Google has signed a search, news, and advertising deal with leading Chinese web portal Sina.com, a agreement that will boost the U.S. company’s presence in China.
The deal will give Google access to massive amounts of Chinese web traffic and help Sina generate greater revenue from its legion of users. Shanghai-based Sina claims the highest web traffic in China, though some argue that Tencent’s QQ.com instant messaging-based property is larger, according to William Bao Bean, a partner at Softbank China and India Holdings.
Google has pushed hard to penetrate China, but its Chinese search engine lags behind leader Baidu.com, with 21.7 percent of the market compared to Baidu’s 55 percent in April figures from iResearch.
And despite claiming to be the top destination for China’s 144 million Internet users, Sina accounted for a mere 1 percent of the revenue generated in the Chinese search market in the first quarter. That compared with Baidu’s 57 percent, Google’s 19 percent and Yahoo’s 14 percent, according to China-based Analysys International.
“Google’s got a strong offering in China but lacks traffic,” said Mr. Bean. “On the Sina side, they’ve got a lot of traffic but need to better monetize it. Google can better monetize that traffic.”
Portals generate greater advertising revenue than search engines in China, according to Tony Fu, Research Director for the Data Center of the Chinese Internet.
However, Mr. Fu reportedly said in a recent talk in Xiamen, China that Chinese Internet users are generally more loyal to search engines than portals. That squares with Google’s apparent strategy to gain access to Chinese Internet users through partnerships, and then drive them to Google’s own search engine.
“(Google’s) strategy is the same as in the rest of the world,” Mr. Bean said. “To build up the network (with partners) while also building up their own traffic on their brand site. The brand site will take time but in the meantime they can drive a significant amount of traffic (through partners). And make some money.”
Under terms of their agreement, Sina will use Google’s search engine and advertising platform on its portal. The two companies have also agreed to an undisclosed news partnership. The advertising agreement covers both Google’s AdSense, which places text and image ads with selected web content, and AdWords, which displays text ads next to search results.
In addition to running its own search engine in China, Google also powers searches and AdWords for Chinese search companies 163.com and Soso.com.
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