Imagine combining the ubiquity of Twitter, the e-commerce might of Amazon, and the location-awareness of Google Maps. Such a coalition is taking shape in China after a flurry of dealmaking by Alibaba, China’s biggest e-commerce company.
Last week Alibaba group bought a 28% stake in maps-and-locations firm AutoNavi for $294 million. Last month, Alibaba bought 18% of Weibo, Sina’s popular microblogging service, for $586 million. And the combination is already bearing fruit: Sina boss Charles Chao said this morning his company is working with AutoNavi, and expects the Alibaba alliance to produce $380 million of advertising and service revenue for Weibo over the next three years.
Knitting together Weibo, AutoNavi, and Alibaba creates a potent combination: eyeballs + data + commerce. Alibaba is creating a separate inventory of advertising for its merchants on Weibo, and location services from AutoNavi will allow better data-collection and targeted advertising. The combined strengths of the three companies will allow them to show targeted ads to a wide audience, with purchases taking place within the same eco-system.
A successful alliance would counter Tencent’s rapidly growing WeChat messaging app while leaving the struggling search giant Baidu to its own devices. And it makes Alibaba’s forthcoming IPO, expected later this year, look that much more attractive.