Almost 75 percent of digital advertising comes from search and display in China.

Alibaba offers to buy digital mapping company AutoNavi

Alibaba to launch US e-commerce website

There are currently few contenders big enough to take on Baidu Inc's 80 percent share of the search market. Yet key social media sites such as Sina Weibo and Tencent's popular mobile messaging app Wechat, which has more than 600 million accounts, are beginning to grab a share of the digital advertisement market, said the report.

The investment is a financially wise decision for Alibaba.

"Through building online retail platforms, Alibaba serves as a commodity trader. In the same way, it can become a digital content trader. The investment fits naturally with Alibaba's business model," said Light.

According to ChinaVision Media's official website, the company participated in the production and distribution of some very well known movies and television dramas in China.

In addition, the company co-manages the Beijing Times, the biggest morning newspaper in the Chinese capital, and has been jointly developing a mobile television business with People.cn, an information interaction online platform created by People's Daily, a major State-own media company in China.

"When a company grows to a certain size, it is only a matter of time before they look to own media channels to gain a certain sway in public opinion," said Tian Hou, chief analyst with T.H. Capital LLC, an independent research and investment advisory firm.

She added that getting involved in media content production is also in line with Alibaba's mobile strategy. The company announced earlier this year it would enter the mobile gaming industry. ChinaVision media also produces mobile games.