July 19 (NBD) -- Chinese advertising service provider Focus Media Information Technology Co Ltd (Focus Media, 002027.SZ) announced Wednesday that Alibaba Group and the affiliated parties will invest approximately 11.6 billion yuan (1.7 billion U.S. dollars) to buy a total of 7.99 percent stake in the listed company from Power Star, Glossy City, Giovanna Cayman and Gio2 Cayman.
The e-commerce giant plans increase no more than 5 percent stake in Focus Media in the next 12 months through block trading or auction trading.
Another announcement said Alibaba will also acquire a 10 percent stake in Media Management Holding Limited, one of Focus Media's shareholders, for around 511.1 million U.S. dollars.
After the new deals are closed, the e-commerce titan will hold a 10.3 percent stake to become the second largest shareholder of Focus Media after Jason Jiang, chairman of the media firm.
Founded in 2013, the media firm operates life circle media in more than 300 cities and provides products include building media, such as building video media and framework media, cinema screen advertising media and retail terminal video media.
The two firms are expected to explore the innovative model of digital marketing in the trend of New Retail and to combine Alibaba's New Retail infrastructures as well as big data with the offline media network of Focus Media, in a bid to bring unique experience and values to users and merchants.
It is noted that an Alibaba-backed company has also forged collaboration with electronic products maker Genimous Technology Co Ltd (000676.SZ) in the digital marketing domain.
Alibaba's new investment is consistent with its Uni Marketing strategy which brings together all of Alibaba's consumer data stemming from its e-commerce, social media, entertainment and other services to help merchants and brands shape their presence and services in the New Retail world in real time.
Alibaba concentrates more on the online traffic brought by its e-commerce platforms before the new deal, said Zhu Kai, analyst at a research institute of financial media Wallstreetcn.com, adding that the cooperation with Focus Media will enable the e-commerce giant to have more access to offline traffic.
According Focus Media, its medium-term target is to cover 5 million terminals in 500 cities so as to reach the majority of mainstream consumer groups in China.
Being part of Alibaba's Uni Marketing, the media company will optimize the advertising model based on the offline and online data and improve the advertising conversion rate.
In addition, by collaborating with Alibaba which has stronger data capacity and cloud computing capacity, Focus Media is to establish a precise advertising system based on data and algorithm, said media service provider.