Alibaba Group advertising & marketing assignments

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Alibaba, now the world's biggest ecommerce company by gross merchandise volume, is one of China's most impressive business success stories. Founded in 1999 by former English teacher Jack Ma and 17 of his colleagues and students, it has grown to become the country's most valuable internet company, and one of China's few major commercial enterprises not controlled by the state. A key milestone in Alibaba's development was the creation in 2005 of a strategic share-swap with what was then Yahoo Inc, and acquisition of the US company's local operations in China. By the mid-2010s, Yahoo Inc's single most valuable asset was its minority shareholding in Alibaba. The Alibaba corporate name is used mainly for the group's international wholesale trading portal. Its biggest single business is domestic ecommerce site Taobao, the Chinese equivalent to eBay or Amazon, linking individual sellers and buyers, while counterpart Tmall is a shopfront for more established brands and outlets, and 1688 is a wholesale marketplace linking wholesale buyers and sellers. Taocaicai is a community marketplace. During 2021, the group had almost 1.2bn active users across all sites, 882m in China and the rest internationally. In 2009, the group launched promotional shopping festival "Singles Day" for the first time. Held on 11th November each year, it has grown to become the world's biggest retail event, in which thousands of international brands promote their products across all the group's sites. Gross purchase volumes for Singles Day 2021 set a new record of around $84.5bn (540bn yuan) over three days. Alibaba has also launched its own traditional bricks and mortar supermarket chain Hema (or Freshippo), which allows shoppers to pay using their online account, and now controls the country's biggest hypermarket operator Sun Art Retail, which owns the local store chains RT Mart and Auchan (the latter under license from the French Auchan group). Alibaba acquired Chinese food delivery service in 2018. A separate part-owned group subsidiary, Ant Group, runs payment platform Alipay and online bank MYbank. The group also controls various local digital media and entertainment assets, including South East Asia's biggest ecommerce operator Lazada and Trendyol in Turkey. Jack Ma acquired famed regional newspaper the South China Morning Post at the end of 2015. In 2017 Alibaba signed up to a 10-year sponsorship of the Olympics. Founder Ma stepped down as executive chairman of Alibaba in 2019 but remains a director. Daniel Yong Zhang is CEO. Revenues continue to soar, topping RMB 717bn (approx $109.5bn) for the year to March 2021, with net income of RMB 143bn ($21.9bn). Gross sales volumes through group-owned sites were almost $1.24 trillion that year, including $1.1 trillion in China; higher than any other ecommerce company. Japanese group Softbank controls around 25% of Alibaba's equity. Until its liquidation in 2021 and the distribution of its assets to investors, Altaba - the rump of the old Yahoo Inc business following the sale of the Yahoo online operations - had 15%.

Capsule checked 13th July 2020

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Recent stories from Adbrands Update:

Adbrands Daily Update 12th Apr 2021: The Chinese government maintained the pressure on Alibaba, imposing a record fine - the equivalent of US$2.8bn - for monopoly practises. It accused the ecommerce giant of "[abusing] its dominant market position in China's online retail platform service market since 2015 by forcing online merchants to open stores or take part in promotions on its platforms." The fine is almost three times the size of any previous penalty imposed in China on anti-monopoly grounds. For its part, Alibaba accepted the fine with grace, if for no other reason than to avoid further regulation: "We accept the penalty with sincerity and will ensure our compliance with determination."

Adbrands Daily Update 16th Mar 2021: Having already brought its weight to bear on Ant Group by forcing the cancellation of its IPO last year, the Chinese government has now turned its attention to Alibaba itself. According to reports in the WSJ, the government has requested that Alibaba dispose of some its large collection of media assets in order to reduce its influence. These assets include the leading Hong Kong-based newspaper the South China Morning Post, and sizeable holdings in social media and video apps Weibo and Bilibili. Alibaba is pushing back against the government pressure and issued a statement defending its investments. "The purpose of our investments in these companies," it said, "is to provide technology support for their business upgrade and drive commercial synergies with our core commerce businesses. We do not intervene or get involved in the companies' day-to-day operations or editorial decisions." Regulators are also preparing to issue Alibaba with a record fine of around $975m over alleged anti-competitive practises on its ecommerce sites. It is also reported that downloads of the web browser marketed by Alibaba's internet hosting subsidiary UCWeb have been blocked, apparently for carrying "misleading" advertising that directed potential patients to private hospitals instead of state-run ones.

Adbrands Daily Update 12th Nov 2020: Alibaba set an extraordinary new record with sales volumes for Singles Day 2020. By extending the promotional period from one day to three, it managed to double last year's total sales haul. Total purchase volumes by close of play on 11/11 were a staggering $75.1bn. Notably, in the wake of the previous week's abrupt cancellation of an IPO of part-subsidiary Ant Group, that financial services provider played an even bigger role in this year's Singles Day promotion. Alibaba no longer discloses what percentage of sales were made via Ant's Alipay payment service or its lending division Hubei. Four years ago, Hubei - whose name translates as "just spend" - funded 20% of Alibaba's purchases with micro-loans to customers. That figure is doubtless even higher now, and Hubei is reported to have sharply increased customers' credit limits in the days leading up to Singles Day.

Adbrands Daily Update 3rd Nov 2020: In an unprecedented development, the mammoth Ant Group IPO was cancelled just one day before its launch in mainland China after a meeting of the country's financial regulators. A preliminary listing already completed in Hong Kong has been suspended and funds are being returned to investors. Official statements suggested that changes being implemented in China's financial services regulations would materially affect Ant Group's projections of future performance. The group has championed a policy of making micro-loans to less well-off businesses and individuals, and there are fears among regulators that this could overheat the Chinese economy and create uncontrollable levels of consumer debt. The main financial services regulator has just issued new draft guidelines on lending that would impose a cap on loans according to borrowers' annual income. Some observers also believe that the move is a response to criticisms voiced by Ant's controlling shareholder Jack Ma about the "pawn-shop mentality" of China's traditional banks.

Adbrands Daily Update 26th Oct 2020: Alibaba's former financial services subsidiary Ant Group - still part-owned - is set to make history next week with a mammoth IPO. According to its founder and chairman Jack Ma, Ant's IPO will be "the largest in human history". The business aims to raise a total of at least $34.4bn from listings in both Shanghai and Hong Kong. That tops the $29.5bn raised by current recordholder Saudi Aramco. Ma told investors "This is the first time that such a big IPO was priced outside of New York City, which we wouldn't have dared to think about five, or even three years ago." Alibaba will retain its current holding of around a third of Ant Group, while Jack Ma and other managers will hold a combined total of almost 40%. Ant Group was originally launched as the payment services arm of Alibaba, similar to the relationship between eBay and Paypal. However, the business has far outgrown those beginnings to become one of China's leading challenger banks.

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