On July 18, The capital group of Focus Media joined a blockbuster capital group. Alibaba Group’s subsidiaries reached a strategic cooperation with Focus Media with a capital of about 15 billion yuan. Together with the previous shares, Alibaba Group and its related parties hold 10.3% of the shares of Focus Media.
Speaking of Focus Media, most people have the impression that it is an advertising company, not an Internet company in the strict sense. And after “alongside” go up Ali, many people make fun of, a large advertising company is being absorbed slowly by bigger Internet advertising company. With the elevator advertising start of the media, really should be on the road to magnate?
Advertising + e-commerce system helps Focus to break through the bottleneck
As is known to all, focus Media has created a market value of 100 billion yuan in the past ten years by relying on the characteristics of high recognition and stable cost of elevator advertising. However, after creating a market value of 100 billion yuan, Focus Media also faced a bottleneck in the offline traffic market.
On the one hand, in terms of traffic entrance, the advertising business of Focus Media has gradually extended from a single elevator advertisement to cinemas and other scenes, and opened the market by using the closed publicity mode of scenes. Up to now, Focus Media’s advertising business has covered 300 cities across China, bringing advertising services to nearly 200 million middle-class urban residents. However, with the popularity of smart phones and the coming of THE 5G era, the declining trend of the closed promotion of focus elevator advertising business has become increasingly obvious among the increasing phubbers.
On the accurate delivery, on the other hand, although the focus media coverage on the elevator advertising reached $200 million, but the crowd, overlap, most and the audience can bring market effect for advertisers, truly is not much, but most of the potential users of elevator advertising attention, is with the popularity of smartphones and weakening. It’s like a fisherman casting a net to catch fish, let alone the designated fish. The elevator advertisers of Focus Media cannot bring considerable market effect for advertisers, and its precise push function is still to be discussed.
The participation of e-commerce giant Ali can not only help Focus Media redefine building advertising, but also solve the problem of accuracy in the process of elevator advertising business expansion. Although Ali has always been the most important customer of Focus Media, this massive investment can strengthen the possibility of Focus Media in the e-commerce advertising market, enable Focus Media to realize digital marketing model innovation under the general trend of new retail, and improve its elevator advertising business volume.
At the same time, the system of “advertising + e-commerce” enables it to quickly open the e-commerce advertising market, obtain more market flow, and alleviate the privatization fund selling pressure in the process of expansion. After more than ten years of development, focus Media has become a veritable unicorn in the elevator advertising industry. However, with the increasing number of new enterprises in the industry, Focus Media needs sufficient funds to expand in order to stabilize its market position. In the current market, Jiang Nanchun, the founder of Focus Media, not only faces the sales pressure brought by the rapid expansion, but also faces the selling pressure brought by the lifting of the restricted shares issued by Focus Media in the stock market at the end of the year. The participation of Ali not only shares the pressure of stock selling of Focus Media, but also promotes focus media to move to lower-tier cities and obtain market guarantee for business expansion.
Under the “generous” investment of Ali Capital, the market pressure faced by Focus Media has been resolved. In the new retail era, focus Media’s market expansion pace will also gain a good development space through cooperation with the e-commerce industry.
Mad Men’s Troubles: Is Focus just a dream booster for the giant?
According to public data, alibaba and Tencent, the two Internet giants, have made 297 and 592 cumulative investments in the investment market so far, with 125 and 203 cases of single investment reaching 100 million yuan respectively. According to the data, in this new retail era, Tencent Capital seems to be superior to the investment advantages of the two giants with the same market value in the investment market, while focus Media, eager to solve the market dilemma, why choose Ali over Tencent as its partner?
In terms of market freedom, some people in the industry believe that Although Alibaba and Tencent are not far apart in market value, they are very different in investment attitude. One is Nato-like Tencent, which is based on openness and cooperation and gives independent management rights to the companies it invests in, while the other is soviet-like Alibaba, which is highly centralized and integrated. Gaining the favor of Tencent Capital can guarantee the independent management right of Focus Media in the future market, but just because of this, focus media’s advertising business is difficult to integrate with Tencent’s advertising business ecology, so it cannot quickly and effectively solve the dilemma of focus Media in the current market. By contrast, Ali’s “strong sense of purpose” features coincide with focus media.
In terms of strategic prospects, Tencent’s massive social traffic can indeed bring considerable market traffic to Focus Media, but these traffic cannot bring substantial changes to focus Media’s accuracy in advertising. Alibaba’s e-commerce platform can improve the accuracy of its advertising while solving the problem of traffic entry for Focus Media. According to Focus Media in an interview, Alibaba Group’s strategic investment in Focus Media will use Alibaba’s new retail infrastructure and big data capabilities to form a response to Focus Media’s extensive offline reach network, bringing new experience and unique value to users and merchants. In other words, the market effect of “advertising + e-commerce” model is much greater than that of “advertising + social” model.
While Focus Media has the right to choose, Alibaba and Tencent will also make corresponding market considerations for the enterprises they want to invest in, and analyze what kind of chemical reaction the enterprises can produce with the original ecosystem. As for Tencent, relying on the social attributes of wechat and QQ, the number of users covered by Tencent advertising can reach nearly one billion, and the daily exposure rate can reach as much as 1.5 billion. In addition, after the “decentralization” reform, Tencent’s open and inclusive platform has been relatively saturated in various major business systems. In the market layout and development of other enterprises need to stimulate the new action to continue to follow up, so as to form a new competitive pattern.
Alibaba, which is still mainly engaged in e-commerce business, has reached the ceiling of online traffic in the new retail era, and needs to continuously consolidate its market position in e-commerce by opening up the offline market. For Ali, which is about to have home-court advantage in the second half of the year, cooperation with Focus Media before the arrival of various e-commerce festivals can enable it to obtain more offline traffic in the home-court and achieve hematopoietic effect. Therefore, considering the ecological response, the integration of Ali and Focus media is more “reasonable”.
In a word, in the face of Tencent and Ali’s market hegemony, Focus Media finally won ali Capital’s favor, not only because jiang Nanchun, CEO of Focus Media, had a “good personal relationship” with Jack Ma, but also because of their respective ecological considerations, which ultimately resulted in this huge investment deal. However, according to the strong attitude of Alibaba in the past, focus Media is likely to become the “Marketing Department” of Alibaba Group in the future market.
Is the acquisition of Focus Media an inevitable trend in the era of mobile advertising?
For the advertising industry, offline promotion of various platforms is inseparable from advertising companies. Therefore, Focus Media has obtained a large number of market resources, thus creating its market value of 100 billion yuan. After digital advertising, mobile advertising may become the next new outlet. In this tuyera, will focus Media be affected by its single business, and will Focus Media, which chooses to “go through the storm”, be gradually swallowed by Ali in the future market?
Maybe have a view think, at this time of focus media in the market of huge volume, ali capital in a short period of time will not consider to buy, but from past acquisitions of UC, youku, potatoes, Scott map, look hungry? Such as trade, once the previous “test” investment success, ali capital will be determined to want to target. In today’s new retail era, Alibaba’s online traffic has reached the ceiling, and the unique market value of focus media in building advertising has become a decisive tool it must get.
In the face of such pressure, Focus Media is faced with a single choice: one is to continue to be a dominant building advertising company, the other is to become the next advertising Marketing Department of Ali?
One family is not alone. After the market value of building advertising is constantly excavated, the competition pattern of elevator advertising market has become increasingly fierce, and capital, entrepreneurs and giants will continue to pour in. In the elevator advertising industry, where the operation mode is obvious, the market environment where the platform can develop and grow by intercepting traffic will increase the competitive pressure of focus media in the future market. Therefore, in the future market, the market position of focus media with single elevator advertising as the profit point will be constantly challenged.
Become the largest Marketing Department. Based on alibaba’s investment share of nearly 20 billion yuan, the market value of Focus Media in the current market can reach about 200 billion yuan. If Ali Capital chooses to acquire Focus Media for expansion and development in the new retail market in the future, the acquired Focus Media may become the largest Marketing Department of Ali Group’s business divisions. As marketing, focus media, founder of Mr. Jiang would like UC ucweb CEO quickly to ali group, the top of the pyramid, or like youku potatoes, hungry? During a founder, requires consideration through practice after fusion of focus media created by market value, as well as the founder of Mr. Jiang have ability of the business.
There’s a third way?
As for Focus Media, it is highly unlikely that it will be absorbed by Ali in the short term. After entering Focus Media, Ali is also reported to invest in other media companies. Alibaba and Tencent are in early talks to buy a 20% stake in WWP China, the world’s largest advertising and communications group, foreign media reported on July 23. The cooperation between Ali and Tencent reminds me of didi platform.
Didi, as the current Internet platform that can embrace the capital of both Alibaba and Tencent, is really enviable. Didi, with resources from both sides, has gradually expanded its business from a single ride-hailing platform to various fields after nearly three years of development. As for Focus Media, which already owns Ali capital, whether it can replicate didi’s path and use other capital to compete with Ali investment capital to solve the crisis of being a giant is a problem that the founders of Focus Media need to consider in the future. However, there is no doubt that Focus media will be the next ali into the new retail pawn!
Article/Liu Kuang public account, ID: Liukuang110