Alibaba Group's online ads subsidiary Alimama said yesterday it will make most of its services available free of charge, as it tries to challenge market leaders like Baidu and Google.

Alimama said it will scrap an 8 percent commission on sales from cost-per-time ads on its websites starting from next month and will open its advertising tracking system to users for free.

But it will continue to charge for pay-per-click ads, which account for 20 percent of the company's ad sales.

"China's online advertising market is in its infancy and for companies like us, the future is definitely to embrace the country's huge number of small and medium-sized enterprises," Wu Yongming, general manager of Alimama, said.

"By making our services free, we can significantly help China's huge number of website publishers and bloggers - and differentiate ourselves from the competition."

Alimama is an online advertising exchange set up by Chinese e-commerce giant Alibaba Group in November last year. The website connects advertisers with the country's countless small and medium-sized websites and bloggers. It takes revenue from each ad sale, in direct competition with market leaders like Baidu, Allyes and Google.

The company claims to have signed up 330,000 small and medium-sized website publishers and 170,000 bloggers in China.

Alimama's latest move is reminiscent of another Alibaba subsidiary, Taobao.com, which beat auction giant eBay to become the largest player in China's customer-to-customer market in 2004 using a similar strategy.

Winning customers with free services has become a proven practice for many latecomers to China's Internet market, as the monthly income of nearly 70 percent of the country's Internet users is below $280.

Baidu Inc yesterday declined to comment on Alimama's latest strategy.

Domestic research firm Analysys International said the move will help Alimama win new users.

(China Daily March 27, 2008)