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December 17, 2006 6:43 pm

Chinese MSN to use Baidu in ‘alliance’

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Microsoft’s Chinese MSN and Live websites are to use paid search advertising services provided by Baidu.com, the Nasdaq-listed internet company, under a new “strategic alliance”.

The decision to rely on Beijing-based Baidu to provide paid listings on the search results pages of Microsoft websites will fuel doubts about the US software giant’s progress in the fast-growing Chinese internet market.

It comes less than a year after Microsoft launched its own AdCenter advertising system, which is intended to match the lucrative paid listings services operated by US search providers Google and Yahoo and emulated in China by Baidu.

Microsoft declined to give details of the tie-up or to say why it had chosen to use Baidu’s paid search listings rather than AdCenter.

“We believe this will help us provide new opportunities for advertisers, which will further enhance our search business in China,” the company said in an e-mailed statement.

Internet analysts say Microsoft’s portal MSN has struggled to make much impact in China since launching a Shanghai-based joint venture in May last year. MSN China ranks ninth among the country’s internet portals, according to Chinese market research company IResearch.

IResearch quotes data from Alexa, the internet traffic analysis company, as showing MSN China attracting less than 5 per cent as many visitors as leading portals such as Nasdaq-listed Sina.com and Hong Kong-listed Tencent Holding’s qq.com.

It is unclear whether the traffic attracted by Microsoft’s websites in China could justify the maintenance of an independent paid search marketing operation. Paid search listings, essentially advertising links that are displayed alongside search results, are widely considered the most effective forms of online promotion.

Baidu executives have said in the past that selling such advertising in China remains a considerable marketing challenge.

MSN China, a joint venture with a state investment company set up by the son of former Chinese president Jiang Zemin, has also been hit by the departure of Luo Chuan its general manager.

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