We came across this interview with former Google exec Tony Miao, who is currently COO of Chinese search engine marketing (SEM) company E-Link Age, which provides a rare peek into the different ways Google and Baidu compete against each other in China.
Topics ranged from how the two motivate agents to policies of whether or not to allow the purchase of keywords that advertise products when users search for competing products (like Pepsi buying keywords for Coke products, for example). Excerpts are included below, but the entire interview can be read here at JLM Pacific Epoch.
“We heard that Google’s agency discounts are higher than those offered by Baidu to agents that sell both Google and Baidu services. Is that true?
Not exactly. Baidu offers different rates to its agents based on how much direct contact they have with Baidu. Agents working directly with Baidu get a discount of up to 50%, whereas second- and third-tier agents get progressively lower discounts.
Google China offers a base commission to all of its agents and adjusts the rate according to sales performance. In that way, Google agents have more pressure to meet sales targets, which are currently RMB 3 million per month from new and existing clients combined.”
“Are you partnered with Baidu or Google?
We do pay-per-click ads for both Baidu and Google. I’m not too familiar with the Baidu team but have good relations with Google China. I usually fly to Beijing once a month to meet with their team. Google China has more than 30 employees in Shanghai, half of which work for the technology department, but all of their customer service employees, which take up about one floor, are located at their headquarters in Beijing. The company divides its sales department into big clients, resellers and online. As far as I know, Google China defines ‘big clients’ as Fortune 500 companies with a daily budget of at least RMB 1,500 and sustainable growth outlook.”
“Chinese media recently reported that The9 (Nasdaq:NCTY) purchased the “World of Warcaft” (WoW) keyword to advertise its non-WoW games on Google China after it had lost its licence on WoW to NetEase (Nasdaq:NTES). Is that sort of marketing par for the course?
It is legal and fair competition so long as the listed ads themselves do not use the “World of Warcarft” brand. Companies can use their competitors’ products and brands to do SEM, but not SEO.
Before the release of Phoenix Nest, Baidu did not allow clients to buy unrelated keywords. Now they sell those keywords as right-column placements. However, if no one buys the left-column ad space, the first ad listed in the right column will be displayed on the left.”
Google and Baidu continue to hammer at each other for search supremacy in China. In six years Google has managed to grow its share of the market from practically nothing to around 30% despite a tendency by the Chinese to be loyal to their own Web sites regardless of competing services. Baidu, in turn, recently introduced a new keyword bidding system, which many believe could help it take on Google.
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