BEIJING: Just two companies accounted for almost half of online advertising services in China in 2013, a market worth 100bn yuan and growing at 37% a year.
Figures from research firms EnfoDesk and Analysys International, published in the Seasonal Survey of China Online Ads Market in Q4, 2013, showed that Baidu (31.4%) and Alibaba (17.5%) dominated the sector.
For the market leader, the report noted that there was widespread acceptance among advertisers of keyword marketing, while Baidu had also gained a competitive advantage through its brand and technical innovations.
Alibaba's share had improved, partly because of the increased promotions on its ecommerce sites during the festivals falling in the fourth quarter. But the report also said advertisers were increasingly moving into the RTB market, where Alibaba was stronger.
Google China was far behind these two with a share of 5.7%. After quitting the Chinese search market in 2010, the company operated largely as an overseas marketing channel for advertisers although it was now targeting the RTB and mobile markets.
The report further identified a cluster of five portal groups – Tencent, Sohu, Sina, Phoenix New Media and NetEase – which together accounted for 15.1% of the online advertising market and which had experienced rapid growth in the final quarter of 2014.
These had benefited from their ability to leverage non-traditional forms of advertising such as online video, social networking and entertainment.
Tencent, for example, was able to exploit the marketing value of its QQ instant messenger and Tecent Weibo microblogging services, while Phoenix New Media's growth was founded on video services.
Breaking down the online advertising formats, keyword search accounted for 37.9% of total revenues, followed by brand images/text with 24.6%, video with 22.1% and e-mail with 0.8%.
The report further noted that real estate and automobile had become mainstream verticals, while there were opportunities to develop games, health care and education along the same lines.
Data sourced from Analysys International; additional content by Warc staff