Founded in 1999 by Robin Li, a frustrated staff engineer at Infoseek, an internet search engine partly owned by Disney, Baidu now has a dominant 62% share of China's search engine market, according to China IntelliConsulting Corp. The company's phenomenal success in China inspired Advertising Age to include Baidu in the Ad Age Digital A-List on March 17, 2008.
Google is the No. 2 player with a 22.7% share, followed by Yahoo at 10.8%, but Dick Wei, a Chinese internet analyst at JPMorgan Technology Research in Hong Kong, believes Baidu's share “is likely to be higher.”
The company “continues to be search engine of choice among new search advertisers, 60.4% of new advertisers spend on Baidu only vs. 13.5% on Google. Customer retention rate for all search engines are above 80%, suggesting good ROI and high adoption for search advertisers,” said Mr. Wei.
China's online ad market surged by 75% to almost $1.5 billion last year, according to iResearch. Growth was largely driven by a boom in search engine advertising, which grew 109% last year and accounted for 27% of the market in terms of value.
“Over the past six months, Baidu has made significant strides to diversify their revenue streams into other brand channels,” said T.R. Harrington, who founded a search engine marketing company in Shanghai called Darwin Marketing. “They’ve made a lot of progress convincing brand advertisers they should advertise on Baidu’s channels.”
Baidu's revenue grew 110.5% during the fourth quarter of last year, compared to the last three months of 2006, said Mr. Li. “As the number of internet users in China continues to grow, we believe there are tremendous opportunities ahead for us and our partners.”
Last fall, he launched of Baidu TV, an online video advertising service through a deal with Ads It Media Corp., a Chinese online video-advertising platform provider, to expand Baidu's revenue base beyond text ads. The alliance will provide advertisers access to about 160,000 domestic web sites.
Last December, Baidu launched a Japanese-language service in Japan, Baidu.jp, offering web search, video search, image search and blog search.
Baidu's first major overseas venture, Baidu.jp will compete against local-language sites operated by Yahoo and Google, which control 60% and 40%, respectively, of Japan's online search market, since Japan has failed to produce a home-grown search engine giant of its own.
One of Baidu's most popular features all along has been its music search service, which makes it easy to locate and download pirated digital tracks through platforms like Music Master, the world's largest music-sharing platform. The site track user queries and click-through rates to develop value-added music rankings and classifications.
In 2007, 84% of music search traffic in China went through Baidu, according to the internet consultancy, iResearch, prompting Baidu to launch a general entertainment channel last year.
Baidu's rise hasn't all been smooth sailing, however. Analysts are dubious that Baidu will make a major crack in Japan's market.
“I’m not a huge fan of what they’re doing in Japan,” said Mr. Harrington. “I understand their desire to branch out and go pan-Asian with search, but the opportunities for them here [in China] are so big and so important. I don’t want to see them get distracted.”
Baidu’s music service has led to Napster-like legal problems with music companies such as Universal Music, Sony BMG Music Entertainment and Warner Music. They are struggling to get Chinese courts to force Baidu to remove links to their copyrighted content from its site.
And Mr. Li plans to take Baidu into China's instant messaging and customer-to-customer sales markets. That will pit it against two other highly successful Chinese dot-coms, the IM giant Tencent's QQ.com platform and Taobao.com, part of e-retailer Alibaba Group.
Other people news in Greater China
[hong kong] BBDO Worldwide has appointed Thuy-Tien Crampton as regional planning director in Hong Kong, leading strategic and consumer planning on a regional basis for companies such as Wrigley's. Previously, she was a strategic planner at CLM BBDO in Paris.
[shanghai] Yum Brands has appointed Sam Su, 55, vice chairman of its board of directors, a move that reflects the growth potential of China's fast-food industry as well as KFC's strong performance in that market. Mr. Su will remain based in Shanghai and retain his existing position as president of the company's China division, which operates across 450 cities in mainland China. The company has 2,140 KFC quick-service restaurants in China, 351 Pizza Hut casual-dining restaurants and 53 Pizza Hut Home Service units. It also created and is testing East Dawning, a quick-service restaurant concept serving Chinese food.
[beijing] The Mobile Marketing Association Asia/Pacific has named Jimmy Poon, the Beijing-based managing director of Puca in China, as chairman of its board of directors.