Baidu targets more ad revenue

16 December 2010

BEIJING: Baidu is investing in ecommerce and online video to boost ad spend among clients, an executive at the Chinese search engine has said.

The firm recently struck deals with ecommerce specialists Rakuten and, and has also linked up with Providence Equity to launch a service that provides online video.

Speaking at the Reuters China Investment Summit, Haoyu Shen, Baidu's senior vice president of business operations, said the agreements could boost ad spending among Baidu's clients.

"[Spending is] growing very fast; it's already meaningful," he said.

"I hear people saying for Google it is 30 to 40 percent of their revenue, but for Baidu it is not that big... eventually it might grow to that level."

Baidu has a market penetration of around 73% among China's 420 million online users, and has enjoyed dramatic growth rates in the past few years.

Official figures from October 2010 showed a doubling in third-quarter net profits and a near-doubling of revenue.

But Shen said next year will be far more challenging.

Citing the rebound in the Chinese economy, the switchover to its new keyword advertising system and Google's scaling down in China, he added that such growth "most likely won't repeat itself next year." 

Baidu shares have soared by more than 160% during 2010, most notably when Google threatened to shut down its China search page due to a dispute over web censorship.

Shen believes that the so-called Google effect had resulted in a temporary boost in traffic for the Chinese search engine earlier in the year, and that this boost is now largely over.

Data sourced from Reuters; additional content by Warc staff