Hylink Digital Marketing Research (HDMR) recently published 2014 China Digital Marketing Report, which gives insights on China digital marketing environment and status quo. Hylink invited marketing staff in 30 enterprises to participate in the survey.

It found out that Chinese advertisers had positive attitudes towards digital marketing in 2014, over half of advertisers indicated that they were willing to try new techs and methods. Other advertisers said they would discreetly choose mature channels and methods. No advertisers would maintain the status quo or choose other, which means Chinese advertisers understood the importance of proactiveness in a fast changing digital marketing era.

73% advertisers said they would increase digital marketing budget in 2014, 17% advertisers’ budget remained the same while no one would cut the budget.

In 2014, Wechat Official Platform, integrated digital marketing and mobile marketing attracted most attention from Chinese advertisers. 67% advertisers cared about Wechat Official Platform very much.

Social marketing had the highest acceptance, which only 11% advertisers said they would never or seldom use it. Search engine marketing and content marketing were regarded as the basic marketing methods, 47% advertisers said they always used it.

In 2014, integrated digital marketing would be more common, merely 3% advertisers said they would not use integrated digital marketing. Social, search, vertical, portal website and video were the top 5 combinations for integrated digital marketing, all had over 60% usage rate.

Chinese advertisers had strong willingness to accept new technologies, video, QR code, LBS, mobile devices, big data and multi-screen interaction were all accepted positively. But augmented reality’s recognition was still very low.

Baidu recently released its Q4 financial report, which showed its thriving mobile market development. Baidu mobile search was growing steadily, it’s very unlikely that mobile search would threaten web search. Therefore, Baidu’s search concentrated business model would be sustainable. But Baidu’s solely profit pattern remained unsolved.

Baidu used to rely heavily on web search, which arouse much worries about whether Baidu could seize a large part of mobile search market share. The rising importance of mobile search was attributed to the popularity of smartphone. Baidu has made breakthroughs on several bottlenecks, which are:

1. Regain Search Users on Mobile: Because of the huge difference between mobile and web entrances, Baidu’s mass web search user base was of little use to mobile search. Now Baidu has successfully regained mobile search users, search volume in mobile end accounted for 35% to 40%. It is expected to surpass web search in the second half of 2014.
2. Mobile Customized Websites: We found that most of big websites have made adjustments for mobile devices, though it still cannot compare with PC , the browsing experience has been improved evidently.
3. Advertisers’ Willingness on Mobile Search Ads: With an increasing number of Baidu mobile search users, it will not remain as a big problem. Mobile search CPC is much lower than web search, and this is mainly because mobile search is more about local life service and business related search is mostly done in PC end.

In the past 2013, Baidu purchased 91 Wireless and PPS to grow its mobile market.

Baidu’s mobile platform revitalized its mobile search. The chart below showed Baidu’s apps downloads, most of them reached 10 million times.

The cutting-edge mobile platform could bring mobile search volume, for example, Baidu Android App Store made users more likely to install its games, music, and SNS apps because of the search convenience. More importantly, mobile users formed the habit of opening baidu.com to search information.

Baidu mobile assistant app had over 400 million registered users, increasing 70 million compared to Q3 2013. The estimated active users were between 150 to 160 million. Baidu revealed that it accounted for 41% of mobile android app distribution market share in Q4 2013. Unlike developed countries, iOS accounted for quite a small percentage in China.

Mobile Search

Baidu also improved its revenue structure, in Q1 2013, revenue generated from mobile search accounted for 10%. By Q4 2013, the percentage was increased to 20%. It was a big achievement for Baidu in mobile search field. When most people worried about the business prospect of mobile search in 2012, the percentage was merely 3%.

Goldman Sachs also expected mobile search remained high level growth rate while web search slowed down.

Baidu mobile search accounted for 57% share, lower than its web search market share. Still, it’s satisfying considered the complex mobile market competition.

Encroached by Qihu 360, Baidu web search market share was shrinking and yet it remained above 60%. But Qihu 360 faced great difficulty in making profit, Baidu could still benefit from the growing general search volume.

Changes in  2014

Baidu has made some changes in the attempt to gain real users: Baidu Tieba requires users to login when they browse some specific topics; and Baidu prepares to enter O2O payment part.

In 2014, Baidu will focus on four parts:

1. mobile search and cloud service
2. LBS service (Baidu map and groupbuy)
3. Consumer service (game, music and social network)
4. Probable overseas expansion

It is expected that Baidu would lay emphasis on fighting for mobile search entrance, that is, promoting its own apps. Baidu’s management revealed Baidu would spend a large quantity of money in purchasing, the expense would probably increase by USD 700 million. Because of huge investment, Baidu’s net profit will not grow in 2014 which is quite rare in IT industry.

Besides, the increasing traffic acquisition cost and copyright cost (iQiyi) would also lower its net profit. It’s estimated that Baidu’s net profit would begin growing fast next year.

In regards of departments, search accounted for 90% of net profit. Other products, such as 91 Wireless, Nuomi and Qunar did not bring much profit and could hardly maintain balance. But they increased the use of search indirectly, therefore, they were indispensable to Baidu. Although the growth rate of subsidiaries was not slow, it’s difficult for them to make profits. As users increased, the revenue grew as well as cost.

Potentials of O2O

In short term, O2O and LBS could not realize their business value mainly because of their scales were not large enough. For each local community, online users accounted for a small percentage. The shops would not perceive O2O as a big market, as a consequence, they were not passionate about entering the market. In return, online users had trouble finding suitable shops in O2O and could barely meet their needs. To break the dead cycle, it could only begin with increasing online users. If O2O attracts more users in the next few years and improves local merchants’ enthusiasm, its operating profit rate might reach 30%.

Except for gaining revenue from shops, Baidu could also display location-based advertising to users which would bring high conversion rate. It might also take years to achieve certain effects.

Nuomi needed to work harder to compete in groupbuy market:

Baidu map had dominant advantage in LBS market:

Chinese users had great search demand in restaurant, bank, entertainment and hotel, Baidu could easily cooperate with restaurants, entertainment enterprises and hotels to generate profits.

Compared With Google

Apparently, Baidu is not so innovative as Google. But Baidu has good business sense, and a growing potential market.

Comparison of Chinese internet enterprises valuation:

This is the part 3 of a series of posts that gives you insights on China LBS travel market users behaviors. Part 1, Part 2.

Travelers who used mobile map apps showed a relatively high demand for POI information. 69.8% of them demanded for detailed shops information in the neighbourhood, 53.5% asked for shops coupons nearby. 69.8% consumers searched restaurants on mobile map app, 58.1% searched for tourist site.

Mobile map app began to enter catering industry, and Dianping still had advantage in catering industry with 58.7%. Baidu map ranked the second with 41.3%, followed by Autonavi with 26.1%.

Consumers would gain comment, coupons, group buy information on mobile food apps.

Vertical mobile app for searching hotels in travel had great advantages, except for Baidu map, which ranked top with 48.9% gained wide recognition for its one-stop services. Ctrip ranked the second with 37.8%, and Qunar hotel ranked the third with 28.9%.

In tickets booking market, vertical apps won the hearts of consumers, 63.6% consumers used Qunar to book air tickets, train tickets and tourist sites tickets. Ctrip ranked the second with 54.5%. Tickets booking mobile app still needed to expand their market, about 10% users barely used these apps.

Mobile taxi apps were just in the beginning stage, consumer using habits still needed to cultivate. 70% consumers barely used taxi apps. In the future, with the growing of DIY tour, the demands for taxi mobile apps would grow.

This is the part 2 of a series of posts that gives you insights on China LBS travel market users behaviors. Part 1, Part 3.

With the basic understanding of consumer demographics features, now we take a further look at social sharing apps’ usage in travel. Sina Weibo and Wechat ranked the first and second in social sharing networks in travel. Demands for LBS information were large. 91.7% of consumers said they had used Sina Weibo to share their information, while 72.9% used Wechat.

71.4% consumers would choose comprehensive travel app, and only 28.4% would choose multiple travel app in professional areas.

Picture was the top sharing content of travelers, with 85.1%. Status about their feelings ranked the second with 68.1%. Location information came to the third with 46.8%.

In travel, most used mobile app was Baidu map, with 39.6%. Followed by Autonavi with 18.8%. According to Enfodesk, in the future, the competition in mobile map app would remain in the big companies. If small companies want to remain their market share, they need to differentiate their products. Mobile map app began to transition from tool app to a platform app to offer one-stop services.

There was a growing need of one-stop services demands for mobile map apps.

This is the part 1 of a series of posts that gives you insights on China LBS travel market users behaviors. Part 2, Part 3.

According to Enfodesk published China LBS Travel Market User Behavior 2013 Report, customized vertical travel search engines became the new leading growing point in travel industry, consumers could get personalized travel routes via vertical travel search.

Combined with mobile travel apps, LBS would bring great opportunity for travel industry. Customized travel kept driving demands for catering and entertainment industries. In 2012, consumption in catering accounted for 26%, and entertainment accounted for 3.5% of total tourism consumption.

The consumer demographics showed that tier one cities like Beijing, Shanghai, Guangzhou and Shenzhen accounted a high percentage with 77.6%.

Consumers with high education backgrounds and white collars were the main market players. 67.4% were graduated from colleges or universities, 26.5% had been to graduate schools. 62.1% consumers were white collars or staffs in enterprises.

Enfodesk released its report on China LBS market, by the end of 2013 Q2, China mobile navigation apps accounts reached 120 million, with a QoQ increase of 8.5% and a YoY increase of 43.6%.

Autonavi, Careland and Mapbar were the top three navigation apps in 2013 Q2.

By the end of June 2013, China telecommunication companies’ mobile navigation apps accumulated accounts reached 41.55 million, with a QoQ increase of 13.1% and a YoY increase of 108.9%.

In 2013 Q2, China telecommunication companies’ mobile navigation apps paid accounts reached 5.8 million, with a QoQ increase of 14.4%. Paid accounts occupied 14% of total navigation app users.

In 2013 Q2, both China Telecom’s enavi app accumulated accounts and paid accounts grew quite a lot.

In 2013 Q2, China pre-installed car navigation market revenue was 190 million yuan (USD 31 million), with a QoQ increase of 18.8% and a YoY drop of 29.6%.

Autonavi and NavInfo occupied China pre-installed car navigation market with 55.1% and 42.8% share.

China portable car navigation sales reached 1.68 million in Q2 2013, 1.3% more than last quarter.

Careland topped with 69.9% in China pre-installed car navigation in Q2 2013, followed by Rtnavimap with 14.7%. NaviInfo ranked the third with 7.1% share.

According to EnfoDesk, Onstar ranked the top in China pre-installed car navigation vehicle networking, with 48.3% market share. G-book and Inkanet ranked the second and third.