Tuesday, March 13, 2007

Focus Media to buy Allyes AdNetwork

Focus Media Holding Ltd., China's largest out-of-home advertising company, said it will buy Internet advertising company Allyes AdNetwork for up to $300 million, to expand its presence in China's blisteringly hot online advertising market, according to this article in the Hollywood Reporter (of all places).

I'm one of those people who watches Focus Media very closely, and when they do anything interesting something compels me to examine it very closely. While they still move a huge amount of content via a sneakerNet of low-wage workers swapping out DVDs and solid state flash drives, it's no secret that they're starting to deploy remotely-managed systems to new locations, so there's that to keep an eye on. We've also seen them acquire numerous smaller competitors and try their hand at non-digital outdoor advertising. But this most recent acquisition is one of the most interesting to me.

While the obvious benefit is an immediate entrance into Internet advertising and a sudden increase in revenues, Focus may have (knowingly or not) put themselves in a position to increase the performance and penetration of their out-of-home ad service in a few years. I've been wondering for some months now whether Google's acquisition of YouTube is the beginning of a killer app for digital signage displays, especially since it looks like they've been trying to patent certain elements common to many digital signage networks. With its acquisition, Focus Media has essentially purchased the Google-like bits and pieces that could allow it to run its own massive real-world auction-based advertising system. While the synergies aren't quite as great as they could be for a hypothetical Google-like service (since Google could work with many networks without necessarily having to pay for their deployment or maintenance), Allyes gives Focus the ability to gain immediate revenues and marketshare in Internet -- where they haven't really been spending much time to date -- with an eye on improving their existing out-of-home network in the future.

Tags: Focus Media, Allyes, digital signage, out-of-home advertising

No comments: