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CCTV Expose Targets Baidu for Fraudulent Paid Search Ads

China Daily, 8/16/11

A news expose on China's national broadcaster CCTV's finance channel CCTV-2 yesterday evening alleged that Chinese internet company Baidu's (Nasdaq: BIDU) Phoenix Nest search advertising platform had a number of loopholes allowing scam websites to place search ads on Baidu targeting Chinese users.

CCTV-2 claimed that Baidu customer service personnel were assisting companies in applying to join the Phoenix Nest system using fraudulent credentials. Products from the weight loss, pharmaceutical, and other heavily regulated industries were easily able to pass the Baidu auditing system and have their advertisements placed online via the Phoenix Nest system.

Editor's Note: CCTV-2 also claimed that current search results generated by Phoenix Nest are not substantially different from those under Baidu's previous paid search ranking system Baidu Classic. Aside from right-hand column advertisements, paid search ranking ads still appeared above natural search results in the left-hand column as before, only now with the words "advertising link" displayed in small print below each search ad.

Keywords: online advertising scandal Internet scam Phoenix Nest Baidu CCTV-2 CCTV BIDU search advertising online search

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