Replacing Human Labor: This Overseas Giant Begins Using AI to Build a New Advertising System - Market Opportunity Analysis Report for the Search Engine Industry
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According to IT Home on January 17, based on an internal memo obtained by Business Insider, Google will lay off at least hundreds of employees from its advertising sales team.
Recently, Google Ads has begun integrating a large number of generative AI features. Another AI system can autonomously create advertising assets such as images and text based on the budget and goals provided by advertisers. Google's generative AI advertising system works by using click-through rates as an instant feedback mechanism to autonomously remix and adjust advertisements.
Commentary: Great Wall Securities points out that AI enhances the production efficiency of marketing materials, quickly generating ad copy, image assets, video assets, etc., reducing the marginal costs of the advertising industry and improving operational efficiency. AI helps advertising companies advance personalized marketing through data analysis, increasing ad conversion rates and delivery efficiency. AI innovates advertising formats, such as Microsoft announcing the integration of search ads into its new Bing search engine, greatly innovating search ad formats. This not only enriches the presentation of ads but also improves their acceptance. AI increases the frequency and duration of information interaction, boosting ad reach. The application of natural language AI extends user time on information pages, while conversational interactions occur more frequently than traditional search-based interactions, potentially increasing internet ad reach.
GF Securities believes that, empowered by generative AI, the advertising and marketing industry is poised for iterative changes in business models and operational forms. Given the inherent compatibility between the creative nature of advertising and the content generation capabilities of generative AI, advertising and marketing will become a key application scenario for generative AI, with broad prospects.
The global advertising market (especially internet advertising) has entered a stage of stock competition, with increasing competition among advertising platforms for advertisers. Against the backdrop of saturated platform traffic, the integration of generative AI and advertising marketing could become a crucial tool for traffic acquisition. In the long run, this may reshape the advertising market landscape. Regarding companies, Changjiang Securities stated: Three People's Company is a leading advertising agency, where AIGC technology's empowerment in material generation and model optimization can be applied to multiple business segments. Yidian Tianxia is currently developing and applying AI for advertising material creation and traffic optimization.
A search engine is a network service that provides information retrieval and content recommendations to users through technologies such as web crawling, indexing, and ranking. As a crucial gateway and infrastructure of the internet, search engines significantly influence and add value to users' information acquisition, knowledge sharing, and consumption decisions. The search engine industry is highly competitive and innovative, involving elements and strategies across technology, products, marketing, content, and platforms.
"I trusted this search engine, but I felt deeply betrayed when I saw the results—there were too many ads, mixed with numerous 'counterfeit websites' and 'fake sites,'" said Qian Xiao (a pseudonym), a resident of Beijing.
Originally, Qian Xiao wanted to download the well-known gaming client Steam. She searched for "Steam" on a certain search engine and, without hesitation, clicked on the top result labeled "Steam Store" to download it. After downloading, she discovered it was a counterfeit software mimicking Steam, calling itself "STEAM." This left her both amused and exasperated.
When searching on some search engines, the top results are often ad-filled websites. Some of these ad sites don't fully match the search keywords, while self-proclaimed "official" or "genuine" counterfeit sites blend in, luring users to click. To ensure the accuracy of search engine industry data and the reference value of content, our research team collects data through multiple channels including listed company annual reports, manufacturer surveys, dealer discussions, and expert verification. We conduct multi-dimensional analysis of the data to deeply examine various aspects of the industry, enabling practitioners to comprehensively understand the development trends and innovation frontiers of the search engine industry from multiple perspectives, thereby empowering search engine professionals to lead in the transformation race.
Baidu will continue to maintain its leading position, but competitive pressure will increase. Baidu is China's largest search engine company, with strong technical capabilities, product advantages, brand influence, and user base. According to iiMedia Research data, Baidu's market share in China's search engine market reached 72.5% in 2022, far ahead of other competitors. It is expected that in 2023, Baidu will continue to maintain its leading position by continuously innovating and optimizing its search technology, products, content, and platforms to provide users with higher-quality and more diverse search services.
However, Baidu will also face competitive pressure from other search engine companies, especially in areas such as short video search, social search, and Q&A search. Baidu will need to strengthen its differentiated and distinctive strategies to maintain its market position and user loyalty.
Sogou will remain in second place, but the gap will narrow. Sogou is China's second-largest search engine company, with strong technical capabilities, product advantages, brand influence, and user base. According to iiMedia Research data, Sogou's market share in China's search engine market reached 12.8% in 2022, ranking second.
It is expected that in 2023, Sogou will maintain its second-place position by continuously innovating and optimizing its search technology, products, content, and platforms to provide users with higher-quality and more diverse search services. However, Sogou will also face challenges and competition from other search engine companies, particularly in areas such as voice search, video search, and vertical search. To maintain its market position and user loyalty, Sogou will need to strengthen its core competitiveness and distinctive advantages.
Other search engine companies will seek breakthroughs and growth, though the difficulty will increase. Besides Baidu and Sogou, China has other search engine players like 360 Search, Shenma Search, and Bing Search. Each of these companies has its own unique features and advantages, along with a certain market share and user base.
According to data, these companies collectively accounted for 14.7% of China's search engine market in 2022, with 360 Search holding 7.6%, Shenma Search 4.5%, and Bing Search 2.6%. It is expected that in 2023, these companies will strive for breakthroughs and development by continuously innovating and optimizing their search technologies, products, content, and platforms to provide users with higher-quality and more diverse search services.
However, these companies will also face intense competitive pressure from Baidu and Sogou, as well as challenges from emerging technologies and business models. Therefore, they will need to strengthen their differentiation and specialization strategies to enhance their market position and user loyalty.
Short video search will become more popular and widespread. Short videos, typically lasting between 15 seconds to 3 minutes, are a form of online media content primarily delivered through video. With their fresh content, engaging format, and rapid dissemination, short videos have gained immense popularity among users. According to consulting data, the number of short video users in China reached 960 million in 2022, a year-on-year increase of 10.3%. It is expected that in 2023, with the enrichment and diversification of short video content, short video search will become more popular and widely used as an important way for users to obtain information and entertainment. Search engine companies will also increase their investment and optimization in short video search to provide more convenient and accurate services.
Social search will become more interactive and social. Social search is a method of obtaining user-generated content or results through social networks or community platforms. It is characterized by authentic information, strong interactivity, and broad social reach, making it favored and trusted by some users.
According to consulting data, the number of social search users in China reached 240 million in 2022, a year-on-year increase of 12.7%. It is expected that in 2023, with the development and expansion of social networks or community platforms, social search will become more interactive and social, serving as an important way for users to obtain information and communicate. Search engine companies will also strengthen the integration and innovation of social search to provide richer and more diverse services.
Currently, from the perspective of the search engine brand market landscape, the top three traditional search engines in terms of full-end (PC + mobile) users are Baidu Search, 360 Search, and Sogou Search. According to report data, in April 2023, the industry penetration rates of monthly active users for traditional search engine platforms were 96.3% for Baidu, 41.0% for 360 Search, and 31.7% for Sogou Search.
From the perspective of PC-end industry penetration, Baidu Search's industry penetration rate reached 64.1%, while 360 Search and Sogou Search had penetration rates of 36.3% and 31.3%, respectively, indicating a stable top-three market structure.
Analysis of Market Opportunities in the Search Engine Industry Currently, the mainstream search engines globally and domestically include Baidu, Google, Bing, and Sogou, all of which support voice and image searches. However, their specific search functionalities differ, creating unique features and competitive barriers.
In terms of brand perception, "comprehensive content" and "resource-rich" are common traits recognized across traditional search engine platforms. From a differentiation perspective, users generally acknowledge Baidu's "high visibility" in the search industry, while 360 Search stands out for its "secure and reliable" user perception. Additionally, 360 Search has garnered brand impressions such as "comprehensive content, resource-rich, and powerful functionality."
In fact, 360 Search's positive brand image and strong market penetration are attributed to its technological advantages, user experience, and privacy protection. At a recent launch event for the 360 Brain Big Model application, 360 announced the upgrade of its cognitive general-purpose big model "360 Brain" to version 4.0.
The 360 Brain has completed iterations in key capabilities like multimodal functionality and will be fully integrated into the "360 Family Bucket," including the browser, search, and security software, achieving a comprehensive intelligent transformation.
The Chinese search engine market size and user base have shown consistent growth trends. In recent years, the market size has steadily increased, now reaching hundreds of billions. With the rapid development and commercialization of the industry, search content has become more diverse and extensive, driving a surge in user numbers. Additionally, the increasing variety of bundled search engine forms and advertising strategies have contributed to the overall high-quality growth of the market.
As demographic dividends diminish, intelligent search has become a key focus for search engines. In the future, the growth of China's search engine market size is expected to remain steady, with further expansion anticipated.