China Marketing Blog

What Is The State Of Mobile Search In China?

Misha Maruma — Tue, 10/21/2014 - 13:09

Man holding a mobile phone

Chinese netizens are slowly moving from desktop search to mobile search. There’s no real debate about that.

What Chinese marketers are currently grappling with is how to invest in a marketing mix that gives netizens what they need on mobile, delivering the right search results and content in a consistent format.

Desktop search remains a favourite among marketers because of its deep consumer behaviour history. Paid search traffic turns into sales more often on desktop than it does on mobile. 

The problem is proving that a mobile activity, conducted without the tracking capability of desktop cookies, contributed to an eventual sale and, thus, how it factors into ROI.

With a mobile revolution under way, desktop search is finding it harder to be the centre of the customer journey. Intercepting consumers at various times on various devices, it’s more frequently mobile devices that catch consumer’s attention first.

Matching up mobile, tablet and desktop activity so that advertisers can establish best practices remains a work in progress.

 

Desktop search in China

To get an understanding of search in general in China let’s first look at search on desktop. Without a doubt Baidu is the dominant force of search in China. The search giant receives over six billion search requests per day. According to the company, it has 83% market share in the Chinese desktop search market.

Data from CNZZ, which analyses the Chinese search market, suggests that Baidu has 54% of the search engine market in China. The data that CNZZ collects is for a search engine’s share of desktop PC page-views in China.

Data from CNZZ does not cover mobile search so there’s no adequate information on the web for market share just on mobile.

But as I alluded to earlier Chinese marketers favour desktop search because paid search traffic turns into sales. Last year, Baidu generated US$5.12 billion in revenue. According to iResearch in 2013 China mobile search revenue totalled over US$700 million. The same report suggested that mobile internet revenue totalled over US$17 billion.

 

Mobile search in China

These figures are one reason Baidu has aggressively invested in mobile search. In June this year monthly active users (MAU) of its mobile search service grew to over 500 million people. The mobile Baidu app reached 70 million daily active users (DAU).

A lot of this growth has been attributed to a recently redesigned mobile search homepage, as well as to new content partnerships that result in more embedded information available at a glance in search results.

Baidu search page

Baidu saw a 34% rise in Q2 profits as the Chinese Internet giant's bet on mobile services started to pay off. Baidu's revenue from mobile services, including search and mapping, reached 30% of total-company revenue for the first time.

The other reason Baidu has invested so much in mobile search is because of major competition in China. 

Alibaba, the huge e-commerce company, has invested in mobile by buying mobile browser company UCWeb. They launched a mobile search engine aimed at challenging rivals Baidu and Tencent known as Shenma (sm.cn). The penetration rate of Shenma in China’s mobile search market has already reached 20%.

Shenma search page

There is a Shenma app, which works in the same way as other search engine apps such as Google or Baidu. The search engine is also available through a mobile browser on your phone (see image above).

UCWeb makes a popular internet browser for smartphones with more than 400 million users worldwide. Shenma comes as the standard search engine on this browser. Shenma will make it more convenient for mobile users who want more precise searches instead of scrolling through pages and pages of results on a mobile screen. 

Alibaba has also invested in US-based app search engine Quixey. It will be the standard search engine on Alibaba’s YunOS, the company’s Android OS that comes installed on many phones in China.

But when it comes to mobile internet in general, and indeed monetizing it, Tencent seems to be the market leader with their massively popular mobile social app WeChat having 355 MAU. Tencent also have a strong mobile presence with the popular QQ IM app.

Where Tencent has struggled has been search but the company merged its own search Service, Soso, with Sogou after it bought a stake in the search service provided by internet company Sohu.

Sogou search page

Similar to Shenma there is a web browser search service as well as an app, which has tied together Tencent’s various services. Tencent also has a web browser called One browser that is only available on Android OS.

 

Current mobile use in China

Mobile search users are very different from desktop search users. Indeed data from CNNIC's latest report into the state of the internet in China suggests exactly this.

Firstly the report makes clear that the proportion of mobile users among all netizens is rising. Mobile users now stand at 83.4% up from 81% at the end of 2013. In total there are 527 million mobile users in China.

Chart: Proportion of Mobile Users Amongst Chinese Netizens

The use of smartphones has also greatly impacted what netizens now do online. There is no doubt that mobile usage has impacted on traditional desktop usage a lot.

The conundrum this poses in relation to online advertising is very interesting. The graph below reveals netizen attitudes to mobile ads. The first bar chart shows that at the end of April 2013 51.9% of netizens didn’t notice ads on mobile. By June 2014 this had dropped to 31.9%.

The other charts show that active clicks on mobile ads are still low. Only 6.9% of netizens actively clicked a mobile ad when they noticed it up from 4.5%.  But 35.1% have not actively clicked a mobile ad at all. 

Chart: Chinese Netizens Clicking Mobile Ads

The increase in netizens awareness of mobile ads may account for the improvement of mobile ads’ effect. Some contributing factors are possibly that on one hand, the increase in mobile phone use directly leads to a rise in ads display and therefore reach. On the other hand, the improvement of ads’ accuracy, which is based on a deeper analysis of target clients, has drawn people’s attention.

But as I pointed out active clicks of mobile ads are still relatively small, so Chinese marketers should attempt to address how to make target consumers see mobile ads to improve click through rates.

Chart: Penetration Rates of Mobile and Desktop in Different Search Engines

The graphic above reflects penetration rates of mobile and desktop in different search engines i.e. traditional search engines, shopping search engines, weibo search, social platform search etc. 

Mobile penetrations are higher than desktop penetration in all kinds of search engines, except for comprehensive search sites such as Baidu. Also, as a new method for searching, QR-codes are widely used by people when searching on mobiles.

When trying to develop an understanding of the differences between desktop and mobile search in China marketers need to consider the different demands of users. 

Desktop search links users with information. The searches that people perform on a desktop can be considered search 1.0, or the old way of static searching for information in a fixed location. 

Mobile search needs to connect people with services. Mobile users continue to make calls or visit a physical store as they are more likely to be on the move. Mobile search results need to factor in location and exact time to better return results that a mobile user will find useful.

The graph below sums this last need for mobile search up nicely. The graphic shows desktop and mobile usage in different cases. Since hot topics, travelling information and local transport information etc. all have the characteristic of mobility and immediacy, so users have more demand in searching for such information on mobile.

Chart: Mobile and Desktop Usage for Searching for Different Information

 

The future of mobile search

Mobile search may be the future, but desktop search remains a heavyweight for marketers in western markets. In China I’d venture to say that mobile search is the dominant method amongst netizens.

Thanks to a sizable advantage in conversion metrics, the desktop promises to be a key player throughout this decade in western markets, but I’d argue against that in China.

The biggest problem to seeing mass market adoption of advertising on mobile is the fact that collecting the data to enhance conversion rates is so tough. As I’ve shown mobile is a fragmented market in China.

Because of the open market with no one player dominating mobile search in China, unlike in the West, there is fierce competition amongst the big three players.

At this stage it seems as if Baidu will hold its hegemony, but Alibaba are becoming very strong and you wouldn’t bet against the company dominating mobile internet in China in the future. 

Saying that, Tencent are so strong in the mobile arena with their stable of IM apps and social networks. The company has invested in search, but have mainly monetized through gaming and e-commerce as opposed to mobile advertising.

What Chinese users want is a tool they can use to download content, while western users want a tool they can use to manage whatever content they already have. This is a fundamental difference that leaves opportunities for Chinese internet firms to still fight for.

 

Cover image credit: businessinsider.com

 

What are your thoughts on the state of mobile advertising in China? Please leave a comment or question below.

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