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Baidu and entering China


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Baidu and entering China

  1. 1. China Search International Guide to China’s Retail Sector
  2. 2. Baidu is China’s equivalent of Google… Baidu is the major search engine in China with over 556 million regular users. That’s the equivalent of all the Google users in Europe and Asia combined. Population of China: 1.35 billion Online Population: 618 million Baidu’s Reach: 556 million
  3. 3. The world’s largest online economy China already has the largest online population in the world at 618 million users. Astonishingly that’s only 44% of their population, so their capacity for growth is enormous 0 100 200 300 400 500 600 618 245 121 101 79 53 20 44 79 10.2 80 39 84 89 Online Population MMs % of Population online
  4. 4. Or to put it another way… China USAUKAustralia = 50 million online users
  5. 5. China’s Retail Sector
  6. 6. Chinese Online Transactions have exploded Online transactions reached $301.9 billion USD in 2013. It is expected to surpass $651 billion USD in 2017. $75.03 $127.69 $212.08 $301.11 $398.76 $491.54 $585.94 $673.83 75% 70% 66% 42% 32% 23% 19% 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% $0.00 $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00 $800.00 2010 2011 2012 2013 2014e 2015e 2016e 2017e Transactions USD Billions Growth Rate (%) Source iResearch, “2013 eCommerce market core value analysis”
  7. 7. Overseas e-Commerce Transactions are growing at an even faster rate Overseas e-commerce transactions reached $12.5 billion USD in 2013. The projected growth rate is over 100% in 2014, reaching $25.3 billion USD by the end of the year. $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 2009 2010 2011 2012 2013 2014e $0.8 $2.0 $4.3 $7.9 $12.5 $25.3 China's Overseas e- commerce transactions (USD Billions) Source: 100EC, “2013 China online retail market insight report”
  8. 8. All is driven by the Chinese middle class The middle classes are expanding beyond the largest cities more rapidly & in greater numbers than any market has ever witnessed. The number of Middle and Affluent Consumer HOUSEHOLDS in China will be the same as the US by 2020 1 13 34 61 57 36 12 53 69 66 39 23 Household annual disposable income (USD) thousands Upper affluent >200 Lower affluent $16 - $31.5 Middle Class $9.5 - $16 Emerging Middle $6 - $9.5 Aspirant $4 - $6 Poor <$4 Households MillionsHouseholds Millions Source BGS Consultants Urban household disposable income 2020Urban household disposable income 2010
  9. 9. And their movement to online shopping There were over 300 millions online shoppers in China in 2013, which is nearly half of the total internet population. Year-on-year growth was at 48.9% during the same period. 242 302 42.9% 48.9% 39.0% 40.0% 41.0% 42.0% 43.0% 44.0% 45.0% 46.0% 47.0% 48.0% 49.0% 50.0% 0 50 100 150 200 250 300 350 2012 2013 Online Shoppers (Millions) % of Total Internet Users Source: CNNIC, “China internet development status report”
  10. 10. They use all the same tools as consumers in the west 10 Source: Nielsen, GlobalWebIndex Wave 6 Search Engines 80% Watched Video 72% Listened to Music 77% Instant Messenger 67% Uploaded Photos 60% Activities performed online % Of users Reviewed a product or brand online 74.58 Used webmail 74.08 Watched a video clip 71.64 Used internet banking 71.29 Purchased a product online 70.79 Used instant messenger 67.21 Uploaded photos online 60.47 Used online office applications 59.62 Post comment on forum / bbs 55.63 Manage your social network profile 54.04 Left a comment on a story on a website 53.39 Used a micro blogging service 52.04 Bought prod/serv through group buying site 49.55
  11. 11. But are even more socially connected China has the most active social media society globally and is more important as part of brand awareness building than perhaps anywhere else in the world 270 million active users on WeChat 95% of Chinese trust a brand more if on social media 85% of Chinese online shoppers share the experience on social media 40% of online shoppers follow brands on social media 9/10 online Chinese have used social media in the past six months, versus less than 6/10 in the UK
  12. 12. Connectivity across mobile has led to massive mobile shopping growth • In 2012, mobile transactions totaled USD7.8 billion, representing 3.7 percent of all e-commerce transactions in China. However, by 2015 mobile commerce in China is forecasted to more than quintuple, to USD41.4 billion, representing 8 percent of all e- commerce transactions. • According to data presented by Taobao, the busiest time of the day for mobile shopping is 10pm, and purchases made by mobile devices are 67 seconds faster than purchases made on personal computers Retailers need to provide a multi-channel experience for consumers.
  13. 13. Chinese Online Behaviour Online Spending Habits 33.8% shop online 30.5% pay online 29.1% bank online Reasons for Going Online Research Products to Buy – 45.5% Research for Work – 49.2% Stay up to date news / events 51.3% Most Popular Activities Search Engine – 76.3% Online News – 78.5% Online Music – 82.5% Online Trust Chinese online consumers display a high level of trust when it comes to conducting transactions online. There is a considerably higher level of trust for brands that use SEM than SEO. This is because the Chinese public are actively purchase only from brands they are familiar with. As the Baidu screening process for advertisers is so vigorous – the Chinese public place a high level of trust in any brand that has been granted permission to advertise. Hence the average CTR for Baidu’s SEM of 4.8%
  14. 14. China’s Ecommerce on Foreign sites
  15. 15. They shop online for a number of reasons The top 3 reasons for China online shoppers to purchase overseas are competitive prices, product quality and the scarcity of products. Source: 100EC, “2013 China online retail market insight report” Product Quality Product Scarcity Competitive price Recommended by friends More variety Better service Security Better logistics Easy to "Click & Buy" Ease of refund / return Others 21.8% 21.2% 20.3% 8.2% 6.0% 5.7% 5.5% 3.8% 2.9% 2.7% 2.0%
  16. 16. and buy different products compared to local transactions Due to the concerns in price and quality, fashion, personal care and baby products are the most in-demand product categories for overseas e-commerce Source: 100EC, “2013 China online retail market insight report” 5.8% 6.0% 7.3% 11.4% 37.8% Books and Music IT Products Household Goods Virtual Card Fashion Top 5 items purchased online by Chinese in China 7.7% 9.4% 12.6% 12.9% 16.0% Digital Products IT Products Baby Products Personal Care Fashion Top 5 items purchased online by Chinese on Overseas sites
  17. 17. 80% of them are under 35 yrs of age The majority of online shoppers in China are aged betweek 25-30 regardless of whether they shop on China based or overseas e-commerce sites. Source: 100EC, “2013 China online retail market insight report” 1.10% 6.80% 10.90% 25.30% 39.70% 15.70% 0.60% 51 and above 41-50 36-40 31-35 25-30 19-24 Under 18
  18. 18. And are more affluent Overseas shoppers tend to be more affluent than those who limit their e-commerce to China based sites. Over 80% have a monthly income between $488 - $814 USD. Source: 100EC, “2013 China online retail market insight report” 2.3% 4.0% 1.4% 15.6% 23.2% 25.3% 9.2% 3.4% 1.3% 2.3% 0.0% 20.0% 40.0% Above $8,140 $3,256 - $8,140 $1,628 - $3,256 $1,303 - $1,628 $814 - $1,303 $488 - $814 $326 - $488 $163 - $326 Below $163 No Income
  19. 19. Majority are living in Tier 1 cities but this will change over the coming period Most of the online shoppers who purchase overseas are living in Tier 1 cities in China, like Beijing (12.2%), Shanghai (13.2%), Guangzhou (14.1%), etc. Source: 100EC, “2013 China online retail market insight report” 14.1% 13.2% 12.2% 9.2% 7.2% 5.2% 4.0% 3.7% Guangdong Shanghai Beijing Jiangsu Shandong Zhejiang Fujiang Heibei However, recently a new trend has emerged that shows more and more online shoppers are coming from Tier 2 cities or below, accounting for nearly 30% of the total overseas online shoppers population.
  20. 20. Success
  21. 21. Ingredients for success Protect your brand and own it - Trademarks, Chinese language brand & domain - Block competition on search against the above Develop awareness - Display (banner & video) audience buying through RTB Build performance - Integrate SEM and Re-targeting (search and audience)
  22. 22. Register a Chinese business name Protect your brand and create a Chinese language version Search Volume Search Volume Search Volume (Monthly) (Monthly) (Monthly) 香奈儿 354,000 Chanel 141,000 迪奥 216,000 Dior 171,000 卡地亚 207,000 Cartier 72,000 路易威登 201,510 LV 516,000 Louis Vuitton 39,000 爱马仕 168,000 Hermes 54,000 阿玛尼 162,000 Armani 39,000 普拉达 87,000 Prada 252,000 范思哲 84,000 Versace 48,000 菲拉格慕 63,000 Ferragamo 27,000 万宝龙 57,000 Mont Blanc 7,200 古驰 42,000 Gucci 132,000 芬迪 36,000 Fendi 13,200 蒂芙尼 36,000 Tiffany 168,000 登喜路 28,800 Dunhill 36,000 巴黎世家 23,700 Balenciaga 13,500 梵克雅宝 23,100 Van Cleef & Arpels 5,700 蔻驰 21,600 Coach 264,000 圣罗兰 12,900 YSL 48,000 博柏利 12,000 Burberry 180,000 巴宝莉 90,000 杜嘉班纳 11,100 DOLCE&GABBANA 16,500 赛琳 5,400 Celine 66,000 Miumiu 54,000 Chloe 36,000 Loewe 20,400 Chinese Brand Name English Brand Name
  23. 23. Baidu Products
  24. 24. Baidu Product Suite • Baidu SEM • Baidu Content Network • Baidu Retargeting • Baidu Brand Zone • Baidu News • Baidu Zhidao Depending on whether you are looking to raise awareness of your brand as a pre-cursor to driving sales, or you already have brand awareness and are looking to drive revenue, Baidu has a product that meets your objective: • Baidu Mobile • Baidu Golden Ad Space • Baidu Travel • Baidu One • Baidu Video • Baidu XMO
  25. 25. SEM Baidu’s search results look very similar to Google’s. The results at the top / centre of the page are “exact matches” to the keyword that the Baidu user has typed in. Results below the red box are organic search results. The red box on the right shows “broad matches” to the keywords that the Baidu users typed in. A brand’s position on the page is influenced by their CPC (the highest bidder for the keyword appears at the top of the page) and the website quality score. The quality score refers to how relevant Baidu feels each keyword is for your client’s website. If a keyword appears many times in a website and meta data, it will have a higher quality score. If you’re the highest bidder but have a low quality score for a given keyword, you won’t be given the top paid search slot. Just like on other search platforms, Baidu don’t publish the exact algorithm that gets a site the top advertising slot. We do know however that it’s a combination of quality score and maximum keyword bid.
  26. 26. Content Network How does it work? Baidu tracks where web users go, what sites they visit, what search terms they use and what they say on social networks. The result is a very rich detailed profile that advertising clients can use, to target exactly the right audience for their products. Banner ads have an advantage over pure search results in that they can use imagery, flash, text and levels of interactivity that a website user is more likely to engage with. It’s also great for clients whose campaign objectives include extending brand awareness. The use of logos, colours and imagery will do a much better job of extending the reach of a client’s brand than search results alone. The average CTR is 2-3% but increases to 5% if retargeting is used. Baidu only charges client when their banner is selected or “clicked” so they only pay for performance. The average cost per click is only 0.20 USD on Content Network making it a great choice for clients on a limited budget. For the latest list of sites in the network – (make sure you view it on Google Chrome so you can translate the content to English) Targeting Campaigns Campaigns can be targeted by - Day Part - Sector e.g. financial sites or youth sites only - Geo targeting (regions of mainland China, major cities, Japan, rest of world) - Keywords and negative keywords - Types of sites visited recently - Search terms used in the past 2 months - Retargeting (via keywords or anyone who visited the site in the past 30 days) If your clients need to work on their brand recognition then Baidu Content Network is the right choice. Rich graphics, animation and video can be targeted to more than 600,000 sites in China, with over 80 billion daily impressions.
  27. 27. Content Network Video ads - Displayed in videos and online game while loading. Embedded ads - Available in 18 different sizes and in JPG GIF or SWF formats. Floating ads - move down the page and stay in the users line of vision. Available in 3 sizes and in JPG GIF or SWF formats.
  28. 28. Retargeting dfbadfb
  29. 29. Brand Zone How does it work? Brand Zone is Baidu’s equivalent of a home page take over. Brand Zone clients can “own” the space above the fold whenever one of their brand terms is searched on Baidu Instead of just a search listing, Brand Zone provides true brand exposure, ensuring users know who you are long before they make it to your website Best of all – Brands can also “own” their brand related keywords exclusively. No other Baidu advertiser can use their keywords. Their competitors can no longer capitalize on their brand equity There is no equivalent of this on other search engines Impressively, Brand Zone campaigns enjoy an average click through rate (CTR) of 60-80%. Compare that to the Baidu SEM average CTR of 4.8% More than half of everyone that views a Brand Zone campaign interacts with it. That’s a measurable proof of brand awareness What to expect Costs for Brand Zone are bespoke and offer a fixed price for unlimited clicks. They’re based on the volume expected for each keyword used. This is not a cheap option and hence only cost effective for blue chip brands who can expect huge traffic levels Keep in mind that Brand Zone campaigns can only use keywords owned by the brand – and they can only be used on exact match (not broad match) So if you own a hotel called Oceanside Hotel in San Francisco, you would be able to use: “Oceanside Hotel San Francisco” or “Oceanside Hotel” but not “San Fransico Hotel” or “Hotel” Brand Zone represents the best possible exposure for clients who already have a “known” brand in China. This service is generally utilised by “blue chip” clients whose brands are household names.
  30. 30. Block competition against your brand • 100% share of voice • Exclusive ‘own’ your branded keywords • Creates over 20 points of entry from a single execution • Integrates with social media • Available in rich media format • 65-90% CTR Brandzone
  31. 31. Brand Zone - Desktop This successful campaign from Burberry includes logos, videos, animated gifs, multiple product photos, latest news, deep links and social media. (Translated from Chinese using Google Translate)
  32. 32. Brand Zone - Desktop Chanel’s Brand Zone campaign includes logos, latest news results, product promotions, links to videos, their official television commercial, social media links, downloads and links to their iPhone app. (Translated from Chinese using Google Translate)
  33. 33. Brand Zone – Desktop Rolex dominates their competition with this campaign showing animated gifs and a full table of their biggest selling range for men and women. (Translated from Chinese from Google Translate)
  34. 34. Brand Zone Unfortunately they’re half way down the page surrounded by competing brands and e- commerce sites. Rolex has avoided this battle altogether. The choice to use Brand Zone has guaranteed Rolex not just the top slot but the entire area above the fold. They didn’t just beat their competition; they removed them from the platform. Compare this to one of Rolex’s key competitors Omega. Omega has chosen to concentrate on SEO rather than paid search and they’ve done a pretty good job of it. They have the third organic search spot. Meanwhile the paid search slots have been taken by Omega resellers. Omega’s official site Paid Search results
  35. 35. Brand Zone – News Portal Baidu News comes with customized ‘official news’ and ‘news module’.
  36. 36. Brand Zone – Video Portal Baidu Video comes with official HD video, business introduction and a takeover presence.
  37. 37. Brand Zone – Image Search Baidu Standard Image comes with a mega big rotating picture at the top and Baidu Advanced Image will have the first page dedicated to one brand with four big rotating pictures.
  38. 38. Brand Zone – Knowledge Portal Baidu Knowledge Portal comes with customized information and large image of the brand.
  39. 39. Brand Zone Matrix Brand Zone campaigns display on both desktop and mobile platforms as well as 4 of Baidu’s most popular internal platforms Video Search Over 120 million in daily traffic Mobile Keyword Search Over 40% of Baidu’s audience Desktop Keyword Search Image Search China’s biggest image search with over 250 million daily users News Search China’s biggest news search platform Baidu Knowledge Zhidao - China’s biggest knowledge portal (Yahoo Answers) BRAND ZONE
  40. 40. China Search International Overview We are Baidu’s International Partner, not an agency. That means our business model does not rely on charging management fees. In fact – the only charge you or your clients will ever see from us is a 2.5% processing fee to cover our banking and foreign exchange fees. In essence we are paid by Baidu to sell Baidu. With offices in Singapore, San Francisco, Sydney and London we’ve guided hundred of clients through the complex Baidu processes. We’ve all worked previously at major brands / agencies in the UK, USA and Australia so we understand your requirements and the importance of managing your client’s expectations. The result is that we’re well placed to help your clients launch on Baidu in the most cost effective and hassle free way. Some of our more well known clients We are Baidu’s International Partner. Our clients are predominantly international companies looking to capitlise on opportunities in China.
  41. 41. How is Baidu different? Baidu is pre-pay It works a little like a pre pay mobile phone. Clients add funds to their accounts and their campaigns run until those funds run out. They can add a top up at any time. Everything is in Simplified Chinese We see an 85% drop off rate whenever Baidu users see a page in English. As a minimum clients should commit to a Chinese language landing page. It takes time to open an account It takes approximately 1 week to open a new account once Baidu have all the necessary documentation from your clients. During this time they are checking that the business is legitimate. Opening accounts in restricted industries such as pharmaceuticals, finance and the medical industry can take significantly longer. No Agency accounts Unlike Google, there’s no concept of an agency account on Baidu. That means that every client (in fact every domain) must have a separate Baidu account and be individually approved by Baidu. It is however agencies are using a bid management tool, it is possible to continue managing accounts in the same way. Baidu can provide an API to their platform to allow your accounts to be managed seamlessly. What works on Google won’t necessarily work on Baidu It’s not just a matter of language. The Chinese search in a very different way to Western cultures. You need more than just translation, you need localisation by SEM experts. Baidu doesn’t operate like other search platforms. Here’s some of the key differences.
  42. 42. Our Free Services • Translation of all documents for submission to Baidu • Facilitation of the account opening process • Provision of bespoke keyword lists where required • Translation and volume checking of keywords • Provision and / or translation of ad copy • Loading of keywords into the client’s Baidu account ready for launch • Bid Management API application on the client’s behalf • Full training on how to manage accounts on Baidu (use of the Baidu console) • Issuing of invoices in the client’s preferred currency and transferring of funds into the client’s Baidu account. • Provision of research decks on relevant sectors and updates in the Chinese market • Pitch Support (provision of keyword proposals, research and recommendations) CSI are not an agency. Our role is to help International companies to launch on Baidu.
  43. 43. Getting in Touch Should you have additional questions, please don’t hesitate to get in touch: Matt Brown Sales Director EMEA +44 7900 692149