Business

Google cuts ties with 2 Chinese advertisers

By Wang Xing (China Daily)
Updated: 2010-07-27 13:37

BEJIING - Google Inc said on Monday it has cut commercial ties with two of its Chinese advertising agents, raising concerns that the Internet giant's recent standoff with the government may scare away more domestic advertisers.

The US-based search engine has ended partnerships with Universal Internet Media and Xi'an Weihua Network, which are the major advertising agents for Google in East and Northwest China, Marsha Wang, spokesperson for Google China, told China Daily.

Universal Internet Media is based in Suzhou, Jiangsu province and Xi'an Weihua Network is based in Xi'an, capital of Shaanxi province. The two are among 25 of Google's authorized adverting agents in the country.

"The partnerships ended a couple of weeks ago because both sides felt there were no longer any mutual benefits," Wang said. She declined to comment on how the breakup would affect Google's Chinese business.

Since Google announced earlier this year that it would stop providing filtered results in its search service and redirect all mainland traffic to its Hong Kong site, a number of its advertisers have expressed concerns and reduced their advertising spending on the US search engine.

Google's market share in China dropped to 24 percent in the second quarter of this year, from 31 percent in the first quarter, figures from research firm Analysys International showed. Market share is measured by advertising revenue.

The market share of Baidu, Google's rival in the Chinese market, hit a record high of above 70 percent during the past three months.

It is unclear whether Google's departure from Universal Internet Media and Xi'an Weihua Network will impact its partnership with other advertising agents.

Cheng Yu, general manager of Zoom Interactive, a Google authorized advertising agent in Beijing, said on Monday his company will continue its partnership with Google.

"Many advertisers still trust Google's advertising network so we will continue to do business with them," he said.

But he also said that his company does not have many alternatives to Google, as Baidu has already built up its own advertising system and other domestic search engines such as Tencent and Sohu are still too small to partner with.

The response from Google's advertising agents is "quite normal" because many advertisers have reduced their spending on Google, Analysys president Edward Yu said.

He warned that Google's market share in China may further decline if the company does not take measures to sooth advertisers' concerns.

Google will still commit to China's online advertising market and will not give up its Chinese website, Wang said on Monday. The company currently provides advertising at music and shopping services on Google.cn, she said.

China Daily