Wong Cho Yau
Wang Zihe
11340690102
11307100060
1. Overview
•Company Overview
•Main Business
•Internet market in the world and China
•Chinese internet users behavior
2. Business Model of Baidu
3. Marketing Strategies of Baidu
4. Competitors Analysis and SWOT Analysis
5. Major Problems of Baidu
6. Future of Baidu
7. Conclusion
Company Overview
Misconception
1st impression:
Baidu is a Chinese search engine
Baidu is an online advertising company!
Company Overview
Truth
How to earn money:
Bring website traffic to others
Baidu’s billboards:
Search engines and other products
= Tools to attract internet users
Company Overview
History
2000
Start - provided search engine
technology to others
2002
Revolution - created their own
independent search engine
Founder: Li Yanhong
Company Overview
History
2005
Pioneer - listed in NASDAQ
Now
Leader – success in China
Company Overview
Mission
To give customers:
An online marketing platform to meet their
marketing needs
An extensive selection of tools for managing their
accounts
Data for analyzing and optimizing ROI
Company Overview
Main Business
Internet advertising:
Brand Display Advertising
Web banner
Frame ad
Search Engine Advertising
Bidding rank
Fixed rank
Market Overview
Number of Internet users
In 2012, the total number of Broadband
Internet users in the world reached 643 million;
the annual growth rate is 8.6%.
Country
Figure
China
U.S.
Japan
Germany
France
Users amount
178.25
95.20
37.17
29.83
23.04
Growth rate
15.11%
3.89%
1.29%
4.25%
3.9%
Unit: million
Source: Broadband Forum
Market Overview
Number of websites
There are over 300 million websites with valid
domain names
Figure
Source: Broadband Forum
Market Overview
2012 Internet Advertising Market
Global Advertising
Market Size
China Advertising
Market Size
107
Figure
435
12.1
Internet
Other
Internet
Other
34.2
Unit: USD billion
Source: E-marketer
Market Overview
2012 Internet Advertising Market
Advertising Market Growth
Market Type
Overall
Figure
Internet
Area
World
China
7.4%
12%
21.3%
45.7%
Source: E-marketer
Market Overview
Global Market Share of Search Engines
Market Share
Search Engine
Market Share
Google
88.8%
Bing
4.2%
Figure
Baidu
3.5%
Yahoo
2.4%
Ask.com
0.6%
Other
0.5%
Google
Bing
Baidu
Yahoo
Ask.com
Other
Source: E-marketer
Market Overview
Market Share of Search Engines in China
Market Share
3.62% 2.88%
10.35%
Figure
18.23%
63.16%
Baidu
360
Sogou
Soso
Google
Bing
Yahoo
Youdao
Other
Source: E-marketer
Behavior Overview
Need for Convenience
Simple user interface(UI) and easy access
Search engines can seek for particular
information efficiently and effectively for
users
Behavior Overview
First Impression and Inertia
If the internet user thinks the search engine
is efficient for the first time usage, they
would use it again in the future.
Internet users tend to use the same website
that they are familiar with.
Behavior Overview
Prefer Free Resources
Chinese people are prudent in spending
money, especially for virtual products
“Whether a product is free” is the main factor
Behavior Overview
Low Awareness of Copyright
As long as it is a free source, Chinese users
seldom care about whether the distribution
is authorized.
Business Model
Core Model
A performance-oriented marketing platform
for businesses to reach relevant Internet
users
Offer promotion links and online marketing
displays in both Baidu organic websites and
its alliance websites
Business Model
Revenue Model
Bidding Rank
Higher is your bid price per click, the
higher is your website’s rank
80% of Baidu’s revenue
“Cost-per-click basis”---cost-effective
for small and medium-sized enterprises
Business Model
Revenue Model
Bidding Rank
Business Model
Revenue Model
Fixed Rank
Higher is your bid price, the higher is your
website’s rank
Charged in fixed cost
Business Model
Revenue Model
Fixed Rank
Business Model
Comparison between the two
Fixed Ranking
Bidding Ranking
Principle
Clients need to pay more for a
higher rank
Charging
Method
Fixed Cost
Cost per click
basis
Business Model
Baidu, users and clients
Users
Business Transactions
Clients
Marketing Strategies
Market Segmentation
Demographic - Classify by Company Size:
Large enterprises (eg. Multinational
enterprises, state-owned enterprises)
Small and medium-sized enterprises
(SMEs)
Marketing Strategies
Market Segmentation
Geographic:
Having business or not in China
Marketing Strategies
Target market and Positioning
Premise: Having business in China
SMEs
Large Companies
Importance
Primary
Secondary
Demand for Low-cost
Advertising
Higher
Lower
Marketing Strategies
Shaping Market Offerings & Creating Value
Market Offering:
Advertising platform to help bringing
website traffic
Values being created:
Exposure and promotion of clients’
brands or products
Marketing Strategies
Pricing Strategy
Recall Business Model:
Fixed Ranking
Bidding Ranking
Principle
Clients need to pay more for a
higher rank
Charging
Method
Fixed Cost
Cost per click
basis
Marketing Strategies
Distribution Channel
Products for Internet Users
Baidu has developed various products and
services: the search engines, Baidu maps,
Baidu free music…
To bring target audience’s mouse clicks to
the clients’ company websites
Marketing Strategies
Marketing Strategies
Database Marketing
Locating the target audience accurately for
clients is crucial
Search records provide a strong database
for Baidu to analyze particular groups of
internet user behavior
Marketing Strategies
Relationship Marketing
Advertising alliance with 600 thousand
websites
Using database, Baidu can easily locate the
target audience for its clients
Marketing Strategies
Relationship Marketing
Marketing Strategies
Sales Promotion
Example 1: Database Advantage Promotion
Stress its advantage in data collection
Created a database analysis simulator for
potential clients
Marketing Strategies
Sales Promotion
Marketing Strategies
Sales Promotion
Marketing Strategies
Sales Promotion
Marketing Strategies
Sales Promotion
Marketing Strategies
Sales Promotion
Marketing Strategies
Incident Marketing
Example 2: Halt of Sina search
In 2002, Sina was unable to pay its service
charge for search engine to Baidu
So Baidu added “Baidu suspended searching
service because Sina deferred payment” to
the search bar on Sina
Due to this, Baidu rose to fame overnight
Marketing Strategies
Marketing Strategies
Branding
Example 2: listed in NASDAQ as “Chinese Google”
Baidu strived to tagged itself “Chinese Google”
This raised foreigners’ expectation of Baidu
Eventually, made history when listed in NASDAQ
Competitor Analysis
International Competitor
Google
Largest search engine in the world
But in China…
In 2010, they shut down Google China, and
combined the service with Google HK
Competitor Analysis
Local Competitor
Qihu’s 360
2nd Largest search engine in China
Started with Anti-Virus software
In 2013, they started their search engine.
After their entrance…
Competitor Analysis
Local Competitor
Market share in 2013 August: 18.23%
In comparison with July:
Baidu - drop from 64.25% to 63.16%,
360 - jump from 17.59% to 18.23%
China Search Engine Market Share Comparison
in July and August in 2013
64.25%
63.16%
Baidu
17.59%
18.23%
360
10.17%
10.35%
Sogou
Soso
3.74%
3.62%
Google
2.92%
2.88%
other
July
August
1.32%
1.30%
0%
20%
40%
60%
80%
Competitor Analysis
Other Competitors
Traditional Media
Includes TV, billboards, newspaper…
Internet marketing is a relatively young
industry
Some firms may still prefer traditional ways
of advertising
SWOT Analysis
Strength
Weakness
Opportunity
Threat
• High Market Share in China Search Engine Market
• Understanding in Chinese culture
• Understanding in Chinese internet users behavior
• Loopholes in Charging System
• Growing Market
• Fierce Challenge from New Local Entrants
SWOT Analysis
Strength
High Market Share in China Search Engine
Market
Baidu and its alliance cover 95% Chinese
internet users
SWOT Analysis
Strength
Understanding in Chinese language & culture
Recognize Chinese meanings more
accurately than other engines
For example, there are at least 38 ways of
saying "I" in the Chinese language.
SWOT Analysis
Strength
Understanding in Chinese internet users
behavior
They provide free mp3 search, document
downloads…
SWOT Analysis
Weakness
Loopholes in Search Engine Advertising
Cost per click: Click attacks by hackers
Bidding rank: Low quality websites
occupy the top of the list
SWOT Analysis
Opportunities
Growing Market
Growth rate of Chinese Internet
advertising market is high
Great potential to further expand its
business (e.g. mobile internet market)
SWOT Analysis
Threats
Fierce Challenge from New Local Entrants
After the entrance of 360, the market
share of Baidu has been declining.
Business Model
Competitive Advantage
Baidu
Higher charge, higher
ranking
High internet user
base in China
Google
Similar to Baidu, but the
ranking is decided by
various factors
High internet user
base in the world
360
Promote its charged
products through free
softwares and engines
High freeware user
base in China
Traditional Media
Varies from different media
Mature industry
Major Problems
Uncertain Quality of Search Results
Bidding price decides result ranking
Recall: bidding rank system
Some imitation websites may appear at
the top of the result list.
Example 4: Fake medicine Incident in 2010
Major Problems
Copyright Problem
Condemned by artists, writers and
publishers due to copyright infringement
Brand image of Baidu is therefore
damaged
Future
Improvement in Bidding Rank System
Report system to protect users equity
Perform simple assessments on clients
Checking the license and certificates
issued by the trusted authorities
Future
Sustain performance in mobile platforms
New opportunities in mobile internet
platform
Currently, Baidu has already turned its
search engine, maps and community
platform into mobile apps
Future
Sustain performance in mobile platforms
What Baidu has to do:
Sustain their stable performance
Inertia in behaviour
Satisfactory mobile service
= Continue to use
Conclusion
Keys to success
Correct timing of implementation of
marketing strategies
Understanding in Chinese Internet users
Knowing its proper sphere
Result: Able to create website traffic
Conclusion
Keys to success
Accomplishment :
Popular Search Engine
Successful Online Marketing Agency