How Alibaba Is Pushing to Leverage Its Consumer Data for Brands

The Giant Is Partnering With Agencies to Use Data Better

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Employees at Alibaba's headquarters in Hangzhou, China.
Employees at Alibaba's headquarters in Hangzhou, China. Credit: Nelson Ching/Bloomberg

Alibaba, China's e-commerce giant, knows a lot about its shoppers. It knows what they're searching for, what they buy and their path to purchase. It has data on what videos they watch. It has access to map data from smartphones.

The company has been on a big push to use that data better for brands that buy ad space on its platforms; on that front it's made purchases in ad-tech and mobile. One newer development is partnering with agencies for help working with brands, as they try to match brands' products with the most receptive consumers, and offer more personalized messages for them.

Through Alimama, the company's online marketing arm, it has teamed up with four first-wave agency partners: WPP's OgilvyOne China, Omnicom Group's Nim Digital, Dentsu Inc.'s &C, and independent player Hylink.

Wu Hao, head of brand strategy for Alimama, said the company "brings in its expertise in data technology and its vast pool of consumer data, while the agencies contribute their expertise in brand strategic planning and marketing."

Alibaba Group Holding Ltd. makes most of its revenue from advertising; it has the fourth-biggest share of online ad revenues globally, after Google, Facebook and Chinese search giant Baidu, according to eMarketer.

Offering more targeted ads, with more creative personalized messages and higher return on investment for marketers, would boost the company's competitiveness against Baidu and Tencent, the Chinese giant behind popular mobile app WeChat, which has seen growing ad revenues lately. Tencent, seen as Alibaba's rival in the race to engage China's 649 million internet users, is No. 9 on eMarketer's list (ahead of AOL and Amazon.)

OgilvyOne, specialized in customer engagement, said the partnership will be interesting for clients in sectors including cars, travel, fashion and FMCG.

One powerful benefit will be the ability to combine Alibaba's data with brands' own data on customers – such as offline transaction data, clickstream data from the official brand site, or insights from traditional research, said Yi Li, OgilvyOne China's first chief data officer, who was named in the wake of the Alimama partnership.

In March, Alimama worked with Buick to target potential new buyers for its Excelle. Using Buick's data on past buyers, Alimama hunted through its own data to find people with similar profiles, and it analyzed the most effective times in the car-buying decision process to send them ads. (Alibaba has been making a big push on auto sales.)

Jacco ter Schegget, president of OgilvyOne China, said that when it comes to Alibaba's data, "there's nothing comparable in the West in terms of breadth and scope."

"You're able to follow a user journey in its entire path to purchase, which is very interesting," he said. "That completeness, that quality, I cannot get elsewhere."

Google and Facebook, for example, know a lot about users, but don't have much knowledge of what they buy. Amazon knows about online shopping, but it lacks some of Alibaba's other entry points into consumer insight.

Alibaba is considered to have stronger search data than Western e-commerce platforms, since it's often the first online stop for someone who wants to buy something.

"Unlike in the West, where the vast majority of searches are on Google, Alibaba has many more searches than Baidu for most products," said Mark Tanner, the founder and managing director of China Skinny, a marketing and research agency. His company found there are twice as many searches for wine on Alibaba's platforms, Taobao and Tmall, as on search engine Baidu.

Through its stake in Youku Tudou, the video platform, Alibaba gained insights on what people are watching. In 2014 it bought China's most popular mobile mapping service, AutoNavi. Both those deals had data sharing as a focus.

Early this year it purchased a majority stake in AdChina, a Shanghai-based programmatic company that built and runs a digital ad tech platform. And it recently formed a partnership with Nielsen, which will use Alibaba consumer data to find white space where brands can innovate in the online space, among other things.

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