Baidu leads US$302 million investment in elevator ad firm

November 15, 2018 15:23
Xinchao Media, a firm that displays advertisements in elevators, will use the new funds to better compete with arch-rival  Focus Media. Photo: Xinchao Media

China’s largest search engine Baidu Inc. led a 2.1 billion yuan (US$302 million) investment in Xinchao Media, a firm that displays advertisements in elevators.

The fresh money from its latest funding round will give Chengdu-based Xinchao Media more ammunition to compete with arch-rival Focus Media, which is backed by Alibaba Group Holding.

A former magazine publisher, Xinchao claims to have an audience of 200 million people, mainly in the form of video displays in 700,000 elevators in over 100 cities across the country.

In an announcement, Baidu said it has formed a strategic partnership with Xinchao Media to “jointly build a new ecosystem of intelligent marketing and offline media in the era of artificial intelligence.”

The two companies will collaborate on data integration between Baidu’s search data and Xinchao’s offline data.

Baidu said it “will empower Xinchao with its big data algorithms and intelligent advertising distribution”, offering more precise and targeted elevator ads to Xinchao’s audience.

Xinchao will also join Baidu’s network of “screen” ad distributors, named “Baidu Juping”, which focuses on digital ads connecting audiences across cinemas, office buildings, smart TVs, local stores, transport stations, smartphones, and other channels.

Baidu Juping now covers 31 provinces in China with a reach of 300 million people, the tech giant said.

Xinchao deploys its LED display screens in elevators in residential buildings and communities across the country.

While people watch the ads in the comfort of the elevator, the company monitors their behavior, which can be recorded and uploaded to a database via WiFi and near-field communication detectors on the display screens.

This data will allow the company to analyze consumer habits and tailor the ads to the target audience.

Founded in 2007 by tech and media veterans Jixue Zhang, Shengdong Pang, and Yi Shu, Xinchao Media has raised over 6 billion yuan (US$864 million) since its founding.

Its valuation surpassed US$2 billion after its Series F funding round in 2017, propelling the company to unicorn status (a private company valued at over US$1 billion).

According to Xinchao's website, the company's current investors include Hong Kong-listed furniture retailer Red Star Macalline, Opple Lighting, Kuka Home, Kingnet Network, and Weixing Chen, founder of Chinese ride-hailing app Kuaidi Dache that merged with Didi to become Didi Chuxing.

Baidu’s latest move to boost its offline ads reach comes after Chinese e-commerce giant Alibaba, one of the top three internet firms in the country, invested over US$2 billion investment in Xinchao’s larger rival Focus Media in July.

Shanghai-listed Focus Media operates outdoor digital advertising screens across the country, claiming to reach 200 million middle-class consumers across 300 Chinese cities. Its investors include Tencent, and Didi Chuxing, the company said.

In April, Xinchao said it had a revenue of over 200 million yuan in fiscal year 2017. By comparison, Focus Media generated 12 billion yuan of revenue in the same period.

Speaking at a conference this April, Xinchao founder and chairman Jixue Zhang said the company aims to challenge market leader Focus Media.

In a bid to poach customers from its rival, Xinchao is offering advertising resources valued at 10 million yuan to those who had previously placed 100 million yuan in advertising budget in Focus Media.

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