The number of search engine users in China is still growing, along with overall Chinese internet usage, albeit at an ever slower rate year on year.
Search Engine Growth Rate in China
In this data from CNNIC.net.cn we can see that while the absolute number of search engine users has continued to grow from 639 Million in 2017 to 656 Million in 2018, the growth rate has slowed to a historic low of just 2.7% in this last period. We expect this slow down will be reflected again in 2019 as internet user growth slows as well as general economic growth.
Interesting to note that the search penetration rate, or the % of all internet users who use search engines, has remained pretty static in the range of 80-82%.
Search Engine Market Share in China
The big three general purpose search engines in China are Baidu, Sogou and 360. Like Google in the rest of the world, Baidu holds the greatest market share in China by a good margin at 80.09% in 2018, according to analysys.cn.
Baidu captured their market share the old fashioned way, by being first and enjoying domestic support for a local Chinese search engine over the international options.
Sogou built their search business on the back of their popular Sogou Pinyin input software. In China, internet users use software like this to type Chinese characters using pinyin and roman letters and the software converts this to Chinese characters. Sogou's input software is the most popular and they leveraged this popularity to launch their own browser which quickly became very popular. Once they had that foothold it was a no brainer to launch their own search engine baked into the browser and with it, their own search advertising product.
360 took a similar approach, but rather than input software they started with a very popular anti-virus product. This lead to their own browser with a focus on security. With a successful browser they too saw the opportunity to launch their own search engine.
The "other" category includes Bing which is accessible in China, and Google which is technically blocked, as well as Shenma which is owned by Alibaba. Interestingly Shenma also benefits from it's integration with the popular UC browser. Shenma is notable as a mobile first search engine and it does have a much more significant share of the mobile market. Indeed in a future version of this post we will break out the desktop and mobile search market share.
Mobile Search Usage in China
Overall search penetration amongst mobile users in China has grown quickly in the last decade and now search is used by just as many mobile search users as desktop users.
Of course search is a much more complex activity these days. It is no longer about just a web search interface. Regular general purpose web search remains important, but now there are many other search channels and verticals that are also important, such as APP search, map search, video search, news search and in China, WeChat search!
Size of the Chinese Search Advertising Market
Search advertising in the Chinese market has continued to grow at a healthy rate over the last decade, and is projected to continue growing at 10-12% through 2020 according to iResearch.cn. The estimated 2018 total spend on search ads in China was ¥95,890,000,000 (Chinese Yuan), which is the equivalent of $13,939,049,850 USD in today's money.
Compare Chinese search spending to the US search advertising market which was $36,410,000,000 USD in 2018, and you have to believe that it still has alot more growth to come. With more than 2x the total internet population and less than half the search advertising spend it does seem like there is more growth to come, but the growth rate is not projected to be much more than the growth in the mature US market. It may be the case that the search market in China will never be as big as the US market despite the large internet population.
Certainly China has other digital advertising channels, and the marketing mix you are used to in western markets may not be right for China. In particular WeChat is attracting alot of the advertising spend in China and we'll be looking at this in another post.