14 DAY TRIAL // Google's move to pull out of the search market in China was seen as suicidal at the time, but there were some that argued that Google may be hit that hard financially, partly because the market is still small.
And that seems to be the case, Google has managed to get back some search ad share in the fourth quarter after several periods of loss. And the company plans to drive up revenues in the country even as its search share my still decline.
According to a Beijing market research firm, Google's ad revenues grew in China, despite another quarter of loss in the search market. Baidu now controls 75.5 percent of the Chinese search market, up from 73 percent in the third quarter.
Meanwhile, Google slid further down and now has only 19.6 percent of the market, down from 20.6 percent in the previous quarter. Google has been losing search share for several quarters now and its very public spat with the Chinese government only made it worse.
This trend is expected to continue in the coming years, but researchers believe the market in China will stabilize itself eventually.
The interesting part, though, is that Google's share of the ad market actually grew and its revenues along with it. Google got 23.1 percent of the search ad revenue in China in Q4 2010, an 1.5 percent points increase from the previous one. Still, it had 35.6 percent in 2009.
But the long-term trend is reversing and Google is expected to gain even more in the future. The internet market is expanding fast in China, so even a declining search market share may mean greater revenue for Google.
It's more than that though, Google is increasingly profiting from Chinese export companies advertising internationally. This part of the market is growing fast and it's a sector Baidu can't address. Google, with its worldwide network on the other hand is in a great position to do this.