Is Google The King? China says Otherwise.

T.R. Harrington, Director of Strategic Direction & Product Development of Darwin Marketing, Shanghai spoke about search behavior and internet marketing in China.

Unlike most markets around the world, Google is NOT king in China. Baidu has 68% of the search traffic with revenue growth up to $234 million USD. What makes Baidu unique is that it shows paid search ads before the organic results. For very popular searches you might not see a natural search result on even the first 2 or even 3 pages.

China is second in the world for search activity and the search engine market is still very young. Because advertisers are much less sophisticated, they need simple tools. For paid search, there are much higher clickthrough rates. However, this information, is gleaned, to a great extent, by conjecture. Baidu provides no CTR data.

Because organic results are less prominent or non-existent, The CPC (cost per click) prices increase much faster, between Jan – May (70% in select industries). There are relatively few PPC optimization variables. Traffic estimation tools in China are unreliable.

Search behavior has become massive in China. From an advertiser’s perspective, PPC is a great solution in China since the ROI of paid is much more immediately evident and there are fewer organic results anyway. In Chinese SEM agencies, the marketers have very little experience with direct marketing. China has historically been primarily a brand driven environment. After searching on the Internet, there is no question that people are buying offline. There is much lower credit card penetration, even with so called “E-commerce”. Companies who take orders, by and large, still do it by phone.

Search data is very difficult to come by. Search engines and portals do not give out information about impressions or offer CPM data buys. It’s very difficult to “plug in numbers.”

Few Highlights from his recent speech:

China Search Market:

254 million users in China July 08, the largest number of users in the world
Fewer choices in other mediums, like TV. Because of this users are more engaged in the online conversation.
There is a very little presence of analytics companies in China. Partly because companies are still hesitant to pay for this service, plus many are still not sure what to measure.
Cost per Click is still the major measurement, understanding conversion and measurement has not reached the China market yet.
Taiwan and Honk Kong are totally different markets then “mainland” China. All Chinese speaking areas can not be grouped together. Different tactics and strategies are needed.
Domains with a .CN extension are considered more reputable and give more weight.

Baidu

Claims the largest and most active BBS Community
Baidu is not like Google
Has 71% Market Share (Google has 23%)
Pushing the ads to right side, like Google. Historically, they have been at top, this pushing organic listings down
Introduces 14.5 products a year
Wants to be the Wikipedia and Ebay of China, as well as search
Provides no CTR% for Paid Search advertisers
Faster CPC price increases (as much as 70% from Jan to May)
Traffic estimations tools in China are unreliable in China