China IT Review

On Apirl 28th, 2010, Baidu (NASDAQ:BIDU) announced the Q1 2010 earnings. The revenue shocked experts, and Baidu’s shares soared 14 percent after the bell.

Baidu switched their customers to a new AD platform called Phoenix Nest (Feng Chao) in 2009. And now, the strong revenue growth, proved that Phoenix Nest is a more powerful tool. From the mass observer’s point of view, Phoenix Nest is totally nothing new but changed the display form of ADs. However, in deep, the new platform allows competitive terms as Google does.

Once the competitive terms can be bid, I’m pretty sure the term price will grow higher and higher. This explains why Baidu’s revenue has improved so much, while Baidu has been weak in Q1 in so many years.

Recently been found, image-ads appeared in Baidu Image Search results. While other search engines (like Google) still put text-ads on top of  Image Search result. Check out the snaps below:

When search “长城” in Baidu Image Search, the result may contain ads about tour of the Greate Wall (“长城” means great wall, in English). From my perspective, I think this type of ads is fairly intuitive, however, I don’t know whether the ROI is higher than those normal text link ads.

As a comparison, I’d like to take a snap from Google.

Well, Baidu is exploring various forms of advertising, in order to raise the income. And placing image ads in image search results, is a really great idea.

It’s about Alipay again .

Today, Alibaba announced that, the Alibaba Group will invest 5 Billion RMB to Alipay. This is a long-time-investment which will last for 5 years.

Notice that Alibaba Group is not the company named Alibaba.com Limited (HKG:1688), but the mother company of it. Alibaba Group is also the mother company of Taobao and Alipay. However, Alibaba Group has also invested Taobao 5 billion on 2008.

Nowadays, Alipay is the leading company in the 3rd payment service field, and holds nearly 50% market share. So I don’t think this huge investment is for Alipay to expand in China, but to speed up the internationalization process in the world. It’s opponent is now Paypal.

There’s one thing I still wonder: where’s comes the money? From the financial report, Alibaba.com Limited, the most profitable subsidiary of Alibaba Group, earns about 1 billion through a year. Whereas, Alibaba Group is to invest 5 Billion in 5 years. Where can Jack Ma get so much money from?

There’s always big news about Alibaba and its subsidiaries, today is about Alipay.

Gossip from Twitter said that, Alipay is going to acquire a bank. Considering another news about Alibaba’s financing 100 Million via PricewaterhouseCoopers, the news about Alipay is worthy of belief.

Here goes the reason: The bank regulators in China, is launching a new  platform for cross-bank transactions. And those 3rd party payment companies such as Alipay, TenPay, BaiduPay, etc, may not able to take advantage of this platform. Once Alipay acquried a bank, it can easily plugged onto the new platform.

However, It’s just a gossip.