This week, Chinese search engine giant Baidu and content marketing firm Taboola made news when they announced their strategic partnership. Working together, these two companies can enhance the services that the other provides. But what do these companies each do separately?
In the simplest terms, Baidu can be thought of as the Chinese version of Google. Founded by the visionary entrepreneur Robin Li (李彦宏) in 2000, the company has experienced tremendous growth in the past decade. In fact, it is reported that the total revenue of Baidu Inc. reached RMB 49 billion (approximately 8 billion U.S dollars) in 2014. Moreover, Baidu Inc. (NASQ: BIDU) is the first Chinese company to be listed in the NASQ-100 index.
The combination of China’s economic success, population of 1.3 Billion people, and large amount of internet users has made Baidu a powerhouse. This power was bolstered by Google’s exit from China due to government censorship, and Baidu now owns a 75% share in China’s mobile and desktop search market. Despite the domestic regulatory barriers, diversification of Baidu’s business area is said to be another key strength. Apart from search advertising, it offers music downloads, Baidu Cloud, Baidu Maps, Baidu translation, an encyclopaedia and other mobile services.
On the other hand, Taboola is a content marketing firm founded in 2007 and headquartered in New York; different to search platforms, Taboola discovers the search that a user is most likely to do. The firm quickly established a strong presence in the U.S. and expanded into Europe and Japan, and it is reported that Taboola’s revenue topped $200 million in 2014. Reaching 500 million users and providing 200 million monthly recommendations, Taboola’s content recommendation engine allows publishers to recommend the most appealing videos and articles to customers based on user information and surfing habits. They usually appear at the bottom of the page, enhancing the website’s traffic and raising more revenue through optimization of native content.
Taboola and Baidu’s Partnership
Recently, Baidu has invested millions in Taboola. What is the implication of this investment? Their partnership can be described as “Search and Discovery”. Together, as the phrase suggests, this partnership creates synergy. While Baidu may process an enormous amount of data regarding a specific user, Taboola on the other hand can figure out the context that user is in. For example, when Baidu is struggling to monetize its mobile traffic, Taboola’s expertise comes in to play as they specialize in driving the traffic by recommending the content to the right audience. Baidu can also improve its technology graph based on Taboola’s technology.
On top of that, there are few companies in China that provide similar services as Taboola. In particular, Taboola’s predictive targeting technology gives Baidu a competitive edge over other competing Chinese firms. And Taboola will also benefit from this partnership. According to Taboola chief executive Adam Singolda, Taboola’s primary goal right now is to break into the Chinese market and launch native advertising in China. Baidu’s local knowledge obviously helps Taboola to develop a better strategy to enter the Chinese market. Lastly, it is speculated that these two firms might consider a joint marketing strategy in order to focus on growth potential in other untapped markets such as the South-East Asian region. The partnership between Taboola and Baidu should be of note to all companies looking to market their brand in China.