According to the latest statistics from market research company iResearch, the Chinese search engine market is estimated to be RMB5.51 billion (US$871 million) in Q3 2011 (link in Chinese), a quarter on quarter (Q0Q) and year over year (YoY) increase of 24.7% and 77.8%, respectively. The company proposes that search engine revenues over the past year have been driven by a boom in e-commerce ad spending from increased customer average revenue per user (ARPU).
The report also continued its survey of search engine competitors and showed that market leader Baidu, Inc.’s ((ADR) NASDAQ: BIDU) share of revenues has continued to rise, reaching 77.7% in Q3. Comparatively Google Inc. (NASDAQ: GOOG) has seen its share of revenues fall to 18.3%, a 1% decrease Q0Q and an 11.2% decrease from its peak in Q1 2010.
Google.cn closed its mainland China operations at the end of Q1 2010 after refusing to continue to censor its organic search results in compliance with Chinese regulations. As a result the company was forced to re-direct visitors to its Google.cn website to its Hong Kong website. So while that move allowed Chinese users to continue to access Google, the company’s share of traffic and revenues have both fallen precipitously. Since its departure Google has lost 11.2% while Baidu has gained 9.9%.
During that same period other leading search engine brands, such as Sogou and Soso have experienced moderate revenue gains — 1.1% and .6% respectively.
In terms of its search engine market outlook for Q4 2010 iResearch proposes the following:
- Search advertising market will continue to experience steady growth,
- Internet ready mobile devices will be a significant contributor to continued revenue growth, and
- Although Baidu will maintain its dominant market position it should not be dismissive of new strategic initiatives by Google as well as continued improvements by upstart search engines that will gradually steal market share.
