mobile ad spending apparently bodes well for Alibaba since eMarketer is forecasting it will draw close to one third of China’s digital spending in 2017, amounting to $16.04 billion. That growth trajectory is forecast to continue as the China ecommerce giant maintains its dominant position in retail and consolidates the businesses it recently acquired, including Youku Tudou, its video platform. “Alibaba’s ad revenues show no signs of slowing down as user engagement on the Taobao app increases and the company continues to deliver highly relevant ads to consumers,” said Liu. Facebook Inc. (FB) ad revenue is targeted to reach $33.76 billion in 2017 on a worldwide basis, according to eMarketer. (See also: Alibaba: Ma Wants Tough Action on Counterfeits.)
eMarketer is forecasting Tencent, China’s biggest social network and online entertainment website to earn $6.02 billion in digital advertising revenue this year, marking a 59.1% increase from last year. What’s more, eMarketer is forecasting the strong growth will continue during the next few years as Tencent aims to make money off of its WeChat platform by incorporating interactive advertising formats and giving more inventory to local advertisers in China. Baidu (BIDU), the Internet search provider, is forecasted to get $9.31 billion in digital ad revenue this year, marking a 14.4% increase from last year. The company’s growth could be hampered by new online search advertising regulations in the coming years, eMarketer noted. “Stricter standards for internet advertising has weighed heavily on Baidu’s search business, while Tencent continues to see robust advertising growth from WeChat,” said Liu. “We expect ad revenues for Baidu and Tencent to be neck-and-neck through 2021.”