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1 Search Inside China
2 Fortune Cookies on China Lies, Lies and More Lies: China s Online User Behaviors are like the West Source:
3 News 72.4% Online Music 86.6% (GOOG MP3??) Source: Instant Messenger 81.4% (US ~40%??) Search 72.4% 210M Users Online Games 59.3% (US ~10%??) China Online Behaviors Chinese users are relatively more turned on, tuned in versus their western counterparts. Given fewer media choices, much of China s public internet companies value are based on entertainment and communication.
4 Q-Zone # 1 Blog Site PVs (iresearch) # 1 China Portal By PVs (Alexa) Source: cnnic; alexa; iresearch; QQ Instant Messenger 254M (Peak 28M Live) SOSO Search (Wait and see) TenCent $10B QQ Games Casual (Peak 3.2M Live) From IM to Portal to Search? Built on the strength of its dominant QQ instant messenger community, TenCent has quietly become one of China s leading internet success stories witnessed TenCent become a leading player in brand advertising, online entertainment, and e-commerce. Could search be it s next product?
5 FREE to Play Model # Players 76M+ 07 (GOOG MP3??) Source: pacificepoch; cnnic; iresearch MMOG 1.6B in 07 (US 40%??) Baidu 2007 # 6 Search PopKart Racing Shanda Online Games 59.3% (US 10%??) Would You Like to Play? Unlike downloading MP3s or movies, casual and MMORPG games can attract up to 1M concurrent customers. Think online applications, in this case games, renting for $0.25/hr and you can see why China s internet café s have become the arcades of new generation.
6 Baidu BBS Search 12M Daily Mobiles Autos Cosmetics Babies 1.2M Posts - Laptops (Jul-Sep 07) 70M+ Creators Source: Source: CIC Data Tuning into Notebook IIWOM Regular Blog User 49.4M (US 40%??) Regular BBS User 74.6M China s Content Creators Have a question? Someone is ready and willing to answer you in China. None other than leading Search player Baidu claims the largest and most active BBS community (and packages it for sale to advertisers) via nearly 12M daily searches on it s BBS search product alone.
7 Fortune Cookie s on China Lies, Lies and More Lies: China is small, slow developing market Source:
8 Market Size Online Advertising / Search both growing rapidly in China 41% CAGR 57% CAGR 07 $961 expected for all online (6.7% total ad spend) 07 $309M expected for search (32% of online) 10 $1,380M expected for search (52% of online) 8
9 China Search Key Growth Drivers 56% CAGR from Rising internet population in China Significant growth in web pages and websites Higher search usage (due to growth in pages, websites) Larger number of SMEs adopting search due to higher ROI Low Penetration (2.5%) among SMEs
10 Fortune Cookie s on China Lies, Lies and More Lies: Baidu is just like Google Source:
11 Source: CIC China; Pacific Epoch; JP Morgan, Darwin Proprietary Data Baidu Market Share + Growth Baidu share 68% search traffic 23% Google Revenue Growth US$ 234M 07 US$ 1B(e)+ 10 Still Low SME Penetration 124,000 Advertisers / 2.5%
12 Ads Before Naturally Ranked PAID RESULT NON - PAID RESULT
13 Ad Platform Differences D CPC price D B Budget / Daily / Total G # of Clicks G Content Network G Campaign Report G Baidu Geo-Target G Google Different D Keyword Insertion D G
14 * Source: Pacific Epoch; Darwin Proprietary Data Baidu Search Implications Paid Search Higher click-thru rates (assumed; Baidu provides no CTR%)* Faster CPC price increases (Jan-May 70% in select industries)* Relatively few optimization variables Natural Search Keyword selection methodology Traffic estimation tools in China unreliable
15 Darwin Marketing Paid Search Optimization Paid Keyword Research Paid Search AD Copywriting Campaign Management Tracking and Optimization Natural Search Engine Optimization (SEO) Natural Keyword Research Natural Search Engine Copywriting Internal and External Link Building Clean, Search Friendly (and User Friendly) Coding Tracking and Optimization Select Search Clients Publishing / Speaking Baidu + China s Search Market ecrm for the Market 15
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