Sina Corp’s Q2 Blues
Sina Corp suffered a net loss of ¥70 million in Q2 2013 – compared to a net profit of 200 million in the same quarter last year. What could be the reasons for this? The company was expected to remain in the black, leaving many digi-gurus scratching their heads. The answer? – Restructuring. Sina is trying to increase its mobile Internet presence by launching many new platforms on new smartphones, tablets and other hand-held devices. In the short term, the shift of emphasis from static to mobile Internet has not generated as much revenue as Sina had expected. Its restructuring plan also leaves the company vulnerable to its competitors’ advances – above all, Tencent. Sina’s deal with Alibaba in April of this year, to grant the e-commerce giant an 18% stake in Sina Weibo, was expected to compensate for the revenue lost through restructuring. Alibaba got microblogging advertising space, Sina didn’t fall into the red – that was the plan. It seems Sina’s gamble hasn’t quite yet paid off.
Online Advertising – Size Matters
China’s online advertising market continues to grow – 17% on Q1 2013. Online advertising in China now stands is now worth ¥23 billion. Search engine and online video advertising saw the largest percentage increases in user signups, uploads and downloads. For brands, online advertising is the gift that keeps on giving. Why is this? It might have something to do with the way the market is structured. Baidu and Taobao together account for more than 60% of online advertising revenue, whereas the remaining 40% is made up of smaller players such as Qihoo, Souhu and Youku. On one level, the variety of online advertising providers offers brands greater choice – each company, whether it’s big or small, specialises in search engine, vertical search, video, rich media or brand graphical adds, which allows brands to choose the advertising strategy best suited to their needs. On another level, brands looking to do business with a bigger company in order to benefit from economies of scale, experience and a track record can choose Baidu or Taobao, brands who want a smaller, more focused set of expertise can go to a smaller online advertising specialist.
Source: China Internet Watch
Baidu Prospers in Q2
Baidu’s revenue was 7.5 billion in Q2 2013 – a 39% year-on-year increase. What is the secret of its success? In addition to serving individual users’ search engine needs, the site offers a performance marketing service. How does this work? Baidu has a network of affiliated websites in all sectors, which allows it to amass and collate data relating to Internet traffic. In other words, Baidu helps brands to find out what potential customers are searching for, and how they are doing it. Baidu’s access to “Big Data” ensures that its business model remains unique – if a brand wants an answer to an Internet traffic-related question, it’s likely that Baidu will have the answer.
Source: China Internet Watch