Alibaba Group Holding Ltd's (NYSE:BABA) revenue guidance for FY2018 has been well celebrated, but its underlying dynamics do not enjoy the same recognition. In this report, Bernstein explores the addressable market for online marketing services – the runaway revenue line within Alibaba's ecommerce engine, which is often conflated with ad-spends. An appropriation of spend from other parts of SG&A expands the addressable market by some 20% by 2020, helping drive Alibaba's "ad-revenue" up, and still make space within the industry for Tencent's ad-share rise, Baidu's aspired defense, and some growth for the long tail of smaller platforms (who will still decelerate sharply ahead).
Elsewhere, hard attribution (the direct causal link between the sale and the advert) is drawing in advertisers to Alibaba's data & analytics rich platform. This service, backed by dashboards, unified IDs and a comprehensive profiling of consumer intent, is unique to Alibaba, at least for now. And it does not seem to demand probabilistic models to estimate attribution to the same extent, unlike many other digital advertising platforms.