Baidu Limits PPC Ad Space: What This Means for B2B Marketers

Baidu LogoOn May 24, Chinese search engine Baidu made significant changes to the configuration of its paid advertising, including limiting the amount of ads that appear on the search engine results page. These changes will have lasting implications for B2B marketers.

The move was not unexpected. Following the death of a 21-year-old college student in April, Baidu’s paid ad policies came under scrutiny by the public, as well as the Chinese government. The student died after trying an experimental cancer therapy from an ad that showed up on Baidu. As a result, the company was criticized for unethical search ranking and ad placements and a public debate ensued over the ethical responsibilities of the search engine giant.

In early May the Cyberspace Administration of China (CAC) launched an investigation into Baidu’s health care advertising practices. Following the investigation, the CAC required Baidu to change its system by the end of May to both limit the paid advertisements appearing on the results page and clearly indicate paid results.

Here’s an overview of the changes which took effect last week:

  • The number of ads will be limited to 30 percent on each search engine results page.
  • All ads on the search engine results page (including top, bottom, and right) will not exceed four ads. Previously, there was no limitation of the number of ads.
  • The advertising on the right has been eliminated.
  • Ads are clearly differentiated from organic results with markers and highlighted in blue.

Take a look at the new layout of Baidu’s search engine results page:

Baidu SERP Example

Implications for B2B Marketers

These major changes have only been in place for about a week, but it will affect search engine marketing in China going forward for B2B marketers.

First, advertising on Baidu will be more competitive and expensive, especially for more competitive keywords. With a dramatic decrease in ad space, advertising space is now at a premium and the cost per click could increase. Advertisers who were happy appearing somewhere on the search engine results page will have to decide if it’s worth increasing their bids to remain at the top of the SERP.

One potential benefit is the Baidu SERP will be significantly less crowded. The top four paid ads will stand out, which could improve CTR and overall ad performance.

Earlier this year, Google eliminated the right hand sidebar ads and while it initially impacted the cost-per-click, the market stabilized as more was understood (and data became available) on the effect of the changes. However, Baidu’s changes are more dramatic so it remains to be seen how bidding and overall costs will be impacted.

Another consideration for B2B marketers is how users will react to Baidu’s paid advertising going forward. Has Baidu lost trust from its audience? Or will these significant changes alleviate the public’s fears of questionable results appearing on page one?

Consider these two data points:

  • PerformanceIN reported during the investigation alone, 126 million paid ads were removed, with a significant number of them coming from 2,518 medical companies.
  • Additionally, the changes will likely affect Baidu’s bottom line: Healthcare ads accounted for 20-25 percent of Baidu’s search revenue, according to PerformanceIN.

While there are still some questions to be answered on the paid advertising side, it’s clear that organic search results will now occupy more space on the SERP – 70 percent! For B2B marketers, that means SEO efforts are now more important that before. It’s an excellent opportunity to invest more in SEO tactics and explore more strategic ways to boost keyword rankings.

Recommendations for Search Engine Marketers

As we mentioned previously, it remains to be seen how Baidu’s changes will impact SEM long-term, but there are a few immediate actions B2B marketers should take.

  1. Identify priority keywords. With limited ad space, competition will increase. Advertisers need to prepare for bidding wars since companies will be vying for the four top positions in order to maintain visibility. Advertisers who were content with positions below the top 4, they may need to determine if it’s worth raising the bids to gain a top position. Look at recent data to determine what keywords are driving quality results. Keep a close watch on these keywords and adjust as necessary. For advertisers who were in the top spots, they need to be prepared to see an increase in the cost-per-click (CPC).
  1. Explore new keyword opportunities. For advertisers who were holding sub-4th positions, this change caused a dramatic drop in ad impressions and clicks. An immediate action to consider in order to increase the ads visibility is to adjust the match types, expand long-tail keywords inventory and explore new keyword opportunities.
  1. Develop mobile search strategy. Ultimately, this dramatic decrease in the number of ads only applies to desktop search queries/results. Amidst these changes for desktop results, there may be opportunity for advertisers to more fully consider their mobile strategy and how it may align with desktop search efforts. With the continually increase of Baidu mobile search’s active monthly users, advertisers need to consider how to develop a more robust mobile ads strategy and gain a better competitive position in the mobile search market.
  1. Consider search engine alternatives. From a long-term perspective, advertisers may consider not putting all their eggs into one basket. Other search engines, like Haosou and Sogou, are growing fast and ad competition is much less. Advertisers could consider investing a small portion on these growing search engines to gain a better ROI.

Final Thoughts

With these changes in Baidu, the search engine marketing landscape in China has changed. It’s going to take time for advertisers and users to adjust to the new normal in Baidu SERPs.

Ultimately, these changes move Baidu’s search results toward more unbiased results and (hopefully) more valuable and reputable results for users’ queries. From a PPC and SEO perspective, websites will need to update their strategies and try new tactics in order to remain visible on Baidu.

It’s an interesting time for SEM in China and we’re looking forward to seeing how these changes play out particularly in B2B marketing.

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