Baidu.com, the mainland's largest internet search engine, surpassed rival Sina Corp in the first quarter to command the largest market share for mainland online advertising as Web marketing in the country becomes increasingly sophisticated, according to a research firm.

The report released yesterday by Analysys International also said total online advertising spending in the country was up 38.9 per cent to 1.35 billion yuan for the quarter compared with the same period of last year.

Baidu.com became the market leader by achieving 108 per cent growth in online marketing revenue in the three months over the year-earlier period to 274.6 million yuan. That boosted its market share to 20.6 per cent in the first quarter, up from 20.3 per cent in the previous quarter.

In noting the growth, the report by mainland-based Analysys International cited Baidu's "improved search engine product and its launch of new products such as Baidu Space, Baidu Knows and video search service".

Sina's market share slipped to 18 per cent from 20.99 per cent in the previous quarter, as its once-dominant advertising business continues to struggle due to the shift away from non-targeted ads such as banners.

The company generated 248 million yuan of advertising revenue in the first quarter, down from 278 million yuan in last year's fourth quarter.

In a model popularised by Google, search engines on the mainland have been having increasing success selling terms, allowing marketers to place small advertisements any time a given keyword is looked up.

The report showed that revenue from keyword search advertising was 492.8 million yuan in the first three months of the year, up 3.6 per cent over the previous quarter, and accounting for 36.1 per cent of the total internet advertising market.

Keyword search generated 303 million yuan in advertising revenue in the first quarter of last year, or 31 per cent of the total internet advertising, Analysys International said.

The report said online advertising revenue from non-keyword search was 777 million yuan in this year's first quarter, which accounted for a 56.9 per cent share of the market, down from 61 per cent a year earlier.

Hong Kong-listed Tencent Holding, which operates the mainland's most popular portal QQ.com, generated 74 million yuan in advertising revenue in the period, accounting for 5.4 per cent of market share.

Tom Online's Tom.com portal generated about 20.5 million yuan in advertising revenue in the same period, down 15.8 per cent from the previous quarter.

In the first quarter, Baidu benefited from a 3.7 per cent increase in more active online marketing customers from the previous quarter, to 112,000. Its average revenue per online marketing customer was 2,500 yuan.
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