Alibaba's steep climb in ad revenue has hit a speed bump, according to forecasts by analysts at eMarketer.
The giant digital player will still be number one in China but customers are pulling back on spending and searching more for basic staples and less for high-end consumer products.
eMarketer forecasts Alibaba’s net ad revenue will grow by only 6.5%, down from the pre-pandemic estimate of 19.3%, in 2020.
This slide will be driven by deceleration in Alibaba’s search ad business, which grew by 41.2% last year but will grow by only 8.9% this year.
However, Alibaba’s combined ad revenue of $US27.05 billion will easily lead the pack and represents 35.9% of all digital ad dollars in China.
eMarketer also forecasts a rebound for Alibaba next year, up 16.8% as China’s economy returns to relative normalcy.
China’s digital ad spend will still grow 5% this year, says eMarketer.
The $US75.33 billion total will rank China as the second-largest for digital advertising in the world, behind the US at $US134.66 billion.
But there will be a power swap among the major platforms, as Tencent becomes the second placed publisher, displacing Baidu.
eMarketer forecasts that Baidu’s net ad revenue this year will drop to its lowest point since 2016. Baidu’s $US7.85 billion will represent a 14.3% fall year-over-year, coming after a 2019 that also saw an 8% decline.
“Baidu has had trouble attracting search ad dollars, despite being free of competition from Google,” says eMarketer forecasting analyst Ethan Cramer-Flood.
“Advertisers are showing that they increasingly prefer the reliability of Alibaba’s platforms for their search spend.”
Tencent will move into second position for net digital ad revenue, claiming 12.6% of China’s total spend to Baidu’s 10.4%.
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