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Googling something is second nature to us in the U.S. But for the 1.3 billion inhabitants in China, that’s not the case. In the world’s largest internet economy, Baidu dominates.
Baidu started in the year 2000, when founder Robin Li developed a page ranking algorithm similar to that used by Google. Initially Baidu functioned like Yahoo, serving as an internal search engine for other larger sites, such as Sohu and Sina. After several failed attempts to organize a sale of the company, Li decided to go the alternative route and establish Baidu as an independent search engine. Baidu’s reach and early start in the search engine game gave Li and Baidu shareholders confidence about their dominance in the market. Capitalizing on its lead in the industry, Baidu employed an aggressive sales force to further spur growth by connecting with advertisers and researching trends and the specific nuances of Chinese digital culture.
In addition to its head start in understanding the particulars of China’s internet users, Baidu’s advantage in the search engine market was due to its willingness to cooperate with government censorship. This is what allowed Baidu to continue to dominate the search engine market even after the introduction of the search engine giant, Google, in China as Google.cn.
Google.cn’s stint in China was brief and filled with obstacles. The primary conflict Google had in China was with government censorship. When it became clear to Google that they started off with a major disadvantage in the realm of cultural understanding, Google approached Baidu proposing a collaboration. However, cultural differences soured the relationship between Li and the Google representatives, and the collaboration was abandoned. Afterwards, Google continued to struggle against governmental red tape and failed to gain a foothold in China.
The event that ultimately drove Google’s exit from the country was an unexpected and widespread hack of Google.cn email servers. After the hack, Google declared that they would no longer tolerate censorship by the government and redirected their efforts in the Chinese-language region to Hong Kong. When Google left China, Baidu immediately benefited. The company’s stock value doubled and the search engine was able to recapture the internet traffic they had previously lost to Google, re-affirming Baidu’s status as the most powerful search engine in China.
Baidu currently maintains its dominance in the search engine market in China, but new technologies, controversies, and rapidly growing competitors continue to threaten that position.
Baidu’s rise to the top was not without complication. The search engine’s compliance with government censorship has led to public suspicion and outright accusations towards the search engine of hiding important political scandals from its SERP. The search engine has also come under fire for prioritizing profits over the reliability of the information and the advertisers it serves.
Baidu has frequently been accused of not properly vetting its advertisers and leading users to hoax products and services, particularly in the domain of healthcare. Earlier this year, the Cyberspace Administration of China commenced a joint investigation into Baidu after a 21-year-old cancer patient allegedly died from obtaining services from an unlicensed, experimental hospital who had bid high prices to have prominent ads hosted on the Baidu SERP. More recently in July, Baidu was implicated in an illegal gambling promotion scandal, where it was accused of allowing illegal gambling websites to flourish through inadequate monitoring of advertisers and the security of advertisements’ links. Baidu has even been reprimanded for not vetting its organic results. Prominent organic results for illegal music downloads led the search engine to be blacklisted by the RIAA.
To address the controversies related to paid advertisements and organic results, Baidu consistently cites the will of the internet market and the objectivity of its page ranking algorithm. However, advertisers are becoming increasingly skeptical. Some vendors have come forward claiming that Baidu penalizes advertisers in ad costs and ad rankings if they also advertise on other search engines, especially on its primary competitor, Alibaba’s Tao Bao. Baidu has denied these claims, but the accusations of cost discrimination in addition to the many other scandals have had resonating consequences for Chinese trust of Baidu, and search engines overall. Internet users in Chinese are increasingly more reliant on social media, networks of friends, and key cultural influencers for answers to questions, reviews for products and services, and other inquiries.
SEM on Baidu
As a result of this accumulation of controversies stemming from Baidu’s oversight, the Beijing branch of the Cyberspace Administration issued harsh mandates for Baidu to reduce the amount of paid advertising on its SERP. These regulations have drastically altered Baidu’s SERP layout. Since June 2016, the advertisements on the right rail were eliminated, and the number of ads displayed above the organic results is now limited to four. The significantly reduced real estate for ads means much higher competition for keywords and ad placements and potentially much higher costs for advertisers.
The Chinese government has also imposed stricter regulations enforcing paid advertisements to be clearly demarcated as sponsored content. In the past, Baidu had little to distinguish between ads and organic results. There used to only be small grey characters for “promotion” and “organic” at the end of the result description. However, since September 1st of this year, the government implemented the Internet Ad Interim Measures, which enforces distinctive and prominent markings for online advertisements. Now, for each paid result, there is a small “commercial text” before the word advertisement. Here’s what a basic search for “shoes” looks like on Baidu:
The ads are encased in the light peach box at the top of the page with the Chinese characters for “advertisement” in the top right. To address the issue of poor vetting of vendors and advertisers, ads now have a small icon that indicates “verified source.” In the image below, it is the orange V3.
Since 2007, Baidu has also offered an alternative, more expensive SEM product, called Brand Zone, that allows advertisers to dominate the SERP space in a dynamic advertisement format. Through Brand Zone, companies pay to exclusively use keywords, meaning that during the time one company pays for a Brand Zone keyword, no other company can bid for it. Here is what a search for “BMW” looks like with the Brand Zone layout:
Here, the advertisement is prominently displayed, taking up about two-thirds of the first page. Advertisers can include videos, slide shows, large images, links to social media pages, and interactive light box images. Brand Zone ads have been proven to be very effective, but are very expensive.
For both Brand Zone and non-Brand Zone advertisers, it is important to pay attention to language and cultural context in order to understand user queries and what kind of creative appeals to users. Mistakes in grammar and syntax are immediately noticeable and off-putting. Particular to the challenge of writing creative for a Chinese audience is dealing with the complexities of written Chinese, regional dialects, and varying vernaculars.
Baidu has products and tools to help advertisers hone their strategy and creative. For prospecting keywords, Baidu has a keyword planner tool similar to that of Google. Baidu also offers a VIP program that provides additional services and recommendations for strategy and advertising as a foreign advertiser.
To get started advertising on Baidu, an advertiser has to get an official signoff from Baidu and the Chinese government. This process can take a while and be extremely tedious. To streamline the process, it helps to work with agencies in China for account setup.
American advertisers can also expect differences between American sites and Chinese sites in website building software and layout preferences. Chinese agencies can also be useful in getting a feel for what Chinese users are accustomed to in their user experience on Baidu.