With Google out, Will Baidu Reign in China?
For users, it means the loss of choice and the end of a battle for eyeballs that drove both services to improve constantly. For marketers, it means the loss of the only strong competitor to the dominant player in the market and the prospect of higher search ad rates. For websites that depend on search engine optimization to bring people to their sites, it means going to bed every night praying your main traffic conduit doesn't change its algorithm before morning.
In other words, China will now get what the U.S. and many other markets have long enjoyed: a search business dominated by a single player.
But don't expect things to stay that way.
China's internet is at a far earlier stage of development than the U.S. The most optimistic estimates suggest that only a quarter of China's population has access yet, and only a fraction of those from their own computers. Online habits are still in their formative stages, as is the critically important mobile internet. And China's marketers, a surprisingly conservative lot, are still in the early stages of adopting online advertising, especially small- and medium-sized businesses.
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All of which means that the opportunities on China's internet are still up for grabs.
So despite the gloom, many of us remain hopeful that Google.cn's departure -- and the digital advertising revenue thus freed -- will incite potential rivals like Tencent, Netease and Alibaba to redouble efforts to build search engines to rival Baidu. After all, in a country awash in technical prowess and an industry filled with entrepreneurial spirit, Baidu can hardly expect to maintain unchallenged search hegemony for long in a market accustomed to choice.
If a rival does not rise to challenge Baidu, marketers will begin re-examining the way they allocate online spending. Whereas with two major players the question was, "Which search engine do we choose for our online campaign?" with a single major search site, marketers will ask, "How much should we allocate to search?" or indeed "Why are we even spending on search?"
Over the past five years, a crop of small and highly innovative companies and services have emerged in China offering attractive alternatives to digital ad dollars. Cool mobile marketing services, addictive social games and sophisticated internet word-of-mouth programs are moving into the mainstream of digital spending. Faced with rising costs and falling ROI in search, marketers will be more comfortable experimenting with alternatives.
I am sad to see Google.cn go. It is politically incorrect in some circles to say so, but Google's presence in this market has made China's internet better by being here, self-censorship notwithstanding.
But China's internet will move on, and for those of us doing business online in the world's largest nation, things are about to get really interesting.
|ABOUT THE AUTHOR|
David Wolf manages Wolf Group Asia, a Beijing-based strategic corporate communications advisory firm that specializes in technology, media, telecommunications and entertainment.