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January 11, 2008

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T.R. Harrington

Hi Florian,

Now that I've reviewed the report, I think you have every reason to question the click through rate (CTR) from search.

Overall, we have seen industries that have a higher overall click-rate than others (i.e. white goods) however, the higher end rates are closer to 3-4% on Baidu and 1-1.5% on Google (after optimization, some of our clients have experienced higher CTR, but the report is talking about market averages)

The potential to have a higher CTR on Baidu is there because Baidu displays their ads on top of natural results with little distinction between the two. Naturally, this should lead to higher average CTR on Baidu vs. Google and our research indicates that is indeed the average case (note: there are exceptions, such as in Auto where Google seems to have a higher CTR on average).

However, the likelihood that CTR could be 25% does not seem possible considering:

a) Average Search Marketer Expertise

Most search advertisers do not have much experience with paid search optimization and

b) It is Hard to Improve what you cannot measure

Since Baidu does not release it's impression data to the public, it is difficult for advertisers to measure CTR and therefore highly unlikely it could be so much higher than the global average.

Just a few quick thoughts on the subject.

Cheers,
T.R.

Florian

Thanks T.R. Your thoughts are very welcome and insightful. I just sent an email to Dick Wei at JPMorgan who seems to be in charge of the China portion. I will post as soon as I get a reply.

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