Huawei's marketing strategy

Author: Wen Liyan
Publisher:
Publish Date: 2006-10-01
Features: The homepage only has 4K of Baidu, simple as a thin sheet of paper. But it has to respond to hundreds of millions of search requests every day. Although many people use Baidu, more people began to take a closer look at Baidu after its stunning IPO. Many people have a curious question: What does Baidu rely on to make money? When Baidu interviews new employees, this question is often used as a "" (): "Everyone knows that using Baidu Search is free, but do you understand how the commercial company Baidu makes its profits?" If the candidate can answer with the four words "" (paid ranking), then, this interview has already invisibly gained extra points. Currently, millions of businesses use Baidu's paid ranking, and there was once a car dealership that sold a ￡25 million Bentley car by spending less than 500 yuan on paid ranking. This is the highest return on investment for online promotion in China so far.
So, what exactly is paid ranking? Friends who have used the magical tool of search engines know that there is a lot of information you want scattered across billions of web pages. Every time you enter a keyword, Baidu will help you list all the web pages containing that keyword in less than 0.01 seconds. Often, there are hundreds of thousands or even millions of relevant web pages listed. At this point, it is very important to decide which web pages to place in the top few positions. Because most users are unlikely to look beyond the first 100 pages.
Paid ranking is essentially taking the top few results and auctioning them to websites that want to be noticed earlier and more often. The logic is similar to how CCTV auctions the time before the weather forecast to advertisers. The difference is that CCTV charges based on time—how much per month or per year; while Baidu charges based on how many people see your web page through Baidu. Of course, TV viewers and users of search engines don’t have to pay money—only their attention, a quick glance at the ad is enough.
On September 22, 2001, paid ranking was officially launched, and at the same time, Baidu also launched its own website, allowing users to access the search engine directly via baidu.com. This business model, which would later generate 80% of Baidu’s revenue, was initially managed and developed by an intern named Liu Zizheng. At that time, the backend system was named Shifen, because when paid ranking was first launched, the lowest price per click was 0.1 yuan (ten cents). Note that this refers to the case where a user clicks on an advertiser’s website, and the advertiser pays Baidu ten cents. If someone wanted to appear earlier than you, they could bid one or two cents per click.
Everyone underestimated the market appeal of paid ranking. After completing some basic keyword promotions and management, the Shifen system was put into use. Wang Zhan, who was in charge of paid ranking, clearly remembers that the revenue for the first day after its launch was over one yuan and ninety cents. This was because paid ranking uses a prepayment model—the actual charge is based on clicks. Even if a website ranks highly, it doesn’t incur any cost unless a user clicks on it.
After Shi Youcai joined Baidu, he was responsible for business expansion.