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Baidu probe

Baidu leaps in where Google opts not to tread

PUBLISHED : Wednesday, 04 May, 2016, 3:01am
UPDATED : Wednesday, 04 May, 2016, 11:12am

Stricter regulation of medical advertising is putting pressure on mainland search engines such as Baidu to improve consumer protection, experts say.

Medicine and health care were among the 10 major industries contributing to Baidu’s online marketing revenue in 2015, according to the company’s latest annual report.

By contrast, the medical industry does not even factor into Google’s top 10 industries in terms of advertising revenue, according to data by Shanghai-based digital marketing firm Sekkei Studio.

“Previously, the old advertising law had restrictions on medical advertisements but only on pharmaceutical products and medical equipment,” said Eugene Low, a partner at the Hong Kong office of law firm Hogan Lovells.

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“The new advertising law enacted from September last year now also includes medical treatments.”

Google is not immune to advertising controversy. In 2011, it was fined US$500 million by the United States Department of Justice for displaying adverts for ­Canadian pharmacies targeting US customers.

Depending on the target country, Google’s advertising policy restricts promotion of health-care-related content including over-the-counter medication, medical services and procedures.

The boom in medical adverts on the mainland is caused by the emergence of thousands of private hospitals and pharmacies that fill a gap in public services, according to a research note by Morningstar analyst Marie Sun.

Baidu’s online marketing revenue for the year ending December was US$9.89 billion, company filings showed. Google’s was US$67.4 billion for the same ­period.

“We do apply particular vigilance to the health-care vertical because we understand its importance and sensitivity,” a Baidu representative said.

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“Over the years, we have proactively cleaned up the customer base, efforts which include rigorous standards of certification, careful screening of potentially misleading ads, [and] our Plus V verification programme that is applied to all customers, with additional scrutiny on medical advertisers.”

An internal letter circulated in Baidu’s intranet obtained by The Beijing News said Baidu turned down 30 million yuan in promotional requests from illegal medical services and closed down 438,000 suspicious advertising accounts in 2015.

Baidu’s Plus V verification systems rates advertisers on a series of factors from customer feedback to the cost and duration of an advertiser’s campaign, according to David Henriques, co-founder and general manager of Sekkei Studio.

Advertisers are rated V1, V2 or V3, the highest, with a rating percentage displayed next to the advert, Henriques said, explaining this was aimed at reassuring cautious mainland consumers.