Baidu Travel & The Chinese Outbound Tourist

Content

China’s Economic Growth

China Online

Chinese Traveller

Baidu & Baidu Travel

CHINA’S ECONOMIC GROWTH

Growing Wealth

China’s Economic Status

• China’s total population of 1.35 billion is more than – US, UK, Japan, Germany, Canada, Australia, Brazil, Russia and Indonesia combined

• By 2020, China’s urban population will be 842M vs. just over 1B for all the above countries combined

• China’s urban population will grow from 42% of total population in 2005 to 61% in 2020, with more growth expected as developed nations average 83%

• China overtook Japan to become the 2nd largest economy in the world in 2010.

• In November 2012, the Chinese government set the goal of doubling China’s GDP and per capita income of both urban and rural residents by 2020

Source: World Bank; retrieved April 2013CCCP 2012; Economic Observer 2013

China’s Economic RiseChina’s economic growth over the past decade and a half has been remarkable. Today, it is the world’s second largest economy and continues to enjoy a relatively high GDP growth rate.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

$1.20 $1.32 $1.45 $1.64 $1.93

$2.26 $2.71

$3.49

$4.52 $4.99

$5.93

$7.32

$8.23

8.40% 8.30%9.10%

10.00% 10.10%

11.30%

12.70%

14.20%

9.60%

9.20%10.40%

9.30%

7.80%

China’s GDP Growth, 2000 - 2012 (Trillions; %)

GDP (current US$) GDP Growth (Annual %)

Source: World Bank

Growing Wealth in ChinaThe middle classes are expanding beyond the larger cities more rapidly & in greater numbers than any market has ever witnessed. The number of Middle and Affluent Consumer HOUSEHOLDS in China will be the same as the US by 2020.

1

13

34

61

57

36

12

53

69

66

39

23

Household annual disposable income(USD) thousands

Upper affluent >$31.5Lower affluent $16 - $31.5Middle Class $9.5 - $16Emerging Middle $6 - $9.5Aspirant $4 - $6Poor <$4

Households MillionsHouseholds Millions

Source BGS Consultants

Urban household disposable income 2020Urban household disposable income 2010

China’s Affluent Class

Source: BCG, The Age of the Affluent, November 2012Note: Affluent is defined as having annual household disposable income between $20,000 and $1,000,000.

China’s Affluent Class in 2012: 120 million with purchasing power of $590 billion

China’s Affluent Class in 2020: 280 million with purchasing power of $3,100 billion (equivalent to 35% of China’s total consumption)

China’s Affluent Class will more than double in the next decade with purchasing power increasing five-fold

CHINA ONLINE

Channels

The world’s largest online economy

China already has the largest online population in the world at 618 million users. Astonishingly that’s only 45% of their population, so their capacity for growth is enormous

China USA India Japan Brazil UK Australia0

100

200

300

400

500

600618

245

121101

7953

2045

79

10.2

80

39

84 89

Online Population MMs

% of Population online

Or to put it another way…

China

USAUKAustralia

= 50 million online users

China’s Digital Credentials

• As of end 2013, there were 618 million internet users in China – the world’s biggest internet user population. The internet penetration rate has now reached 45.7%.

• There are more male internet users in China (55.9%) than female (44.1%).

• While nearly three quarters (73.4%) of China’s internet users are going online via their PCs, more than two thirds (69.3%) also do so from their mobile devices.

• China’s students represent 30.2% of China’s online population.

• The rural areas of China account for 26.5% of the total internet population, or 156 million internet users.

• As a guide, in recent years, China’s internet population has grown by approximately 30 million people quarterly (half the population of UK)

1,351,000,000

51% Urban

Total Population

Urban vs. Rural

618,000,000

45.7%

Internet Users

Internet Penetration

1,198,500

88.7%

Mobile Subscribers

Mobile Penetration

556,000,000

90%

Baidu Users

Internet Penetration

Source: US Census, CNNIC, Mobithinking, Baidu Metrics

CHINESE TRAVELLER

Growing Wealth

China’s International Travel Expenditure 2012

Increasing number of Chinese tourists traveling further

Chinese were the world’s biggest spending travellers in 2012 (over-taking the Germans)

Est. expenditure to reach $117.6 bn in 2013 with a year on year growth rate of 20%

2005 2006 2007 2008 2009 2010 2011 20120.0

2.0

4.0

6.0

8.0

10.0

12.0

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

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nd

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end

itu

re (

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row

th

Source: United Nations World Tourism Organisation, Baidu

Volume of Outbound Travellers

Source: United Nations World Tourism Organisation, Baidu

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Jan-March2014

10.5 12.116.6

20.228.9 31.0

34.541.5

45.847.5

57.4

70.3

83.2

97.3

112.0

26.4

2014COTRI est.

In 2013, Chinese outbound travellers reached 97.3 Million, with 14 million more travellers than 2012. It was estimated to break 100 million in 2014.

China Outbound Tourism 2000-2014 in million border-crossings plus COTRI Forecasts 2014.

Sources: COTRI, CTA

Market Value Today

Chinese travel market is currently worth $232 billion

China’s travelers estimated to take 200 million trips annually by 2020

Chinese tourists spent an estimated $100 billion in 2012, up $27.6 Billion from 2011

– Industry’s 17% annual growth over the next decade translates to… 10 million ‘first-time’ Chinese travellers every year for the next 10 years

– Or… 70,000 new Chinese travellers every day for the next 10 years

Source: HSBC 2013; UNWTO 2013

Why Target China?

800 Million Middle Class Chinese by 2030

• Rising incomes means more Chinese are looking to travel

• Greater number of Chinese traveling, taking more trips overall and traveling further

• Increased spending power means higher travel expenditures

• Growth of online in China as a resource and tool for travel seekers

Chinese Travelers to the UK

Source: VisitBritain.org

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

50

100

150

200

250

$0

$100

$200

$300

$400

$500

$600

64

105 100 105

130

98 83

111

145

170

202

$125 $134 $127 $101

$149 $130 $109

$186

$245 $291

$493

Chinese Inbound Visitors to the UK and Expenditure, 2003 – 2013(000’s & GBP millions)

Chinese Visitors to UK Chinese Visitor Expenditure

The typical visit from China generated £1,680, almost 3x from the average market. London alone accounts for 44% of all Chinese visits and 47% of spend, making it the most important UK city for the Chinese tourism market.

Defining Trends

Source: HSBC 2013; UNWTO 2013

Source: China Digital Review, Aug 2014

Independent: 63% of China’s outbound now plan travel independently (up 10% from a year ago)

Sophisticated: no longer after the cheapest rooms, to reserve cash for handbag shopping, the discerning inbound now seeks out quality accommodation, and loyalty programs offering discounts

Experiential: Gen 1 shopping and Stonehenge, Gen 2 want meaningful experience and are receptive to being marketed to in Mandarin, with authenticity and passion

Online: All the time! Savvy marketers will provide content and next step options at various stages of the travel cycle: from wish list to post-trip.

80% research online to make travel plans, 53% (and climbing rapidly) book flights and hotels online, 91% use Social media during and post trip

Influencing Channels

Sharing experiences through social media is popular, especially among the younger Chinese. More Chinese are writing about their travel experiences through personal blogs as well as social media, either during the trip or after the trip.

Online sources are rated as the most useful source as travellers can obtain very detailed and comprehensive review and guidance from other experienced travellers.

Chinese predominantly turn to maps that they picked up at the destination for information. Other popular sources of information consulted are tour guides and online sources via either their mobile phones or other electronic devices

BEFORE TRAVELLING DURING TRAVELLING AFTER TRAVELLING

Chinese Traveller Pre-arrival Research

65%

Internet

51%

Word of Mouth

41%

Magazines

38%

Newspapers

37%

TV

For Chinese High Net Worth Individuals (HNWIs) in Tier 1, Tier 2 and Tier 3 cities, the internet is the most popular source of information. Women prefer the internet (71%) and magazines (45%)

Source: Huron Report Chinese Luxury Consumer Survey 2013

SILK CRM consumer insights interviewing luxury Chinese women shoppers

Women travelling abroad for the first time have between 2 to 30 items carefully researched and prepared on their list

Influencers on Chinese Travellers

Individual Chinese

travellers are most

influenced by Chinese

Internet/Social Media and

friends/family

Chinese are traveling more independently rather than on tour groups, giving them the flexibility to plan their own trip itinerary

• 60% of Chinese outbound tourists now prefer to travel individually• 74% of individual travelers are between the age of 25-44

Source: Hotels.com, 2014

Usage of Different Travel Booking Channels

EDM

Credit Card Club

BBS

Travel Reviews Website (daodao / tripadvisor)

Travel Channel or Portal

OTA (e.g. elong / agoda)

Vertical Search Engine (e.g. Qunar / Kayak)

General Search Engine (e.g. Baidu / Google)

0% 10% 20% 30% 40% 50%

11.00%

15.70%

27.00%

27.70%

35.50%

39.60%

41.70%

46.50%

Source: Baidu, World Travel Mart

Online Travel Booking Market Scale

2009 2010 2011 20120

20

40

60

80

100

120

3036

42

112

Online travel booking usersMillions

Country Penetration Rate

United States 40%

United Kingdom 47%

India 20%

Brazil 25%

China 7.9%

• 2012 was the tipping point when online travel booking spiked in China

• By 2012, China had more online travel booking users than the United States (112 million).

• The current penetration rate is only 7.9%, which indicates growth opportunity ahead

Source: Baidu, World Travel Mart

UK Visa Status

Source: HSBC 2013; UNWTO 2013Source: Evening Standard, Sep 2014

Some 90% of Chinese tour groups omit UK from European tours, resulting in £1.2bn lost revenue each year

UK losing out to France and Germany because we are not currently part of the Schengen agreement

BAIDU

China’s largest digital publisher

China Travel Search Users’ Intentions

9.4 Billionmonthly travel-related keyword searches on

Baidu

Baidu is China’s equivalent of Google…Baidu is the major search engine, and largest digital publisher, in China with over 556 million regular users. That’s the equivalent of all the Google users in Europe and Asia combined.

Population of China: 1.35 billion

Online Population: 618 million

Baidu’s Reach: 556 million

What can Baidu offer?

Loyalty 忠诚 Purchase 购买Consideration 考虑Familiarity 熟知Awareness 知晓

• Content Network

• Hong Media

• Targetisement

• Brand Zone• Keyword Search (SEM)

• Baidu Wireless (mobile)

Brand Landmark

Search Network

Baidu’s search results look very similar to Google’s.

The results at the top / centre of the page are “exact matches” to the keyword that the Baidu user has typed in.

Results below the red box are organic search results.

The red box on the right shows “broad matches” to the keywords that the Baidu users typed in.

A brand’s position on the page is influenced by their CPC (the highest bidder for the keyword appears at the top of the page) and the website quality score.

The quality score refers to how relevant Baidu feels each keyword is for your client’s website. If a keyword appears many times in a website and meta data, it will have a higher quality score.

If you’re the highest bidder but have a low quality score for a given keyword, you won’t be given the top paid search slot.

Just like on other search platforms, Baidu don’t publish the exact algorithm that gets a site the top advertising slot. We do know however that it’s a combination of quality score and maximum keyword bid.

Brand LandmarkUsing the keyword – Luxury Watches

Brand Landmark average CTR 2-3%

Brand LandmarkCalifornian Tourist Board

Brand ZoneThis successful campaign from Burberry includes logos, videos, animated gifs, multiple product photos, latest news, deep links and social media. (Translated from Chinese using Google Translate)

Brand Zone – Desktop

Sands Cotai Central – Hotel Group, Macau

Brand Zone – Video & Knowlege

Sands Cotai Central – Hotel Group, Macau

BAIDU TRAVEL

Targeting Chinese Travellers

Baidu Travel

Baidu Travel

• 212 Million travel related search queries exceeding 9 Million every month. 

• travel.baidu.com was launched in 2011, taking advantage of Baidu’s big data resource

• Powerful platform for Chinese Travel Enthusiasts

• From June 2014, Baidu Travel is available to non Chinese brands to advertise on

• China Search International have rights to sell Baidu Travel in the UK

Channels for Obtaining Information

If your customer is online in China, they’re on Baidu!

Source: CNNIC: Chinese traveler’s behavior 2012

Enormous Reach

Chinese Outbound Travellers

97.2 Million

42.4 Million

66.0 Million68% use Online Sources

20,000,000

Page views/day

Baidu

Source: China Outbound Tourism Research Institution, 2014; UNWTC

Baidu Travel Channels

Baidu Travel has 7 Channels to influence audiences making travel decisions:

Homepage, Destination, Travel Note, Picture Album, Travel Plan, Shopping Mall, Promotion

Recommendation from past visitorDownload Travel Guidebook, Specialist travel magazine or newspaper

See downloaded PDFOnline guidesTour GuideDigital Maps

BEFORE TRAVELLING DURING TRAVELLING

AFTER TRAVELLING

Write review on Baidu TravelBlog about itPost on social networking siteShare photo

Baidu Travel - Positioning

“Unbiased destination reviews, photos and travel advices for

trips and vacations” “High quality content generated by travel professionals. Venturing

Somewhere New? Be Inspired By Baidu Travel!”

“See suggestions & recommended sights with

pictures posted by past travellers. And share your own

travel experience!”

Professional Generated

Content

Best Trip Advisor Active TravelSocial Media

Baidu Travel - PositioningSuggested Schedule

Place of interest

Food & Hotel

Transportation

Activity & Festival

Q&A + Tips

Baidu Travel - Mobile

Unique Visitors

6,000,000+

• As of May 2014, the number of downloads via mobile devices exceeded 40 Million.

• Time spent on Baidu Travel app made up 30% of total time spent on Baidu Travel services (PC+App)

• The monthly unique visitors of Baidu Travel app reached approximately 6 Million in Apr.

Active Visitors

1,100,000+

User Demographics

Domestic travel users on avg. have travelled 4.7 times in the last 12 months

Outbound travel users on avg. have travelled 5.4 times in the last 12 months

9,447 RMB average expenditure in each trip

Affluent

60% plan to make at least 1 intl. trip in the next 12 months

58% claim to be fluent or proficient in English

62.5% owns a bachelor degree and above

YoungElite

WellTraveled

Monthly Personal Income 8,114 RMB

Monthly credit card consumption is almost twice as much as the general online users’

The average car ownership for existing users is 1.4, the average price is 230 thousand RMB

Baidu Travel

Banner Standarddisplay

Impactfuldisplay

Interactive Campaign

ThemePackage

Q&AActivity

Destination Package

Destination OfficialExperience Pavilion

Mobile

APP Developmentand Maintenance

BRAND

DIRECTRESPONSE

Banner Options

Homepage Travel Plan

Shopping Mall

Picture Album

Promotion

Travel Note Detail Page

Destination Details Page

Baidu Travel offers a variety of banner placements including Standard Display and Impactful Display:

Destination Package

Banner Promotion For Q&A Activity

Special designed pagefor introduction ofdestination

Baidu Travel

In the UK access to advertising opportunities is only available from me!

Baidu Travel advertising is not available in China

Popular with travel and tourism brands for planning and sharing activity pre-, during and post-trip

Also popular with retail brands (at destination) e.g. products-in-store brands, retail outlets, and shopping destinations.

China Search International

Overview

We are Baidu’s International Partner, not an agency. That means our business model does not rely on charging management fees.

In fact – the only charge you or your clients will ever see from us is a 2.5% processing fee to cover our banking and foreign exchange fees. In essence we are paid by Baidu to sell Baidu.

With offices in Singapore, San Francisco, Sydney and London we’ve guided hundred of clients through the complex Baidu processes.

We’ve all worked previously at major brands / agencies in the UK, USA and Australia so we understand your requirements and the importance of managing your client’s expectations.

The result is that we’re well placed to help your clients launch on Baidu in the most cost effective and hassle free way.

Some of our clients

Thank you

Direct: 020 7193 8753

Mobile: 07900 692149

Email: matt.b@chinasearchint.com

Web: www.ChinaSearchInt.com

Matt Brown

UK Sales & Marketing Director