Taobao’s affiliate network was merged with Alimama in 2008 to create the Taobao Ad Network and Exchange (TANX), which – as Alibaba phrased it in the company’s IPO filing in May – ”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.”
Seems like Alibaba has it all covered. Why, then, does it really need AdChina? The answer could be as simple as expediency.
“It sounds like AdChina will give Alibaba access to more inventory sources – and they also probably also come with some clients as well, which is always nice,” Forrester senior analyst Richard Joyce told AdExchanger. “Alibaba could have just built all of those relationships from the ground up and plugged into all of those inventory sources with Alimama, but it seems like Alibaba is saying, ‘Let’s just get it all done right now.’ They certainly have the capital to do it.”
The move feels analogous to something Amazon or Google might do, Joyce said, noting that the AdChina deal reminded him of Google’s acquisition of the DoubleClick ad exchange.
But the supply side is a completely different animal in China versus the US.
“Historically, Chinese publishers didn’t want other businesses to touch their ad inventory, not to mention their data,” AdChina CEO Alan Yan told AdExchanger in a previous interview. “And because of that, the supply side in China was highly fragmented until just a few years ago.”
AdChina, however, has already put the work into tackling that fragmentation, making it an attractive acquisition target for Alibaba.
“You could see it that way,” Joyce said. “If Alibaba has the ability to consolidate all of these different publishers, then they can just start collecting, or at least seeing, that data. It’s similar to something a Google might do, or any of the exchanges or DSPs for that matter.”