According to the data in the Quarterly Monitoring Report on China's Search Engine Market in 2016Q4 released by Analysys Industry Database, the market size of China's online search engine providers reached RMB 20.54 billion in the fourth quarter of 2016, with a decrease of 2.9% over the third quarter and a decrease of 4.4% over the same period last year.
The decreasing market size of the search engine providers was largely due to the effect of policy. Because of their Internet entry status, the requirements for search engines and their commercial value and social value are high. The decrease in advertising spaces and the advertisers' re-audit will inevitably have an impact on revenue. On the other hand, the search engine market has been relatively mature. The decline in Internet user dividends leads to slowdown in traffic growth and has an impact of keyword-based advertising revenue. Besides, advertisers still recognize the marketing value of search engines and remain optimistic about the conversion capacity of search engine marketing. The demand for the marketing services of search engines is still strong on the market. Analysys believes that mature application of new technologies, such as image search and voice search, as well as mature cashing models, will greatly help to enhance the revenue of search engine providers. On the one hand, the emergence of new technologies and services will bring about more traffic for conversion from advertising into cash. On the other hand, for the enhancement of user experience, new interactive ways will indirectly promote the advertising conversion effect and enhance the value of unit traffic.
Baidu's further improvement of information distribution capabilities of the search engine and its content has a cycling and complementary effect. Based on the search engine technology and mobile Baidu's information flow, the adaptability of content and users and the conversion capacity of advertising are enhanced through distribution of self-owned content like Baijiahao and union content by way of "search + recommendation". Behind the upgrade of information distribution capabilities of the search engine are real-time matching calculation and dynamic modeling. Such functions rely on the search engine's rich user tag accumulation, natural language processing, in-depth learning, and other technology applications. The search engine's technology gene has been a key factor to the upgrade of the information distribution capabilities.
Google strengthens the connection between the mobile search engine and information, users, and services. According to the users' request for search for food, recipe and other related information are preset, and O2O services are provided in conjunction with the offline services of the surrounding restaurants. In the mobile Internet era, the users' access to information is more fragmented and scenarized. The search engine will open up the user demand and physical services and realize greater value of the search engine through the users' search behaviors.
In the fourth quarter of 2016, an updated version of APP5.0 of the Sogou search engine was released to further deepen the vertical search layout. In addition to the introduction of the comic vertical channels and the "see comic" card function, a large number of high quality comic resources were provided. Besides, Sogou APP's credit system was upgraded to develop the users' use habit, especially the habit of use via WeChat, Novel Reading and other vertical search engines. In the medical field, Sogou launched Mingyi.sogou.com to reduce the risks caused by information asymmetry in the users' search process. Priority is granted to the contents of Wikipedia, Zhihu.com, academic journals, Dxy.cn and professional organizations. Since China's search engine market structure has been fixed, the businesses' in-depth exploration for vertical search helps search engines enhance the entry status in the various domains of vertical contents. Besides, the users' search experience and the market share may be enhanced.
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