March 30, 2006, 12:00 AM

Chinese search engine industry faces slow growth

China’s search engine market will experience a sharp slowdown in growth in the next 18 months, due to small and mid-size advertisers’ dissatisfaction with the engines, according to Analysys International, a market research firm.

Paul Demery

Managing Editor, B2B E-commerce

 

China’s search engine market will experience a sharp slowdown in growth in the next 18 months, due to small and mid-size advertisers’ dissatisfaction with the engines, according to Analysys International, a market research firm.

“The actual performance of search engines is far from people’s high expectations,” said Edward Yu, CEO. “Poor user experience, unstable advertising effects and some irregular channel operations make the small and midsize enterprise customers of search engines suspicious of this new kind of advertising.”

In 2005, advertising revenue from search engines reached RMB 950 million ($118 million) in China, a 79% increase from 2004, and accounted for 32.2% of the total online advertising market, according to Analysys.

Only 20% of search engine advertisers obtained results that exceeded their expectations, Analysys found, while 29% didn’t get the results they were expecting and were considering reducing or suspending their search engine marketing.

Because search engine marketing is in the early stages in China, search engines still don’t understand exactly what users want, creating an unsatisfactory experience that leads to low brand loyalty, Yu said. More than 46% of users turn to other search engines or portal web sites when they don’t find what they want with a search engine, Analysys said.

About 100 million Internet users use search engines at least once a week in China, accounting for 84% of the total Chinese Internet user base, Analysys said.

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