So to find out more about the potential opportunity for European brands trying to gain a foothold in China, I spoke to CharmClick general manager Johnny Zhu and Net Media Planet founder Sri Sharma.
For more details about Baidu, check out Econsultancy CEO Ashley Friedlein’s blog post on digital marketing and ecommerce in China and keep an eye out for our new Baidu Best Practice Guide which is due for publication in May…
First of all, how big is the opportunity for European companies in China?
There is great potential for European companies as China is such a huge economy and with a massive online population. Internet penetration is only at 42%, but we still have more than 500 million people online.
And even though many UK businesses don’t have Chinese websites or offline stores, we still see that Chinese people search for brands such as ASOS and Mulberry using Baidu.
So these brands really need to have a local presence, no matter whether their landing page is in Chinese or English, because people really want to find them. It’s a great opportunity for brands to test whether the market is big enough for them to warrant setting up a local entity.
Baidu already lists UK companies if you search for them using brand terms, so what would these businesses benefit from bidding on their own brand terms? Would it not be better to bid for product terms?
In natural search you can’t change the content or the landing page easily, and if you have new products or promotions then you need to deliver the correct message to your customers using paid search.
Also, Chinese consumers want to know more detail about UK cosmetic and apparel brands, so you can provide answers to these questions using paid search.
Another point to note is that in Baidu you can have your brand logo in paid search results, which is different form Google and is quite appealing as it catches the customer’s eye.
It’s similar in some ways to Google’s PLAs, which achieve more clicks than standard ads.
Another point is that in Baidu you can buy different display units, one of which is called Brand Zone that allows you to communicate more of your message and takes up more space, which means you get more exposure than you would from a standard ad format.
But on the point about the opportunity for brands in China, on the one hand you’ve got these brands that are international and want to maximise the opportunity that exists there or they want to grow even bigger.
Another category is brands that have aspirations to grow in that part of the world and they want to take market share, but first they have to grow their brand in the region by using things like display, paid search, SEO and wider activity.
So paid search is one way of learning and testing, and being quite nimble about how they do it.
And thinking about the sectors that this applies to, it’s certainly an opportunity for fashion retailers, universities targeting international students, travel companies and auto brands hoping to sell more cars in Asia.
So if a brand has tested the water and knows there is a market there for them, what is the next step? How should they go about creating a Chinese version of their site?
From my experience it depends on a couple of factors. If a brand has got some awareness in that market it could immediately start converting even from an English language site.
That’s the case for ASOS and that’s been our experience with brands in other parts of the world.
For example, Paul’s Boutique is active in the Middle East and Europe and is converting profitably even though the site is in GBP and English language.
Then the next evolution is to try and evolve that into the local languages.
But if you don’t have any presence in your target market then you need to think about localising and creating a competitive edge by differentiating your brand from others in the region.
And when it comes to translation, I would say that in a market like China you would want to work with local experts. One reason for that is that if you have a complex brand name like Marks & Spencer, which is quite complex to write in Chinese, then you need to identify the different variations that people are going to use when searching for your brand.
And then when you do SEO you need to be thinking about optimising your site for those terms.
So it’s better to work with a Chinese organisation that can properly translate your site for a local market, rather than a UK company that perhaps doesn’t have the same local knowledge.
On that SEO point, are the basics of SEO for Baidu the same as for Google?
It’s different in some ways, although most of the major factors – such as linking and content – are the same.
But if you compare the results you will see that Google always ranks the high PageRank sites on the first page, but Baidu focuses more on the latest content and user behaviour.
So the age of the content is sometimes more important that the site quality itself, so sites with new content will appear higher in the rankings.
Also, in China if you search a keyword and click a result then the link opens in a pop-up window, so the search results are always there in the background.
This encourages users to click more search results, but at a certain point they will stop. So Baidu tries to learn from the user’s activity to work out which page most closely matches the user’s request based on when they stop clicking.
This then feeds into the algorithm and is used to improve the organic search rankings.
Google uses a self-serve model for its paid search. How does Baidu differ?
I worked for Google in the past and globally they only have two sales channels – online self-service and a direct sales team that provides some of the services for the key accounts.
But in China they offer a resale option and 90% of key accounts sign with agencies due to the complexity of the search engine algorithm.
And for European businesses, most of the keywords that they are bidding on will be in Chinese, so these businesses need help from agencies to help translate proposals, reporting and new creatives.
So we’re not just acting as a resale agent, but we’re also providing them with a full service for translations of the keywords and creative, and providing an operational contact in English to meet the requests.
How does the level of investment required for paid search on Baidu compare to a similar campaign on Google?
Even for Google the UK is the most expensive country for CPC. I remember five years ago I was told bids for certain keywords in the legal industry went up to around £100.
So compared to markets like the UK or Germany, CPC is much cheaper in China.
On average the CPC will be £0.10 to £0.20, though obviously there is some variation between industries.
One of the big changes recently for Google was the unveiling of Enhanced Campaigns. Does it work on a similar basis with Baidu or is mobile dealt with entirely separately?
Baidu has more than 80% of the mobile search market in China, but the ad formats are different from the web search results.
Previously Baidu didn’t have an independent facility to optimise mobile campaigns, but now they allow clients to set up separate campaigns for desktop and mobile so we can keep track of the different conversions and CPCs.
Baidu actually has around 20 different types of ad types, but 90% of the revenue comes from three of four ad formats.
So for local UK and Irish customers we’ll only introduce these three or four formats as we don’t want to confuse them, plus these are the most effective ads.