The first sign of how Google’s “new approach” to China will affect its search engine marketing revenue in the region has been revealed, as Bloomberg reports a drop in the company’s share of the PPC market.
At the beginning of this year, Google announced that it would no longer censor its organic search engine results at the behest of the Chinese government, following a series of data security breaches on their corporate infrastructure believed to originate from China. The announcement generated a huge amount of media attention and some stern comments from Chinese officials.
Last month, Google finally followed through on this announcement and openly defied local rules by removing all the filters it had previously put in place. Rather than commit an outright breach of Chinese law, Google moved its hosting service for the region to Hong Kong where censorship rules are more relaxed, redirecting web users to the .cn site to the .hk service instead.
Shortly after the site launched, Google reported that China’s “Great Firewall” – the government censorship and monitoring system for internet traffic – blocked the redirected service for several hours. Since then though the site has been open to Chinese users.
Despite this though, the company’s effective pullout has taken a toll on its share of China’s PPC search market. Bloomberg reports that new data from Analysys International indicates a 4.3% decline in Google’s share of paid search engine marketing revenues in China for the first quarter.
This drop from 35.6% to 30.9% was the first decline seen since Q2 2009 for Google’s Chinese branch. Regional incumbent Baidu appears to have swallowed up the forfeited revenue, further cementing its position in the region. The Beijing based company increased its market share from 58.4% to 64% over the same period according to Analysys.
According to Bessie Lee, the CEO of the Chinese branch of media buyer GroupM, Google’s new stance will have alienated advertisers from the AdWords system because it is at risk of being blocked without warning.
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