Despite having the largest online population in the world, China has long been an enigma to companies looking to establish a strong presence in this key market. Even major players such as Facebook, Google and Amazon have failed to make an impact, or are not permitted to provide their services at all. However, with the population continuing to grow and mobile commerce virtually ubiquitous, now is the best time to invest in digital marketing – particularly on Baidu, the nation’s most popular search engine. This white paper is designed to offer insights into this market and its huge potential for companies large and small.
China: the world’s largest online populatioN
The online Chinese population is growing at a staggering rate: with one in five internet users living in China, this equates to an online population two and a half times that of the USA and ten times that of Germany. In 2017 alone, China was responsible for increasing the global internet community by 40.7 million users, bringing the country’s total to 772 million – 97.5% of whom access the internet exclusively via mobile devices. Furthermore, this number is likely to grow, as the number of people online represents only 55.8% of China’s population overall.
China | The Largest Market for E-Commerce
With such a huge population, it stands to reason that China is by far the world’s largest market for e-commerce. More and more consumers are embracing the possibilities of online shopping, leading to the USD 1 trillion e-commerce barrier being broken for the first time in 2017. On Singles’ Day 2018, for example, consumers spent more than USD 30.8 billion – nearly triple the amount generated in 2017 during Black Friday and Cyber Monday combined.
Single's Day | Record Breaking Revenue
- Singles’ Day originated among university students in the early 1990s as a response to Valentine’s Day.
- Companies gradually embraced the idea, with Alibaba using Singles’ Day as a platform from which to promote and sell their 2009 winter coats with great success.
- This strategy continued to pay off massively during the 2018 iteration, with Alibaba making an astonishing USD 1 billion in the first minute and 25 seconds – a world record in retail.
- Overall, it took just 14 hours, 48 minutes and 51 seconds for the company to surpass its 2017 Singles’ Day earnings of USD 25.3 billion.
These developments are not localized in urban centers, either: rural areas have seen a 39% increase in online shopping. And more growth is yet to come. According to a recent study by McKinsey, the number of Chinese millionaires is set to surpass that of any other nation by 2018, and China is on track to have the most affluent households in the world by 2021. Beijing, the country’s capital, has already been dubbed the ‘Billionaire Capital of the World’. The study also predicts that Chinese consumers will spend USD 432 billion on luxury goods – accounting for half of the global market – every year by 2025.
China’s rapidly growing middle and upper class will therefore continue to drive demand for quality foreign goods and prestigious brands. In other words, foreign companies now have a golden opportunity to cement their products and services in the minds of Chinese consumers and establish themselves as the number-one choice in this lucrative market.
In Brief: Opportunities and Challenges in China
Gaining access to the world’s largest e-commerce market
Satisfying the high online demand for western brands
Using performance data to monitor and measure results
Benefitting from high flexibility in terms of media spend and targeting
Seizing advertising opportunities that can be tailored to different platforms
Dealing with comparatively complex administrative documents and procedures
Ensuring continuous protection of trademarks and monitoring of markets necessary to safeguard advantages and stay competitive
Carefully localizing advertising strategies and methods to attract a consumer base which is not the same as in the West
Meet Baidu | THE GOOGLE OF CHINA
Known as the Google of China, Baidu is the country’s most widely used search engine. But the comparison doesn’t tell the whole story. Worldwide, Google processes 3.5 billion searches daily, and has a market share of just 2% in China. Meanwhile, Baidu processes5 billion queries for its users in China each day, which equates to 80% of the nation’s mobile search queries and 60% of desktop queries.
Compared to other search engines like Google, Baidu has multiple distinct advantages and offers various features designed to help companies and brands raise brand awareness, increase online sales and target specific user groups. Baidu actively works to develop an in-depth understanding of local Chinese language and culture, thereby providing it with a strong basis from which to tailor its search technology to the needs of local users. What’s more, Baidu’s search algorithms prioritize the context in which words are used – especially important given that Mandarin and Cantonese are highly complex languages whose words and phrases have multiple meanings. These are all strategies that other search engines have thus far failed to implement, enabling Baidu to establish a quasi monopoly in the Chinese market.
Search Engine Advertising
If a business wants to make inroads into the Chinese online market, search engine advertising with Baidu is essential. The search engine has tools in the form of performance-based advertising formats and search text ads designed to reach millions of users.
The main priority for any company is to ensure it is at the top of the list when a customer scrolls through the search engine results page (SERP), which is where ad optimization and the use of keywords comes in. A pay-per-click (PPC) system applies to Baidu’s search engine advertisements.
Aside from traditional search ads, which are displayed when users actively look for information, Baidu offers a specific in-feed advertising service that allows companies to display ads in the Baidu mobile app browser and forum alongside related products, brands and search terms. This feature has an especially wide reach, as more than 100 million consumers per day view these in-feed ads, with various display formats including picture, gif, and video formats
To obtain the maximum return here, it is essential to use keyword targeting effectively and display them in forums frequented by the right target audience (as indicated by their interests and search histories). Meanwhile, the Baidu app is designed to keep users online by offering a range of content, including a search engine, news, maps, social functions and the ability to share articles, which maximizes the chance that an ad will be seen by the right audience.
Image Search Advertising
A picture is worth a thousand words: It comes as little surprise, then, that Baidu users perform 800 million image searches per day via desktop and 1.5 billion via mobile. In response, the search engine developed Baidu Image Search Ad, a unique format designed to reach these users. When a company applies the right keyword targeting strategy, they can bring their own images to the top of the pile.
And it works: automotive giants make sure their new models appear first when Baidu users perform image searches for cars. Moreover, Mercedes-Benz uses the service to showcase their latest models with customized layout at premium position when people are searching for their car image.
It's quick, efficient and highly effective.
Brands are synonymous with quality and credibility, and reflect a company’s history and its mission. Chinese consumers understand this, which is why their appetite for trusted and prestigious brands is growing rapidly. Companies with strong brands need to make sure they are in contention when a customer decides on a brand for the first time. According to the report by McKinsey, “While affluent Chinese consumers might purchase a brand they did not initially consider, wealthy Chinese are unlikely to purchase luxury goods that don’t fall within the two brands they consider top of mind.” In other words, it is essential for a brand to position itself as the best choice if it is to receive the right amount of attention in the Chinese market.
Baidu Brand Zone is a feature allowing brands to advertise above the listings shown on a SERP. This space is set aside for the company’s own “brand zone”, a simplified version of its regular website that offers users a shortcut to quality content they are interested in. User interest in Brand Zone can be especially lucrative, as reflected by the high click-through rate of 40% to 60%. As an example, Miele’s Brand Zone ad campaign displays its most popular products above the rest of the search results. At the same time, a banner on the right promotes Miele’s latest sales promotions along with a store locator and links to online shops.
Opening an Account
Opening an account with Baidu usually takes three to four weeks for non-Chinese companies. They do not have to be registered as a legal entity in China to open an advertiser account on Baidu; however, to prevent internet fraud, companies applying for an account are required to provide documents to prove their legitimacy as a business.
The following proof may be required (but it is different for every company):
- Business licenses
- Bank account confirmation letter
A B2B company that produces laboratory equipment wanted to boost the visibility of its products on Baidu, and called in Webrepublic’s in-house Baidu expert to help set up and run a systematically structured Baidu account. After just eight weeks of being up and running, the company’s Baidu campaign activities resulted in:
- 200% more sessions
- 270% more new users
- 150% more contact form submissions
Overall, the company’s Baidu campaign generated 73% of the traffic for its Chinese website.
A luxury brand seeking to target the 705 million people who travel within China during the country’s ‘Golden Week’ holiday seasons (Chinese New Year and National Day) – and who spend USD 85 billion per year in the process – sought the expertise of Webrepublic’s in-house Chinese expert to raise awareness and generate website traffic on Baidu. Using PPC and in-feed ads, the brand targeted Chinese consumers before, during and after their travels.
Over the October Golden Week, Webrepublic’s campaign increased month-on-month website traffic by 89% and generated 685% month-on-month micro conversions (i.e. store locator clicks).
Comprising 25% of the global online population at present, the Chinese online market is continuing to grow briskly. This is a consumer base that conducts the majority of its transactions online and has a penchant for prestigious Western brands, making it the perfect time to promote your company’s products and services, boost your visibility and take full advantage of sales opportunities – especially before your competitors decide to get involved.
As a key benefit, Baidu provides companies with effective advertising formats that target exactly the right customers via exactly the right channels, and adapt as this market continues to evolve.
Want to stay ahead of the competition and carve out your niche in the Chinese market? If so, get in touch with us. To get you started, our certified Baidu experts will open your Baidu account, plan and implement test campaigns, collect and evaluate performance data and conduct market analyses. Together, we will help you make your company a success in China.
Don’t wait until tomorrow – embrace the Chinese market today.