From Alipay to Ads-lipay: If Ant rewrites its IPO prospectus, how would it describe Alipay's new model?

Sometimes missing out on long-term investment opportunities can make people slap their thighs in regret, lamenting that they missed the train of the times.

For example, the programmatic advertising sector in U.S. stocks unexpectedly boomed in 2023-2024. Humble as I am, I managed to catch a small slice of the huge gains from the big winner AppLovin (APP). Beyond AppLovin, which multiplied several times over, the advertising giants in U.S. stocks—Google (GOOGL), Meta (META)—have been breaking new highs as effortlessly as slicing a melon.

Who would have thought that the ancient advertising industry, akin to pig farming, could unleash such explosive market value growth?

Simply put, programmatic advertising platforms evolve from pure storytelling to realistic expectations, then to gradually thickening margins, and finally into cash cows—a business model validated step by step by real cash flows. Industry forecasts suggest that by around 2030, 95% of digital ad revenue will directly and seamlessly come from programmatic advertising.

This is the future, guys.

As an investor, I can’t help but marvel at how internet advertising, especially programmatic advertising, is a business worth studying—where research unlocks golden opportunities and hidden gems. Advertising and programmatic advertising naturally penetrate the BBATM ecosystem, and this time, my research led me to Ant Group and Alipay.

1. The Kick-off of Alipay’s Advertising Business and Its Unique Appeal

Unlike autonomous driving, internet advertising is a field that 1. heavily relies on AI automation and 2. is easily fully AI-driven. However, because programmatic advertising is very B2B and lacks flashy sci-fi appeal, it’s often overlooked by general investors. Yet, even just the domestic market is enormous—bigger than you’d imagine—and the 红利期 is still 喷发 ing. Ride the cycle, pick the low-hanging fruit—

As Charlie Munger said: Fish where the fish are.

(Source: iResearch)

My investments in Chinese stocks follow the same logic. Whether it’s Alibaba (BABA), Tencent (0700.HK), or Ant’s Alipay, they’re all heavily invested in this space. In August 2023, Ant launched Alipay’s proprietary ad system, the "Light Digital Promotion Platform." Because Alipay entered the game late, the investment community sees this as "the last undervalued traffic 洼地 in internet advertising." The value of Light lies in providing merchants (advertisers and agents) with 一站式， integrated marketing and promotion services within the Alipay ecosystem. Here’s a brief intro to the Light platform:

(Source: Alipay)

Let’s break it down. The key stakeholders in this ad business model are:

1. Advertisers

2. Publishers

3. Agents (or ad networks)

As I’ve mentioned in previous articles, the basic playbook of this industry is advertisers seeking the best publishers for placements, with agents serving both sides—a classic iron triangle business model. The platform weaves everyone together like love, repeatedly collecting rent from advertisers and publishers to achieve this 'optimal' state. Under multilateral network effects, monetization reaches its peak when everyone—advertisers, publishers, and agents—profits.

As of April 11, in just over half a year, Alipay’s traffic commercialization 红利 has 喷发 ed dramatically. The Light platform’s active advertisers grew fourfold, active ad agents grew ninefold, and GMV from branded mini-programs running ads surged 200%. Unlike short-video or entertainment platforms, Alipay has a unique trait: its traffic is highly service-oriented. Think about Alipay users’ mindset—ladies and 乡亲们 from all over aren’t there to kill time but to fulfill specific needs. We call this traffic 'service-oriented 流量.' And this service-oriented 流量 within Alipay’s ecosystem represents a new 增量 for the ad market. More on this later.

We must ask: Why has Alipay’s traffic monetization grown so rapidly?—I believe it’s because it started late, riding a 红利期。 Many other platforms 要么 struggle with 精准投放，要么 face diminishing marginal utility. Take Meituan (3690.HK), another service-oriented 流量 platform. But Meituan’s native model is O2O—linking demand with services—and its traffic has been kneaded like dough for years. For merchants, continued ad spending (mostly by local O2O businesses) is like adding water to the same dough, which can’t expand much further. Alipay, also emphasizing the trinity of 'people-scenario-service,' is just starting its ad business. In an already 溢价， expensive ad market, online advertisers are all searching for new 增量 platforms.

2. Three Key Trends in Alipay’s Ad Business

Analyzing Alipay specifically, I’d summarize its ad business with three unique trends.

First is the aforementioned service-oriented 流量属性。 Alipay is the largest service-oriented app in China，甚至 Asia. Why do users open Alipay?—To pay via QR codes, commute via subway 刷 s, access healthcare 刷医保， or check investment returns. Alipay is also a 垂类 hub for students and niche demographics, where services meet brands in specific scenarios. Reports note that Alipay now offers over 8,000 services across 150+ scenarios, with 700 million daily 生活服务 mini-program users.

The second trend is brand advertisers shifting budgets to Alipay. Luxury fashion, FMCG, automotive, and beauty—traditional brand ad spenders—are moving budgets to Alipay. The growth curve for brand ads (aimed at boosting brand awareness) has taken off, as seen in the earlier data (4x more active advertisers, 9x more agents).

Alipay’s ad hotspots include the app’s homepage search bar, payment success pages, travel 频道， membership 频道， and wealth management 平台—prime digital real estate akin to anchor stores in malls. These high-traffic, high-ROI zones are where monetization happens.

But one challenge remains: hitting RMB 10 billion in ad revenue isn’t hard given Alipay’s scale—the question is how to capture more market share. Alipay’s current 短板 lies in content and entertainment. A major trend in internet ads is 'content monetization via brand-KOL collaborations,' where mid-tier influencers and MCNs (as publishers) are becoming key traffic carriers.

That said, Alipay is pushing into content (though still weak). No other service-oriented 流量 platform starts with such scale, giving Alipay a huge 突围 opportunity. Since Light’s launch, MCNs on the platform have doubled, and live streams grew 14x. Light now integrates video ads, linking merchant mini-programs and 生活号—a 'content + service' strategy.

The third trend is programmatic, automated, and AI-driven investments. Reports show 90% of digitally savvy advertisers plan to increase digital 营销 spending this year, with AIGC-assisted creative production becoming standard. Alipay’s AI capabilities—like Light’s AIGC ad 创意 tools and AI-powered ad suggestions—boost 编排 efficiency by 27%. AI algorithms are the soul of programmatic ads.

Lastly, the ad market isn’t just about screen time. Ad models vary—Google, Microsoft, Meta, Amazon (AMZN) each built unique, successful ad revenue streams. E.g., e-commerce platforms like Amazon have less user time than social apps but comparable value. Time isn’t key—technology is. With AI, the industry’s potential is limitless. Even Apple (AAPL) is copying Google, Meta, and 微软， using AI to optimize App Store ads. As branding shifts toward content and 社交化， advertisers keep boosting digital spend—and Alipay, as a 国民级 traffic 入口， holds a natural edge.

3. How Would Ant’s Revised IPO Filing Look Compared to 2020’s?

Ant’s 2020 IPO filing highlighted payments, microloans, wealth management, and insurance—financial-centric businesses. But in 2024, I’d frame Ant and Alipay through three lenses.

First: De-financialization and digital tech. Technologically, Alipay has been 炫酷 lately—AI，大模型， digital humans (debuted at the 亚运). Digital humans, now open for 医疗， gov services, and commerce, align with Alipay’s service strength. Beyond payments, it’s 'Payments + N.' I expect Ant to further 淡化 finance and emphasize tech. Current segments include: digital payments, digital connectivity, Ant International, OceanBase, and Ant Digital Tech. Alipay’s biz model now covers live commerce 抽佣， mini-program fees, tech solutions, and ads—with ads massively expanding its imagination.

Second: Alipay’s growth boundaries. Beyond payments/finance, it’s expanding into C 端 digital 生活 and crucial B 端 tech 输出. In 2020, Ant’s core was payments (fees/reserve interest) and digital finance (撮合 loans, wealth, insurance). Now, the focus is digital 生活 (payments + connectivity) and platformized B2B (e.g., Light). A 2024 IPO filing would showcase these modules.

Third: Total addressable market (TAM) potential. Four sectors: digital payments (RMB 100s of billions), digital finance (trillions), digital connectivity (likely tens of trillions). Ant’s growth—from payments to finance to connectivity—is a 接力 process. For Alipay, evolving beyond payment fees to monetize traffic is the right path.

Projecting 2024-2028 growth:

1) Digital payments: CICC estimates RMB 400B in 2023 → RMB 640B in 2028 (10% CAGR).
2) Digital finance (loans + wealth + insurance): RMB 1T → 2T (14.9% CAGR).
3) Digital connectivity: RMB 3T → 8T (12.7% CAGR).
Globally, programmatic ads alone will hit $500B by 2028 ($1.7T in 2021 → $8T by 2031, 16.6% CAGR). As noted earlier, 95% of digital ad revenue will be programmatic. Alipay’s 商业想象力 lies chiefly in the largest TAM: digital connectivity.

Alipay’s ad goal boils down to two words: maximize monetization. Not just 'making business easy' but 'making all businesses profitable.' When Ant IPOs again, its filing may reveal a 焕然一新的商业 logic.

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Disclosure: Author holds long positions in $Alibaba(BABA.US).
This post is for sharing only, not investment advice.