In June 2018, the number of search engine users in China reached 657 million. To put it in another light, that’s 81.9% of the country’s netizen. But change is afoot.
While the number of search engine users has been on an upward trajectory for years, the pace of the growth is finally starting to slow. Since the end of 2017, China has added 17.31 million new search engine users, a growth of 2.7% from the previous year, when China tallied 13.42 million new search engine users.
In a changing market, it should come as no surprise that search engines saw fierce external and internal competition during 2018. That competition has affected commercialisation capabilities in many ways, as search engines large and small have navigated severe traffic diversion issues.
How China’s search engines combat traffic diversion problems
Within the market, the mobile traffic dividend has dropped sharply, causing search engines to increase cooperation with traffic channels and mobile phone manufacturers. This trend has pushed up traffic acquisition costs (TAC). Data from corporate financial statements shows year-on-year rises in TAC for both Sogou and Baidu during the first quarter of 2018. Qihoo’s 360, meanwhile, noted a marked increase in the traffic diversion effects of e-commerce, life service, news and video apps. That has had a ripple effect on search engine keyword advertising.
How have these search engine companies responded? It depends on the company’s size.
AI has undoubtedly been the hottest topic in Internet technology over the last two years. Baidu, the leading Chinese search engine, began by talking about "all in AI” and is now talking about “AI Marketing 3.0”, a sign that they don’t just believe in the future of AI but are determined to implement it soon as well. Keen not to be left behind, Sogou — China’s second biggest search engine — is also focusing its efforts on AI.
As well as increasing commercialisation capabilities to achieve revenue growth, incorporating this technology should help China’s search engine giants optimise bidding products and make ad placement more effective for advertisers. But AI is only one answer to evolving market forces.
Smaller search engines such as 360 and mobile-driven Shenma that focus on partnerships with China’s mighty mobile manufacturers have proven to be a more sensible way to attract more consumers and deal with the impact of market forces on traffic levels.
Thanks to the increasingly fragmented habits of consumers in the mobile age, search engines are no longer the only portals for search traffic, and search marketing is no longer confined to the traditional scope of search engines. What exists now might be most accurately called a 'big search universe', encompassing traditional search engine (Baidu, Sogou, 360 and Shenma), social search (Wechat, Weibo), Q&A search (Zhihu), EC search (T-mall, JD), and vertical search (health app, auto app, etc.).
Why Synergy matters
The number of search users in China is still growing, but the pace of that growth has slowed, and the mobile dividend is diminishing, too. At the same time, search engines built in different platforms have made users accustomed to more complex search behaviour. For advertisers, it is hard to know how precisely to invest in this minefield of a search marketing landscape.
But GroupM has an answer. The media advertising specialist has developed a distinct methodology called Synergy Search to help advertisers invest properly across multi-platform search engines and gain better value. Featuring GroupM’s unique analysis and modelling tools, Synergy Search allows advertising teams to better understand the various search behaviours in China. In turn, that helps them generate better-focused strategies across multiple channels and rethink the values of each platform for higher ROI.