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Open sesame: Alibaba enters net advertising
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Chinese e-commerce firm Alibaba.com Corp announced yesterday it has entered the fray of Internet advertising with an online platform for websites and advertisers to match up.


Its new unit - Alimama.com - which has gone through 100 days' trial operation, will compete with other Chinese online ads alliances led by Baidu.com and Google Inc in attracting small websites, including bloggers' spaces, to help them make money out of their traffic.


"We are just offering a practical business model for the small sites to grow," said Jin Jianhang, vice president of Alibaba.


Jin added that the small Websites "deserve a better model" than relying on the commission from search engines by serving as their extended advertising space, as Alimama's model is more transparent in that it allows small Websites to deal with advertisers directly.


Baidu, China's No. 1 search engine, and Google have teamed up with hundreds of thousands of smaller Chinese websites that joined their ads revenue sharing program. The small sites display the ads from the search engines' customers on their sites and are paid by the number of clicks.


It has become increasingly important for the search engines to boost sales. For Baidu, traffic acquisition cost in the third quarter accounted for 12 percent of total sales, up three percentage points from a year ago, due to a rising sales contribution from its approximately 200,000 Baidu Union members.


Meanwhile, Alimama copies the business-to-business trading model of Alibaba's already successful division Alibaba.com Ltd. Alimama charges eight to 15 percent of the ads value.


Advertisers such as Bank of China and Citic Bank as well as some online game companies have signed contracts with Alimama to place ads on the site.


It has 150,000 small and medium Websites and 135,000 bloggers' spaces ready to take placements.


(Shanghai Daily November 21, 2007)

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