Baidu CFO Responds to Keyword Price Inflation
Shanghai Morning Post, 4/13/10
Speaking in response to increased prices for a portion of keywords on Chinese search engine Baidu (Nasdaq: BIDU), CFO Jennifer Li has said that the prices for some keywords have indeed increased, but that increases across certain industries do not reflect an overall price increase.
Li said that the number of advertisers fell following Baidu's switch to its Phoenix Nest search advertising platform, but that these numbers have already recovered, and that advertisers are now placing an increasing volume of ads.
According to statistics released by Beijing-based search engine marketing company AdSage, prices for popular keywords on Baidu increased following the switch to Phoenix Nest. Prices for popular keywords in the gaming industry have risen as much as 800%, and hot real estate industry keywords have also seen rapid price inflation.
Lei Peng, senior vice president at AdSage, said that though keyword prices have increased, advertisement conversion rates have seen corresponding increases thanks to the new advertising system's increased accuracy, so ROI for advertisers has not dropped.
A Baidu customer service representative said that fees for opening an account on the Phoenix Nest platform vary by cities, with customers in first-tier cities such as Beijing and Shanghai paying RMB 5,600, while customers in second-tier cities such as Chengdu pay RMB 5,000. The representative said they had not been notified of an increase in these fees.
Opening an advertiser account on Netease's (Nasdaq: NTES) Youdao search engine or Sohu's (Nasdaq: SOHU) Sogou search engine costs RMB 3,600 (which includes an RMB 600 service fee). To open an advertiser account on Tencent's (0700.HK) Soso search engine costs RMB 2,000.
Editor's Note: Baidu's minimum fee for opening an account, RMB 5,600, includes a RMB 600 service fee, while the remaining RMB 5,000 serves as a deposit against future cost-per-click advertising fees. After one year from the date the account is opened, advertisers must also pay Baidu an additional RMB 600 annual service fee. Similarly, the RMB 3,600 minimum fee to open an account on Youdao or Sogou includes a RMB 600 service fee, plus RMB 3,000 as a deposit against future cost-per-click advertising fees. In contrast, Soso is currently not charging any service fee, so the full RMB 2,000 minimum charged by Soso to open an account can be used toward cost-per-click fees.
Keywords: online advertising AdSage Lei Peng Jennifer Li Netease Internet Phoenix Nest Baidu Sogou Soso Youdao Tencent Sohu 0700.HK BIDU NTES pricing online search
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