Tencent has forked out $448 million to gain a minority stake (36.5 percent) on Sogou, China’s third largest search engine, in a strategic partnership to increase mobile search share in the country.
The partnership will see Sogou merging with Tencent’s Soso search and collaborate on data sharing, user insights, and search technology.
But how will Sogou and Tencent’s Soso partnership impact advertisers buying search marketing in China?
From our point of view, 14 percent market share will make Sogou/Soso an important choice in search marketing for most clients, especially for those whose focus is ROI.
This merger may not increase bidding price on Sogou or Soso in short-term, but we expect to see more and more clients begin to invest on these two search engines, thus the bidding price may get higher in the future.
“Sogou provides a more matured search algorithm (due to Sogou running many more years in the China market vs. Tencent’s Soso) with better search result relevance than Tencent’s Soso.
Assuming Tencent combined these two entities, moving forward it would likely mean greater monetization for Soso in terms of share of advertiser dollars. Likewise, we think the potential tie-ins of Sogou’s Browser and Pinyin product could also be a driver of growing their share of search queries.
According to CNZZ August figures, Baidu continues to dominate China’s search share at 63.16 percent, followed by Qihoo 360 (18.23 percent), Sogou (10.35 percent), and Soso (3.62 percent).