Analysys International, a provider of business information about technology, media and telecom (TMT) industries in China, is expecting a sharp slowdown in the growth of China’s search engine market in the coming 18 months.

Published: 30 Mar 2006

Analysys International, a provider of business information about technology, media and telecom (TMT) industries in China, is expecting a sharp slowdown in the growth of China’s search engine market in the coming 18 months.

The company attributes this to increasing dissatisfaction from small and mid-size enterprise advertisers of search engines.

Edward Yu, chief executive officer, Analysys International, said that the actual performance of search engines is far from people’s high expectations.

“Poor user experience, unstable advertising effects, and some irregular channel operations make the small and mid-size enterprise customers of search engines suspicious of this new kind of advertising, which will lead to a slowdown in the growth of the search engine industry,” said Yu.

The company says over 46 percent users turn to other search engines or portal websites when they don't get what they want in a search engine. According to a research of 1500 samples, only 20 percent search engine advertisers obtained results that exceeded their expectations, while about 29 percent didn’t get the results they had expected and were considering reducing or suspending their search engine marketing expenses.

According to Analysys International, about 100 million Internet surfers use search engines at least once a week in China, accounting for 84 percent of the total Chinese Internet user base. Search engine users and Internet surfers are both growing rapidly. Analysys International says, in 2005, advertising revenues from search engines reached RMB 950 million in China, accounting for 32.2 percent of the total online advertising market and increasing by 79 percent over the year 2004.

“However, according to Analysys International’s business life cycle model, search engine industry in China is still in the initiation stage, characterised by high and fast growing market expectations. Search engines still can’t understand exactly what users want and the search results are usually not satisfying,” stated the company. “The user experience is not satisfying. When a user types in a word to a search engine, it is likely the user doesn’t get what he or she exactly wants, which leads to low brand loyalty.”