Going global without selling goods, an IPO of a 'traffic intermediary' reveals the true state of overseas marketing

Over the past few years, from cross-border e-commerce to gaming and utility apps, the competition of Chinese companies in overseas markets has evolved from "can we sell" to "can we sustainably acquire customers."

Increasingly complex platform rules, rising compliance boundaries, and continuously escalating advertising costs have propelled overseas marketing service providers who "understand platforms, understand ad placements, and understand localization" to quickly move from behind the scenes to the forefront.

It is against this backdrop that a cross-border e-commerce service company from Fuzhou, Fujian, has chosen to enter the capital market. Recently, Miduoduo Group submitted its IPO application to the Hong Kong Stock Exchange. It does not directly sell products nor own brands, yet it is deeply involved in the most critical and expensive part of Chinese companies' overseas expansion—overseas traffic acquisition.

In 2024, Miduoduo ranked as China's fifth-largest service provider by cross-border e-commerce marketing service revenue. However, while its revenue continues to grow, the company has been teetering on the edge of profitability for two consecutive years. So, is Miduoduo's business a highly certain "traffic intermediary" or a low-margin track squeezed by both platforms and clients?

In the Deep Waters of Overseas Expansion, Whoever Controls Traffic Holds the 'Entry Pass'

The narrative of Chinese companies going global has fundamentally changed over the past decade. Early cross-border e-commerce relied on supply chain dividends and platform windows, but today, what truly determines survival is the ability to stably, compliantly, and cost-effectively acquire users within global platforms like Google, TikTok, and Meta.

For many small and medium-sized overseas enterprises, this is not an easily digestible capability. The varying compliance requirements for ads, content review standards, user behavior differences, and frequent adjustments to platform algorithms make "figuring it out on your own" often mean high trial-and-error costs. This is precisely why the overseas marketing service industry has rapidly expanded in recent years.

According to CIC data, China's overseas marketing service industry reached a market size of $36.3 billion in 2024 and is expected to double to $73.7 billion by 2029, with a compound annual growth rate exceeding 15%. Cross-border e-commerce remains the most concentrated customer segment, accounting for about 40% of the total market.

Miduoduo has evolved its role amid this wave. Its business trajectory is almost a microcosm of China's overseas service industry: from traditional cross-border trade intermediation to providing ad agency services for Google, TikTok, and Amazon, and now offering one-stop overseas marketing solutions for Chinese cross-border sellers.

In terms of business model, Miduoduo is not mysterious. Its core revenue comes from overseas marketing services, helping clients place ads, purchase traffic, and optimize execution on international digital media platforms. During the reporting period, this business contributed over 98% of the company's revenue. This means Miduoduo is not "creating demand" but improving the efficiency of meeting demand.

From the results, this is a business with certain demand. During the reporting period, Miduoduo served over 1,700 direct clients, covering more than 20 countries in Europe, the Americas, Asia, and Oceania. As Chinese companies shift from "opportunity-driven" to "capability-driven" overseas expansion, reliance on such services will only deepen.

But the problem lies precisely here.

When industry demand is highly certain, what truly determines a company's fate is often not "whether there is a market" but its position in the value chain.

The Dilemma of the Fifth-Largest Service Provider: Scale Grows, but Profits Slip Away

From a revenue perspective, Miduoduo's story is not pessimistic. From 2022 to the first half of 2025, the company's revenue showed an overall upward trend, with client numbers and ad placement scale continuously expanding. However, issues on the profit side are quickly emerging.

During the reporting period, Miduoduo's gross margin remained in the single-digit range with noticeable fluctuations. More alarmingly, the company recorded significant net losses in 2023 and the first half of 2025 (-$16.413 million and -$19.85 million, respectively). Even on an adjusted basis, profitability is extremely fragile.

This is not due to operational mistakes but the business structure itself.

As an overseas marketing service provider, Miduoduo's costs are highly concentrated on a few international digital media platforms. Google- and TikTok-related media costs have long accounted for over 70% of the company's total sales costs. During the reporting period, the cost share of the top five suppliers once approached 99% of total costs.

This means Miduoduo does not hold real pricing power. Once platforms adjust rebate policies or raise media resource prices, the pressure quickly transfers to the company's profits. The gross margin drop in 2023 from 8% to 4.1% was precisely due to an international platform reducing rebate rates for Chinese ad agencies.

Meanwhile, uncertainty exists on the client side as well. Cross-border sellers typically engage in short-term contracts and tend to compare and switch between different agencies. This makes it difficult for service providers to form truly reliable revenue expectations, even as they expand their client base. During the reporting period, Miduoduo's revenue share from its top five clients fluctuated significantly, peaking at over 60%.

More realistically, Miduoduo's position is not at the absolute top of the industry. By 2024 cross-border e-commerce marketing service revenue, its market share was only 0.5%. In a highly fragmented market with over a thousand players, being the "fifth-largest" does not imply sufficient scale advantages or stronger bargaining power between platforms and clients.

This is the core contradiction of the overseas marketing industry: the track is large enough, but value is squeezed by both platforms and advertisers, leaving service providers with extremely limited profit margins.

Against this backdrop, Miduoduo's IPO is essentially a bet on its future path. The fundraising is explicitly directed toward localization capabilities, overseas e-commerce operations, R&D, and potential acquisitions. This means the company is trying to break free from reliance on single marketing services and move into higher-value-added segments.

But this path is not easy. Deeper localization means higher labor and compliance costs; building technical capabilities requires sustained investment; and any attempt to "break free from the agency logic" demands time and patient capital.

Conclusion

Miduoduo's IPO is not a coronation of past achievements but more like a prematurely arrived stress test.

It must answer to the capital market not whether "there is still demand for Chinese companies going global" but—in a platform-dominated global traffic system—whether a Chinese service provider can evolve from a low-margin traffic intermediary into a capability-driven company with long-term value.

The answer to this question may not only concern Miduoduo but also determine how far a large number of Chinese overseas service providers can go.