Met with Baidu management at their China Investment
Management says they have better monetization in the right
hand side and top left corner of the result page, both managed
by Phoenix Nest. They are confident of better positive results
after a couple of quarters of transition, as Phoenix Nest is
extended to the main monetization area, left hand side of the
search results page.
Some smaller clients do not want to migrate to Phoenix Nest.
Some big advertisers are not ok with two systems for the two
parts of the page. Some negative impact from some customers
not switching immediately, some customers budgeting less
money initially while waiting to see how things work out, and
system optimization. ML believes the impact will be mostly in
1Q10,with residual in 2Q.
Baidu is managing costs closely during the transition. While
they are still hiring graduates, there are no salary hikes, since
there is less competition because of the downturn. Rental
costs are lower because of the move to an owned building. The
budget for the Japan startup was $25 to 30 mln for 2009 of
which only $17.5 has been spent in 3 quarters. That provides
operating leverage to offset TAC costs from traffic from