Baidu sets up shop in London to drive European expansion

Baidu is coming for European advertisers, but it will stick to its strength — building technology — to facilitate this while an agency takes its ad business to market.

The approach is unconventional for Western technology businesses but aligns with how the Chinese equivalent of Google likes to do things. Like Baidu has done in parts of China where it does not have a sales team, the company tasked a local agency in Europe, long-term partner agency Forward3D, to drum up interest in ads spanning search, display, native and in-feed mobile ads.

“We’re an online business with strong technical capability,” said Linda Lin, Baidu’s gm. “Baidu wants to focus on where we’re strong, which is the technology side. Agencies are experts in industries our teams cannot really understand at depth. We see value in that knowledge as we try to grow.”

Forward3D’s London office will be the only agency Baidu permits to sell two courses to marketers and agency executives in Europe. The first course offers a basic rundown on search advertising on Baidu, which makes up the bulk of the 86 percent of its revenue it took from advertising in its most recent quarter, while the second course expands into both search optimization and its nascent native ad business. The plan, according to Lin, is to appoint other agencies in other international markets over the coming months.

Companies that complete either course are then given access to the Baidu platform in the hope that an influx of brands stems the flow of online searches and internet ads shifting to rivals such as WeChat and Tmall. Baidu’s share of the entire search market reached a two-year high last October, but that figure slumped to 60 percent last month, according to financial analysis firm The Motley Fool.

“There are a lot of Western brands that Chinese people could learn from, as the average spending per capita is on the rise,” said Lin of the scale of the opportunity behind Baidu’s pitch.

As small as the search engine’s native ad business is — it accounted for 2 billion yuan ($318.6 million) in 2017 compared to the 20.4 billion yuan ($3.2 billion) Baidu made from all ads in its most recent quarter — Lin is optimistic. There’s a growing demand for the ad format both in China as well as internationally, she said. In-feed environments, particularly in its news aggregation app, seem to be the most successful format for native ads. The problem is most Chinese native ads are not in-feed, consequently reducing their native effect.

“The mobile in-feed ads are a big thing because the overall targeting around interest clusters and affinity groups allow you to go for very specific groups,” said Hannes Ben, chief international officer at Forward3D. “Clients love that [level of targeting] because it gives them an opportunity to really relate to the right people.”

With far fewer regulations around personal data and privacy, companies will be able to access far deeper and richer data on their potential customers in China, said Doug Baker, director of strategic services at digital agency Analog Folk.

Earlier this year, a Chinese consumer group accused Baidu of snooping on users of its smartphone app, while Tencent and Alibaba have been forced to clarify to the public how they handle personal data after coming under fire for the practices they use.

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