Following the scandal, Baidu’s CEO Robin Li wrote an internal memo to all employees. Robin states, “The anger of these users is a more serious crisis than anything Baidu has faced before… “[Baidu] needs to reexamine the business models of every single Baidu product, determine whether it has influenced the user experience, and thoroughly reform anything that doesn’t respect the user experience.”
While the company is facing public outrage and under legal investigation, on May 23, 2016, Baidu suddenly announced on its official Weibo account with a simple message that they would cut the ads on the right-hand side; furthermore, they would reduce the number of paid ads that appear in search results. Now, only up to 4 ads in total are allowed to appear throughout the page, including ads on the top and bottom of the page.
Before the change:
search term: Chicago Hotel
After the change:
This sudden announcement has caught many advertisers off guard, especially those who measure success by impressions rather than conversions or revenue.
How Does This Change in Baidu Search Ads Impact Advertisers?
1. Higher bidding competition
This change will have more impact on small business than the larger brands. Smaller brands are recommended to stay focused on high converting keywords. However, big brands still need to pay attention to ad position, preventing others to bid higher and take over the position.
2. Higher quality landing pages
Since there are now fewer paid ads showing, it is important for brands to keep a high brand profile to maintain their customer database and attract more customers, and highly performing landing pages to optimize conversion path. Again, small- to medium-sized companies would pay more to achieve this goal.
3. Increased SEO optimization
With only 4 ads showing on Baidu’s search results page, other ads with lower positions will disappear from the ads section. Meanwhile, related search results will show throughout the page and likely rank on the second or third page. Therefore, SEO will certainly play a more prominent role as more conversions would come through organic search and advertisers will fight harder to get their landing pages to rank on the first page.
4. Additional opportunities for other Baidu advertising channels
Since paid search is much more limited on Baidu’s search engine, brands can consider reallocating their advertising budget to better utilize other channels. There are numerous other offerings within Baidu’s product range, including Baidu PostBar (similar to Reddit), Baidu Wiki, Baidu’s Quora (similar to Yahoo Answers), Baidu-owned video platform iQiYi, and Baidu Shangmao for B2B advertising. Brands can also expand their content marketing strategy to advertise on social media platforms and leverage working with influencers and Key Opinion Leaders.
The Impact on Baidu
The direct consequence of this ad restriction on Baidu’s side is revenue loss. On the other hand, what Baidu will benefit from is that instead of showing multiple ads across the screen, showing just a few quality ads will provide a better user experience overall.
Baidu, as the leading Chinese search engine, has acquired 80% of market share in China. It is the first digital platform to turn on if you want to target audience in Mainland China. Sheng Li Digital offers extensive Baidu advertising expertise and we can help your brand to cope with the change. Contact us now to learn how your brand can advertise on Baidu.