Press Room: 2006

Google Poses Strong Challenge to Leader Baidu in China, Reports Keynote

  • Keynote Completes First Ever Study of Customer Experience and Service Levels for Chinese Search Engines
  • Google's Popularity with U.S. Consumers Translates Well in China
  • Chinese Search Sites Match Global Standard for Technical Service Levels
  • Study Finds Close Race Among Alibaba/Yahoo!, Baidu, Google China and Sohu
  • Chinese Internet Users Report High Level of Frustration with Search Experiences
  • Results of Annual Study To Help Providers Track and Improve Performance in World's Fastest-Growing Search Market

SAN MATEO, Calif. and BEJING, China — January 18, 2006 — A groundbreaking new study from Keynote Systems (Nasdaq: KEYN), The Internet Performance Authority®, shows Google in a strong position to challenge Baidu in the Chinese search engine market despite the distinct brand recognition and market share advantages Baidu currently holds in that market. The study provides firm evidence that the tremendous success Google has enjoyed in English-speaking markets appears transferable to the rapidly growing Chinese market. With billions of investment dollars riding on Chinese search in both the U.S. and Chinese stock markets and with the search leaders themselves in the U.S. and China forming alliances with and against each other as they aggressively jockey for position, the study's implications are far-reaching.

The Keynote study showed that Chinese consumers, once they are exposed to Google, have an overwhelmingly positive search experience on the site and generally prefer that site as compared to competitors in the market. Baidu is currently the preferred search engine brand of 48% of Internet users, according to the China Internet Network Information Center (CNNIC).

For the customer experience component of the study, Keynote examined 1,200 Chinese consumers as they searched and performed relevant tasks on leading Chinese search sites and then benchmarked the sites in more than 250 categories including those for news, image, product and music search. For the service level portion of the study, Keynote took more than 13,000 measurements of each site's responsiveness and reliability from different geographical regions of China over a four-week period from mid-November to mid-December 2005.

The Alibaba/Yahoo! (Nasdaq: YHOO), Baidu (Nasdaq: BIDU), Google(Nasdaq: GOOG) and Sohu/Sogou (Nasdaq: SOHU) search sites were included in the study. Keynote has conducted similar studies in North America, where Google and Yahoo! are the clear market leaders both in terms of market share and user experience. Similarly, Keynote has committed to conducting an annual study on search in China, which will be particularly important in order to track user preferences and technical performance over time in a dynamic and fast-changing market.

Google is a Winner Among Chinese Consumers and is Poised to Capture Market Share
"Baidu holds a clear lead in the Chinese market in terms of usage and brand recognition," said Dr. Bonny Brown, director of research and public services for Keynote. "However, we see that Chinese consumers really like the overall Google experience better. Eventually, this promises to translate into increased market share, particularly given Google�s strong resources and focus on the market."

Google topped the Keynote Customer Experience Rankings, an aggregate ranking of the consumer appeal of leading Chinese search engines based on an analysis of the 250 metrics measured during the study. In fact, Google outperformed its competitors in 11 of the 13 business success drivers measured in the study, including those for general search, news search and image search. But Alibaba/Yahoo! and Baidu were close competitors with Google in more than half of the 13 business success driver categories studied. Baidu ranked highest with consumers in the music search category, while Alibaba/Yahoo! was first for help and instructions.

Keynote Customer Experience Study
Leading Search Engines by Category

General Search Quality

Image Search Quality

News Search Quality

Music Search Quality

Google

Google

Google

Baidu


In general, consumers saw Google's search results as more relevant to their searches than those of other leading search engines. In fact, 68% of consumers that participated in the study described Google as a "high quality" search site as compared to 61% who described Baidu and Alibaba/Yahoo! this way.

This advantage in perceived search quality and experience translates into consumers being more likely to make Google their primary search engine, return to the site for a future search and/or begin using the Google search tool bar.

"The Keynote study clearly shows that the success Google has had with consumers in North America is transferable to the Chinese market," said Dr. Brown. "A positive search experience has universal characteristics. Baidu is in a strong position because of its market share, and only needs to perform at parity with Google to hold that share."

Chinese Consumers Frustrated with Search Engine Results, Ads
In general, consumers interacting with Chinese search engines experienced more frustrations with their search experience than did consumers in North America. The leading frustrations of Chinese consumers were with duplication of results (50%), search results not being ranked well (43% expressing this frustration) and results being out of date (36%). Chinese consumers also expressed dissatisfaction with search results on some sites being too cluttered (37% expressing this frustration) and with ads or sponsored results being distracting them from actual search results (35%).

Google's strengths in the general market — simplicity of design, strong perceived results relevance and unobtrusive advertising— are also its strength in the Chinese market and key factors in its appeal to consumers.

"Those sites that are developing in the Chinese market need to focus more on the simplicity of design and clear presentation of search results. They need to also be cautious about too much advertising for short term revenue versus less obtrusive advertising and long term market share potential," said Brown.

The appeal of the search site's homepage actually has the biggest impact on consumer' perceptions and intentions for future usage. Here, Google and Yahoo! also outpace their Chinese competitors because of the simplicity of design.

"Homepage appeal and design may sound like something quite simple, but it is extremely impactful to the customer experience," said Brown.

China Search Engine Industry Matches Global Technical Standard
In terms of service levels, Google had the industry's best reliability, indicating its site was highly available and experienced little or no downtime. In general, the Chinese search engine industry is highly technically reliable with the sites being available 99.5% of the time, a figure on par with the U.S. market.

Site Reliability Leader Site Responsiveness Leader
Google 99.8% Reliability
Baidu .35 Second Average


"In both the U.S. and in China the search engine industries are setting the pace for Internet reliability and responsiveness," said Ben Rushlo, senior manager of professional services with Keynote. "In fact, the Chinese search engine market really sets the global technical standard, edging out even the U.S. market in terms of site responsiveness."

Baidu set the industry standard in terms of site responsiveness; an indication of how fast a site was in returning results, among other areas.

Alibaba/Yahoo! ranked second overall in service level performance.

"Most of the leading search sites excel in responsiveness with no notable slow downs during peak usage periods," said Rushlo. "At these speeds consumers will not note a significant difference between any of the leading sites."

Although the Google site is hosted in the U.S. and may be expected to have slower responsiveness, because of the simplicity of their design, they remain highly competitive despite a technical disadvantage. And although the sites developed in the Chinese market are heavily loaded visually, they are not technically heavy, excelling in the responsiveness category.

The Keynote Customer Experience and Service Level Rankings for Search Engine Sites (China) provides in-depth competitive analysis of the search engine industry and contains hundreds of additional data points, as well as a detailed analysis of study findings. For an abstract reviewing the study visit:
Download http://www.keynote.com/docs/kcr/cem/Keynote_China_Final.pdf

Customer Experience Management
Keynote's customer experience management (CEM) services offer both competitive intelligence studies and custom engagement services examining consumer attitudes and behavior on the Web. To learn more about Keynote's CEM solutions, visit: http://www.keynote.com/solutions/customer_experience_management.html

Service Level Management
Keynote's service level management (SLM) solutions provide enterprises with the tools to align IT and e-business goals. To learn more about Keynote's SLM solutions, visit: http://www.keynote.com/solutions/service_level_management.html.

About Keynote
Founded in 1995, Keynote Systems (Nasdaq "KEYN") is the worldwide leader in services that improve online business performance and communications technologies. Keynote helps approximately 2,300 corporate customers and 13,000 individual subscribers become "the best of the best" online. The business premise supporting Keynote's mission is: "Online businesses can't manage what they don't measure." As an independent and trusted third-party, Keynote provides IT and marketing executives with unbiased benchmarking data, competitive analysis and operational metrics from the customer perspective. This data measures service levels and customer experience of Web sites, broadband services and mobile communications.

Known as The Internet Performance Authority®, Keynote manages a market-leading infrastructure of 1,600+ measurement computers and mobile devices in over 114 locations and 66+ metropolitan areas worldwide that assess service levels and a panel of over 160,000 consumers who participate in interactive Web site tests that assess user experience. These online user experience tests capture customer attitude and behavior to answer the critical "why" behind the "what." Keynote's geographically distributed measurement services, on-site monitoring appliances, competitive intelligence and custom studies ensure that its customers outpace their competitors in online service levels and overall user experience.

Keynote Systems, Inc. is headquartered in San Mateo, California and can be reached at www.keynote.com or by phone in the U.S. at 650-403-2400.

Keynote, The Internet Performance Authority and Perspective are registered trademarks of Keynote Systems, Inc. Other trademarks are the property of their respective owners. © 2006 Keynote Systems, Inc.

Editorial Contacts:
Dan Berkowitz, Keynote (650) 403-3305 dan.berkowitz@keynote.com
Dan Cahill, Roaring Communications (415) 552-3999 dcahill@roaringcommunications.com

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