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Watch Out, EBay! Here Comes Alibaba

Chinese E-Commerce Giant Launches a Global Marketing Campaign, Starting in the U.S.

By Published on . 7

HANGZHOU, China (AdAgeChina.com) -- Watch out, eBay. China's largest business-to-business e-commerce company, Alibaba, is heading to America.

Alibaba created a microsite, success.alibaba.com, detailing the stories of fictional buyers.
Alibaba created a microsite, success.alibaba.com, detailing the stories of fictional buyers.
Alibaba Group, the parent company of Alibaba.com, broke a $30 million global ad campaign this week to drum up business from small-business owners primarily in the U.S., though the campaign will also run in Europe and the Middle East later this year.

"The world is on the cusp of a new model that shifts power away from big business and gives it to consumers, small manufacturers and e-retailers," Jack Ma, Alibaba's founder-CEO, said at a recent online merchant trade fair in Guangzhou, China. Mr. Ma's company is a giant in China's internet world. The site has about 32 million registered users inside China, including more than 400,000 domestic suppliers. It has another 8.6 million international users from more than 240 countries, including 1.4 million in the U.S.

The group also runs Taobao.com, the largest online retail site in China, with more than 100 million registered users, and its online payment platform, Alipay, surpassed 200 million registered users last month.

Although Alibaba.com is the leading e-commerce site in China -- and a national icon among nationalistic Chinese internet users for fending off global rivals such as eBay -- the company has been hurt by the global recession and the sharp decline in Chinese exports, Alibaba's bread and butter in terms of revenue.

Alibaba's net earnings in the first quarter of this year fell 16% year on year, partly because of rising operating costs, including advertising, as well as a drop in income after lowering fees for product listings last year.

Alibaba announced plans to advertise its English-language e-commerce site outside China in October 2008, just as economic problems began cascading from the U.S. around the world.

The company picked the "worst time in the world" to try to drum up global business, said Dick Wei, VP-equity research at J.P. Morgan Chase & Co. in Hong Kong.

Alibaba reduced product listing fees to "extend its supplier base" of Chinese manufacturers and "get more people in the site to maintain revenue," Mr. Wei said. "Now it needs more sales in order to satisfy those people, so it has to get more international buyers. I think [advertising overseas] will attract more users to the Alibaba site though."

"This campaign should be positive for them," Mr. Wei added, because it's aimed at "smaller companies in the U.S. who can use Alibaba to reduce their own expenses. If they use the site, they no longer have to travel to exhibitions in China or visit factories in person."

The campaign's tagline, "Alibaba.com. Find it. Make it. Sell it," encourages struggling entrepreneurs, said Linda Kozlowski, Alibaba's director of international corporate affairs in Hong Kong. "Draw up your business plan. Lock down your prototype. Get on Alibaba.com to make it happen."

Alibaba talked with U.S. small-business owners and entrepreneurs to "really get a sense for what they are facing in today's marketplace and how Alibaba.com can help them compete," Ms. Kozlowski said. "One of our key takeaways was that they were looking for new resources to help them achieve their goals. They were energized by the idea that they could be 'like the big guys' on a global scale via Alibaba.com."

Characters depict small business owners
To explain how Alibaba.com can help local businesses, the company created fictional characters who embody the type of business people already using Alibaba to handle sales of pieces and parts, full-scale production or purchases from manufacturers for resale. Their stories appear on a microsite created for the U.S. market.

The campaign will run online through display and search ads on sites such as InternetRetailer.com, SBTV.com (Small Business Television Network), Entrepreneur.com, Purchasing.com, PriceGrabber.com and Buy.com, as well as websites run by names such as CNN Money, Forbes and Women's Wear Daily. Print ads will run in Inc. and Fast Company magazines, and Alibaba will air a 30-second TV spot on broadcast outlets including ABC's "Shark Tank" show and CNBC.

U.S. ads were created by Traction, San Francisco, and media buying was handled by Mediasmith, also in San Francisco. The campaign will run at least through the end of the year.

Different creative will break at the end of this month in Europe and the Middle East, primarily in the U.K. and Germany, created by Truly in London.

For more marketing news from China, visit Ad Age China.

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