[photopress:baidu_1.jpg,full,alignright]A survey of China’s on-line search market shows that Nasdaq-listed Baidu has reinforced its dominance in China with an increase of more than 10 percent in market share in one year.
A report in China Youth Daily said the survey showed the market share of Baidu had risen sharply over the past year to 62.1 percent, leaving main rival Google far behind at 25.3 percent.
However, the report also cited a research finding that Baidu seemed to be more popular with students, while Google was favored by China’s white-collar classes.
But all is not sweetness and light at Baidu.
Earlier this year, Analysys International, an IT research firm, started to notice that the number of click-throughs from keywords on Baidu.com was soaring without any corresponding increase in actual business for the company. In April alone, Analysys went through one third of its yearly online marketing budget.
Analysys conducted a survey of 2,000 Chinese online advertisers and found that one-third believed they had been victims of click fraud.
Analysys has stopped buying keywords from Baidu.
It gets worse. Dr. Liu Wenhua is the director of the Beijing Zhongbei Cancer Medical Research Center. In August he led a small demonstration in front of Baidu’s headquarters in the capital, protesting alleged click fraud.
Dr. Liu claims that his center suffered from fraudulent clicks that came from a Baidu-affiliated site about music and entertainment. According to Dr. Liu, Baidu offered to refund him his money, but he refused their offer and has taken Baidu to court.
Representing Dr. Liu is Zhang Xinwei, a partner with the Beijing Hetong law office who says that he has four other clients who also are suing Baidu. He said, ‘The problem is very serious.’ Another plaintiff against Baidu is a Beijing travel agency specializing in trips to Canada called Land of Maples Tourism and Culture Exchange.
A Baidu spokeswoman e-mailed a statement explaining the company’s policy regarding click fraud. The statement said, ‘Baidu places the highest priority on preventing fraudulent clicks. We have set up numerous measures both through automated technology and manual efforts to prevent fraudulent clicks and the effectiveness of which [has] been verified by [an] independent third party. We believe our anti-fraudulent clicks measures have been working quite effectively.’
It will be hard for Baidu to nail this down. In the US, Google deals directly with customers. In China Baidu relies on third-party distributors that employ armies of salespeople to drum up business.
Baidu uses 200 different distributors, which in turn often farm out the work to others. The distributors are pushed to deliver revenue. There is a temptation to fake clicks. Baidu is playing it down but it is plainly a serious problem.
Source: Business Week