Digital marketing company NewBorn Town launched public offers at HKEx and soon closed its international placing because of oversubscription. In a so-called capital winter, digital marketing is still a business in its springtime.
A China-based mobile tech company NewBorn Town (赤子城, 09911.HK) was reported to be more than 760 times oversubscribed as of December 18. The IPO is expected to raise up to HKD 245 million (USD 30 million). For digital marketing distributers, traffic is the momentum and key driver for the business.
NewBorn Town was founded in 2013, a golden time of China’s mobile Internet because of 3G’s transition to 4G, which enriched the imagination of tech savvy entrepreneurs and startups. NewBorn Town has a nickname, the ‘Foreign ByteDance,’ which reflects that it shares similarities with ByteDance, while its main business is located in overseas markets.
The company’s practice is composed by two major product lines: one is for To-C markets and the other is for the To-B side. Speaking of the To-C line, NewBorn Town is crowned as an ‘App Factory,’ since it has created the mobile app mix of more than 300 mobile applications since its founding. Similarly, the parent company of TikTok, ByteDance, is commonly known for its speed in developing applications. Thereby, NewBorn Town came to be known as ‘Foreign ByteDance.’ Applications developed by NewBorn Town include games, lifestyle, utilities,, etc. By the end of 2018, the company had attracted over 669 million users worldwide to its ecosystem.
After the massive traffic accumulated from the app matrix, NewBorn Town closed the loop by monetizing traffic via digital marketing, which is claimed to be supported by artificial intelligence technologies. Outside its own product mix, NewBorn Town has quantitative links to other platforms to distribute its marketing services. The digital marketing service generated CNY 172.8 million – over 94% of the company’s total revenue – in 2018.
The digital marketing market is expanding steadily along with the increasing penetration of Internet service and mobile devices, on a global scale. e-marketer estimated that the global digital marketing expenditure had been expected to grow from 2018’s USD 283.35 billion (45.9% of the total marketing spending) to USD 517.51 billion in 2023 (60.5% of the total marketing spending).
The potential growth is drawing in ambitious players. Papaya Mobile Tech (木瓜科技, PapayaMobile), another Chinese digital marketing company, filed to be listed in the STAR stock market but ceased the process after four months – it was also the first company to withdraw its IPO application at the STAR market. It cooperated with Internet giants like Facebook and Google to distribute marketing contents; over 91% of its 2018’s revenue coming from Facebook channel.
Similarly, Zedge (ZDGE:NYSE) is a digital marketing company with a layer of mobile application development. It has developed a series of utility apps for smartphone users, with over 390 million downloads in total. With fierce competition in digital marketing, companies like Zedge are willing to provide an open-source platform to content contributors. With better content, it may include more users on its platform, which inversely feeds better use images and improves marketing results.
An employee at NewBorn Town said, via WeChat, “We have developed our own ecosystem that covers both B and C sides, to expand the digital marketing market. The company has the geek gene – and an open-source platform is certainly a dream for all geeks. NewBorn Town will plan for open source in the future.”