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What’s the Opportunity in China’s Advertising Market for Alibaba?

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Jun. 27 2019, Updated 11:23 a.m. ET

Almost $80 billion up for grabs in China’s digital advertising market in 2019

China is Alibaba’s (BABA) home market, and the company derives the majority of its revenue from the country. Alibaba is lucky to call China home, as China is one of the world’s largest and fastest-growing digital advertising markets.

Digital ad spending in China is expected to increase 22% in 2019 to top $79.8 billion and account for 69.5% of the country’s total media advertising spending, according to data from eMarketer. China’s digital advertising market is projected to grow to $134.3 billion by 2023 and account for 78.8% of the country’s total media advertising spending.

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Top providers dominate China’s digital advertising market

At the moment, China’s top five digital advertising providers, Alibaba, Baidu (BIDU), Tencent (TCEHY), Sina (SINA), and Sohu (SOHU), control nearly two-thirds of digital advertising spending in China. The other large competitors in China’s digital advertising industry include JD.com (JD) and ByteDance, the name behind the popular TikTok app that’s used to share short video clips.

Tapping into advertising to stimulate growth and diversify operations

For Alibaba, China’s digital advertising landscape is a major source of inspiration. As e-commerce growth slows in China’s major cities and the need arises for companies such as Alibaba to diversify their businesses, the country’s booming digital advertising market is a point of hope. The shift in trend in which consumers begin their online product searches on marketplaces instead of general search engines such as Baidu and Google favors e-commerce companies such as Alibaba in the race for digital advertising dollars from consumer brands.

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