A Peek Inside Alibaba's Ad Business, Courtesy Of Its IPO Filing

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alibaba-f1Alibaba's big IPO filing on Tuesday shows the company is one of the world's largest ecommerce companies  maybe the biggest.

But there's a subtler message, too: Thanks to its transactional data and exchange platform, the Chinese company is also among the giants of ad technology.

"With rich consumer data generated from our China retail marketplaces, we utilize our proprietary algorithms to evaluate the quality of advertising inventory from thousands of publishers and make predictions of click through rates and conversion rates of online marketing messages," Alibaba said in its F1 (foreign registration statement) filing with the US Securities and Exchange Commission. "This capability enables sellers to improve consumer targeting efficiency and enhance the return on investments for online marketers."

What Alibaba is describing is essentially a large ad network/exchange platform, where the company leverages its valuable transactional data to amplify ad campaigns via RTB-enabled reach extension. It's a strategy Amazon has pursued as well, as AdExchanger has previously covered.

Based on this and other language in the F1, Alibaba clearly realizes the ad oppoertunity.

What follows is a sampling of its other ad-themed info from the SEC filing.

On the launch of its ad network and exchange platform in 2007:

"In 2007, we launched Alimama, our online marketing technology platform that offers sellers on our marketplaces online marketing services for both personal computers and mobile devices. Alimama also offers our sellers these marketing services through third-parties through the Taobao Affiliate Network, which we believe is the largest online marketing affiliate network in China in terms of revenue shared with our affiliates. In 2007, we also started to monetize our Taobao Marketplace through P4P [pay for performance] marketing services and display marketing."

Later Alimama was merged with the Taobao Affiliate network to create TANX (Taobao Ad Network and Exchange). Today TANX automates the transaction of billions of media impressions daily. Alibaba puts it this way:

"TANX enables more transparent pricing of advertising inventory, which improves online marketers’ return on investment. Participants on TANX include publishers, merchants, demand side platforms, and third-party data and technology companies."

Alibaba also has a data-management platform (DMP) that connects to its exchange. Using it, TANX participants can identify audiences they want using first- and third-party data.

For example, Alibaba said Mercedes Benz used its DMP to advertise its Smart compact car brand on Taobao Marketplace in December.

"By matching data collected from visitors to their physical showrooms to our DMP, we were able to identify the showroom visitors who also visited our China retail marketplaces and our partner websites and to add additional attributes to the data set using our proprietary algorithm. We then ran an online marketing program on behalf of Mercedes Benz to deliver targeted advertisements to a much larger set of potential customers with similar attributes without disclosing personally identifiable information. Mercedes Benz reported to us a noticeable increase in foot traffic following launch of the campaign."

Alibaba has begun to monetize its valuable consumer shopping intent and transaction data through ads, with help from its cloud data processing architecture. Once again, there are strong echoes of Amazon here. Alibaba says its server cluster is capable of crunching "terabytes of data points for the modeling of tens of billions online advertising impressions."

 

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