Search Titans Vie for Asian Users

By Jones, Gareth

Asia-Pacific is now the world’s biggest search marketplace. With marketers beginning to take an interest in paid-for search, there are huge opportunities for the engines able to attract traffic The news that Google is planning to offer free music downloads in China is the latest development in what is becoming a land-grab within Asia’s search market. More internet searches are conducted in Asia- Pacific countries than anywhere else in the world. According to comScore, 258m consumers make more than 20-3bn searches in the region every month, well ahead of Europe and North America.

Google’s plans for China, and the news it may open an office in Malaysia, reflect the eagerness of overseas search operators to strengthen their hand. Google, Yahoo! and Microsoft are fighting to stand out against domestic search engines such as Baidu in China and Korea’s Naver. “The global search giants are racing flat out to strengthen their Asian presence,” explains Henry Wood, business director at Profero Hong Kong. “The revenue potential of these developing markets is compelling.”

The most heated battle for search supremacy is in Japan, one of Asia’s most advanced internet markets. Baidu, China’s leading search engine, is attempting to make ground on its global rivals with the launch of a Japanese-language service, marking its first significant overseas venture. The site’s roll-out sees Baidu go head-to-head with Yahoo! and Google, which together have a near duopoly on the Japanese search engine sector. Yahoo! has a 60% market share, while Google’s stands at around 40%.

These power struggles are crucial as the growth of paid-search – tipped for rapid expansion in the years ahead – will hand significant revenues to the leading engines. Up to now, paid search has struggled to take off in several markets – for example, in China. For marketers, search tends to be useful for driving consumers to make an online sale. But China lags far behind Europe and the US in terms of e-commerce, due to the low infiltration of credit services and the lack of a centralised delivery infrastructure. “Chinese consumers have been reluctant to spend money online,” explains Neil Jackson, search director at Tamar. “It follows that brands have been slow to invest in paid-search as a marketing tool.”

That may be changing. Enquiro Research claims that Chinese credit card applications have grown by more than 400% over the past five years – and the more credit cards are out there, the higher the potential for online shopping and search marketing.

Untapped potential

Overall, sponsored listings account for around 30% of digital marketing spend in Asia, compared with 60% in the UK. “Asia is still struggling to understand the digital medium and there is a profound lack of knowledge when it comes to search engine marketing,” argues Ben Gibson, regional VP Asia-Pacific for TD Technology.

He points to Japan as an example. Its search sector is more advanced than other markets, with Yahoo!, Google and Microsoft working hard to monetise their search offerings through keyword bidding. But there is still untapped potential. “In Japan search is seen as something to experiment with, rather than an essential component of a campaign,” Gibson adds.

This has not been helped by the attitude of Japan’s two main advertising agencies, which have been reticent to embrace paidsearch, viewing it as something of a dark art. This is changing rapidly. The country’s largest ad agency, Dentsu, partnered with US search expert 24/7 Real Media before the latter’s acquisition by WPP. Hakuhodo, Japan’s second-biggest agency, is also looking at search. “As the two main players wake up to the potential of search and start educating their clients, investment will increase and the Japanese market will take a quantum leap forward,” says Gibson.

On the whole, the Asian search market appears to be mirroring the rapid growth experienced by the industry in Europe and the US a few years ago. However, unlike their Western contemporaries, consumers in some Asian countries are far more likely to use a mobile phone than a PC to access the internet. Mobile phone penetration is between four and eight times higher than PC penetration across Asian countries.

Unsurprisingly, this is leading to a boom in mobile search offerings. Japan, with its advanced mobile market, leads this area. There, industry estimates suggest that brands are investing around US$330m each year on mobile search. Both global and local search engines are working to strengthen their mobile offerings. In January, Google forged a deal with Japanese wireless carrier NTT DoCoMo to provide web search and other applications on handsets from this spring. Baidu is in talks with mobile phone carriers about a mobile version of its Japanese search service. Yahoo!, meanwhile, has struck more than a dozen mobile partnerships across Asia in the last nine months alone.

“Mobile search will be the dominant force in the Asian market due to the increasing popularity of internet browsing via wireless devices,” believes Erica Schmidt, global search director at Isobar. “The challenge will be for search engines to take advantage of the mobile interface to provide better services.”

The search engine of the future, however, could look very different from today’s offerings. Social search, which determines the relevance of results based on the contributions of other internet users, looks set to increase in importance. Pioneered by Korea’s Naver to sidestep the lack of online local-language documents, it inspired Yahoo! Answers.

Cultural divide

Language has been an issue for some of the Western players. According to Yahoo!, the shortage of searchable documents in Asian languages means that one-third of users in the region rarely find what they are looking for on the first search, with few continuing past the second search page for any given query.

Nilhan Jayasinghe, head of search at digital agency Spannerworks, believes local issues will be a major hurdle for the multinationals. “The Western search giants simply haven’t managed to understand or effectively cater to the cultural differences of Asian markets,” he says.

To improve the relevance of its results, Google is rolling out its universal search platform, adding videos, images, news and maps to standard web links within search queries. It is also investing in personalised search, a service intended to monitor what people select from search results and shape future queries based on their choices. Meanwhile, following the launch of a research centre in Beijing to develop tools for its AdCenter platform, Microsoft is looking at intuitive search, behavioral targeting and contextual advertising. “Our focus is on providing internet users with truly relevant answers to their search queries rather than just standard listings,” says Mel Carson, Microsoft AdCenter community team manager. “The future lies in intuitively understanding what consumers are looking for online.”

As Microsoft’s recent bid for Yahoo! shows, the search engine market will not stand still. And in Asia, there is still plenty to play for.

“The global search giants are racing flat out in Asia. The revenue potential here is compelling”

HENRY WOOD

Search – the next generation

UNIVERSAL SEARCH

* What it means

Universal search engines deliever results not just in text pages but within video, audio, image and photo feeds.

* Who is doing it?

Following in the footsteps of Korean search engine Naver, Google upgraded to universal search in May 2007, and the change was so subtle that many users did not even notice a difference. Competitors were quick to follow, producing sites such as Ask X, Microsoft’s Live Search and Yahoo! Alpha. 3D sites such as Spacetime 1.0 may move the market even further.

* Will it be big?

Almost certainly.

* Implications for marketing

Both paid-for search and search engine optimisation could become complicated, as brands are dealing with more than just text in the ratings. But there is greater scope for linking search with other brand activity.

BEHAVIOURAL SEARCH

* What it means

Engines performing behavioural searches will deliver results based on what the program already knows about you in terms of age, gender, location or other demographic. Users register with an engine and provide basic personal information. It creates cookies that are used to monitor search patterns and produce personalised results.

* Who is doing if?

Few sites rely on behavioural search at the moment. In 2004, Kanoodle and 24/7 Real Media launched BehaviorTarget to analyse searchers’ preferences, and Lycos was one of the first companies to sign up for the program. More recently, Microsoft’s US$1.2bn acquisition of Norway’s Fast Search and Transfer in January may result in the first major search player to launch behavioural search into the mainstream.

* Will it be big?

Development has been slow, mainly because it is difficult to set up and users worry about privacy implications. But search firms have been investing in the area since 2000 because they know that perfecting the technology will produce useful, highly specialised results.

* Implications for marketing

While marketers cannot access searchers’ personal data, they can use the cookies to recall past searches and ‘suggest’ products that suit users’ preferences. By observing users’ initial searches, companies can detect their target audiences and direct ads accordingly. LOCALISED SEARCH

* What it means

Localised search filters results according to users’ locations. These searches are most helpful in matching users with services and directions.

* Who is doing it?

Every major search engine, including Ask.com, Google, Microsoft and Yahoo!

* Will it be big?

With growing mobile internet access, localised search can be especially useful to those on the go. People on holiday, who have moved to a new location or are simply lost will appreciate this tool. While localised search sites may not be users’ main search pages, they can appreciate the engines in their times of need.

* Implications for marketing

Localised search has countless opportunities for goods and services that operate in a specialised area restaurants, for example.

COMMUNITY SEARCH

* What it means

Users search for answers among results that have been uploaded, revised and rated by other users. The theory is much like Wiklpedia’s public encyclopedia, where the best answers may be the ones collectively compiled by experts from across the world wide web.

* Who is doing it?

In Asia, community search was pioneered by Korea’s Naver. More recently, Wikipedia announced it would build on the success of its encyclopedia by launching a test bed for Wikla Search. It also uses the wiki structure that allows volunteers to tweak answers to enhance their accuracy. Meanwhile, Yahoo! Answers is a community forum where searchers can ask questions and receive real answers from real people.

* Will it be big?

Much of Wikipedia’s success is driven by the behind-the-scenes team that combs through uploaded answers for accuracy. If these sites are able to assure users they are receiving trustworthy information, audiences may end up relying on them for searches involving complicated information.

* Implications for marketing

There is still scope for paid search here, but the user- generated angle makes using this type of search tricky. However, If advertisers can generate positive word-of-mouth, marketers can let the proponents of their products do the talking for them.

“The search giants haven’t understood or catered to the cultural differences of Asian markets”

NILHAN JAYASINGHE

Copyright Haymarket Business Publications Ltd. Feb 21, 2008

(c) 2008 Media; Asia’s Newspaper for Media, Marketing and Advertising. Provided by ProQuest Information and Learning. All rights Reserved.