by Sumner Lemon, IDG News Service
"I get it," the Western man says, speaking heavily accented Chinese.
Surrounded by beautiful Chinese women in the video advertisement, he
grins with self-satisfaction.
Nearby, a suave Chinese man dressed in scholar's robes laughs. "You
don't necessarily get it," he says. As the ad unfolds, the Chinese
scholar proceeds to humiliate the Westerner, mocking his poor
Chinese-language skills. In the end, the women flock to the scholar's
side, and the Westerner is left confused, alone and humiliated.
"Baidu understands Chinese better," the Baidu.com advertisement says,
needling the company's former investor and current rival, Google. And
statistics seem to bear that out: Baidu accounts for 62 percent of the
country's search traffic, up from 52 percent in 2005, according to the
China Internet Network Information Center in Beijing. For Western
companies trying to establish a Web presence in China, understanding
how Baidu plays the game could be key.
Top Chinese Site
Founded in 2000 by Robin Li and Eric Xu, two Chinese technology
executives who once worked in the U.S., Baidu has grown to become the
most visited Chinese-language Web site in the world. In the process,
it has also earned the rare distinction of being one of few companies
to have competed toe-to-toe with Google and won, though some would say
the playing field was tilted.
Baidu's detractors claim that the company abets music piracy and pads
the top of its search results with paid listings. But the success and
popularity of the company's search engine is undeniable.
A large part of Baidu's early success is attributable to its MP3
search engine, which came just as MP3 players were taking off in
China. Lawsuits brought by music companies claiming that the search
service infringes on their copyrights haven't slowed Baidu's progress.
The company's rise occurred as the Chinese government was growing
increasingly concerned about Google's search engine. That situation
came to a head in September 2002, when government censors shut off
access to Google in China. A few days later, Chinese officials
"hijacked" the Google.com domain name, redirecting Chinese Internet
traffic to local search engines that censor results. Most of that
traffic ended up at Baidu, giving it an instant boost in popularity
and sparking rumors of cooperation with China's police administration,
the Public Security Bureau. (Baidu executives declined to comment for
No reason was ever disclosed for the blocking and subsequent hijacking
of Google's domain name, which lasted for 10 days. The event was
notable for two reasons, however: It was the first time Chinese
censors blocked access to a search engine, and it marked the beginning
of the end of Google's reign as China's most popular search engine.
Google's Early Friction
Today, Google lags far behind Baidu in China, in terms of both its
popularity with users and revenue derived from search-related
advertising. Despite Google's best efforts and the millions of dollars
it spent to open an office in China, the company shows no signs of
closing the gap with Baidu.
Baidu executives clearly believe that the company's success is secure.
"We don't think competition is a major threat at this point," founder
Li, who currently serves as the company's chairman and CEO, told
investors during a February conference call. (Xu left the company in
Like Google, Baidu derives most of its revenue from Internet ads. It
earned $106 million from online advertising in 2006, a 170 percent
increase over the previous year.
In recent months, Baidu has branched out into new areas, reaching
beyond search. The company has added a news service, for which it
recently received a license from the Chinese government, and a
blogging service, called Baidu Spaces.
Buoyed by its success, the company launched a Japanese-language search
engine, Baidu.jp, in March, as part of its plan to spend $15 million
this year to build up a Japanese business. It will be interesting to
see if Baidu "gets" Japan.
Baidu's Click Fraud Charges
Advertising on Baidu.com can be a great way to reach Chinese
consumers, but advertisers may find that their ads don't necessarily
produce the desired results.
Nearly half of companies that advertise on Baidu are discouraged by
what they perceive as a high percentage of invalid clicks, including
fraudulent clicks, according to a report by Peter Lu, a longtime
observer of China's Internet search market and managing director of
Baidu mixes paid listings and search results, so some users
inadvertently click on ads, Lu says. He cites several causes for
allegations of click fraud, including inflated click rates by sales
agencies and distributors, fraudulent clicks by paid users, fraudulent
clicks by competitors, and little overall pressure to stop corrupt
In a recent IntelliConsulting survey, just 25 percent of Baidu's
advertisers said they felt that the invalid click rate was within
acceptable limits, and 43 percent said the problem was big enough to
discourage them from advertising. In fact, 46 percent of the
complaining companies said they believed that the invalid click rate
was higher than 50 percent.
About 15 percent of Baidu's ad customers said they plan to decrease or
cease placing ads during the next six months, the report said, but 20
percent plan to increase their placements during the same period.
The controversy over alleged click fraud on Baidu could spell
long-term trouble for the company. Already, some advertisers see
Google as a better way to reach a targeted audience.
"Google advertisements have a relatively higher return on investment,
but because the traffic with Google is relatively small, the number of
users attracted to your Web site is limited," says Lu.
He recommends that companies interested in advertising on a Chinese
search engine play the field and compare results from ads placed on
Baidu, Google and Yahoo China to find what works best for them.
Despite continuing allegations of click fraud, for companies that want
to establish a presence in China, ads are still the main means of
driving traffic to their sites from Baidu. But there are ways to
optimize your site for the search engine so that your company has a
fighting chance to come up high in a Baidu search:
Render all content in simplified Chinese. Eliminate references to
content that might be offensive to the Chinese government. Eliminate
use of keywords that might be sensitive or banned by the Chinese
government. (There's no official list, so users have to feel their
way here.) Pay attention to keyword density and metadata, as in other
Copyright 2007 PC World Communications, Inc.
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