Baidu Profits from Online Advertising

August 29, 2012

Unlocking Word Meanings
Read the following words/expressions found in today’s article.

1. booming (adj.)
[boom-ing] – growing or progressing  quickly
Example: The booming sales of umbrellas and raincoats happen during the rainy season.

2. client (n.) [klahy-uhnt] – a customer
Example: The hotel serves hundreds of clients every summer.

3. dominate (v.) [dom-uh-neyt] – to have the highest or greatest position
Example: Microsoft has dominated the software market for years.

4. portal (n.) [pawr-tl, pohr-] – (in computers) a website which serves as an entrance or starting point to other websites
Example: People use online search portals to easily find information.

5. robust (adj.) [roh-buhst, roh-buhst] –strong and with energy
Example: The country is experiencing a robust economy because of increasing exports.

Read the text below.

The sales of China’s largest search engine Baidu, increased by up to 70% as a result of China’s booming online advertising business.

From April to June 2012, Baidu’s earnings from advertising increased by 60% to 5.5 billion yuan, eventually leading to a net profit gain of 2.8 billion yuan ($436 million) for the company. During this period, the number of clients who advertised with Baidu also increased by more than 18%.

Baidu attracts many advertisers to invest in its popular portal as it dominates China’s online search market with an 80% share.

Several companies today advertise online to get more customers, especially now that more Chinese have access to the Internet. Currently, China has the world’s biggest online market with more than 500 million Internet users, a number which many believe will still increase.

Baidu has also entered the phone and mobile Internet market by releasing a low-cost smartphone. As more people connect to the Internet through these devices, Baidu sees opportunity for further growth by making their own mobile phone products.

Robin Li, chairman and CEO of Baidu, said that the company is looking forward to seeing the results of robust growth by the end of September. Li said that to accomplish such a goal, Baidu will maintain growing sales and continue looking for more varied business opportunities in China.

Viewpoint Discussion
Enjoy a discussion with your tutor. 

Discussion A

·         Do you like seeing advertisements on the websites you visit? Why or why not?
·         What types of business do you think would profit the most from online advertising?  

Discussion B

·         What are the risks a company might face when they try starting a different line of business (e.g., from software to hardware)?
·         Do you think a company should focus on just one kind of product or line of business? What makes you say so?

August 29, 2012