Alibaba's strategic holding of Yi Media will invest in the "cash + resources" model

On January 14, AdChina Group, a domestic integrated digital marketing platform, announced that Alibaba Group will make a strategic investment in and take a controlling stake in AdChina.

It is understood that after Alibaba strategically controlled Yichuan Media, the latter still maintained independent operation and, together with Alimama, the marketing and promotion platform under Alibaba Group, promoted the development of digital marketing programming in China and gradually realized the popularization of big data marketing capabilities.

Yan Fangjun, CEO of eMedia, said in an exclusive interview with a reporter from 21st Century Business Herald that Alibaba's investment is large in scale and will be invested and controlled in a "cash + resources" model. The investment amount will be announced in April.

In fact, eMedia had planned to go public in the United States, but withdrew its application due to market conditions and other factors. After Alibaba took strategic control of eMedia, Yan Fangjun said, "eMedia will not give up independent listing, and after cooperating with Alibaba, its revenue will increase significantly, making it easier for the company to go public."

“Cash + Resources” Model Investment

It is understood that Easy Media was founded in Silicon Valley in early 2007 and received a first round of investment of US$10 million that year. In July 2010, Easy Media completed its second round of financing of US$30 million, and in November of the same year, it completed the third round of financing of US$40 million.

In fact, eMedia submitted an IPO application to the U.S. Securities and Exchange Commission (SEC) in February 2012, planning to raise up to $100 million. At that time, the prospectus of eMedia showed that eMedia's net income was $10.79 million in 2009, $27.27 million in 2010, and $50.67 million in 2011, with a compound annual growth rate of 117% in the past three years. However, due to factors such as the poor capital market environment, eMedia eventually withdrew its application for listing on NASDAQ.

"An important prerequisite for the cooperation is that e-Media can be listed independently, but the most important thing now is to develop the business in combination with Alibaba's resources." Yan Fangjun told reporters that his current main concern is how to better implement the cooperation points between Alibaba's resources and e-Media. After the cooperation between the two parties continues for a period of time, e-Media's revenue may reach 10 times the current revenue level.

Alibaba's advertising business system "Alimama" focuses on e-commerce customers such as Taobao and Tmall. Yichuan Media is an advertising platform that focuses on brand advertising and the enterprise market. "Alibaba's customers, especially some brand sellers on Tmall, have advertising needs. We will provide a one-stop wireless connection solution for Alibaba advertising and e-commerce." Yan Fangjun said.

Yan Fangjun told the 21st Century Business Herald reporter that how to develop big data into a big business has put pressure on BAT in the past one or two years. "Alibaba's big data has been established, but how to move forward? I think big data marketing is one direction." Yan Fangjun said that after Alibaba strategically controls Yi Media, it will connect the entire data system with Yi Media, expanding from small and medium-sized e-commerce companies to brand advertisers.

According to Yan Fangjun, eMedia and Alibaba have had a lot of business exchanges and share many common clients, and the two sides reached this cooperation through constant communication. "This investment will be made in the form of 'cash + resources', including hundreds of millions of yuan in cash plus hundreds of millions of yuan worth of data resources."

The new era of big data marketing

In fact, although the three giants BAT currently have huge traffic, except for Baidu's "Brand Zone" and Tencent OMG (Online Media Group), the overall traffic monetization is more inclined to performance advertising rather than brand advertising.

"The characteristics of brand advertisers are that they have large advertising budgets and high profits from brand advertising business. The profit margin of some brand advertising businesses can even reach over 100%." ​​Zhang Di, CEO of Shanghai Hege Technology, told the 21st Century Business Herald reporter that Alibaba's advertising system is relatively still e-commerce advertising, which is paid through pricing methods such as the number of user clicks, thereby bringing traffic to e-commerce merchants. This type of advertising business is far less profitable than brand advertising. The joining of Yichuan Media may expand the brand advertisers in Alibaba's advertising system.

Data is like oil, but although the BAT giants have huge data resources, it is difficult for them to open them to a third-party DSP company (demand-side platform) in the market. Zhang Di said that cooperation like the one between Alibaba and Yi Media is the beginning of making use of Alibaba's data.

In recent years, programmatic buying has been mentioned frequently in the advertising field, and big data marketing has also been widely publicized. Data is the core element of programmatic buying. At the end of last year, BlueFocus invested in two big data companies: AdMaster Technology and JingZan Technology, focusing on the two companies' ability to process big data. However, BAT, which has a large amount of data in the Internet field, has not really started big data marketing. An advertising industry insider told reporters, "When BAT really started programmatic buying, the big data marketing that has been talked about for many years really began."

Yan Fangjun told the reporter that even though many DSPs on the market are talking about concepts such as algorithms, most of them still lack the "data" element. The above-mentioned advertising industry insider told the reporter that from the perspective of the pattern, this kind of strategic investment, holding and even acquisition will continue to happen in the advertising technology field in the future. In fact, in May 2014, Qihoo 360 invested in and held a controlling stake in MediaV.

Yan Fangjun said that in the future, BAT will occupy an increasingly larger proportion in the field of big data marketing because they own big data; and many DSP companies will find it difficult to develop because they do not have end-to-end data.

It is worth mentioning that recently, the news that Tencent WeChat will launch Moments feed ads has also spread like wildfire. The so-called "Moments feed ads" are ads inserted between the information posted by friends in WeChat Moments. In this regard, Zhang Di believes that under the demand for such an advertising model, Tencent may also invest in or acquire an advertising technology platform with technical capabilities in the market in the future, thereby building a programmatic buying chain.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.