China Search Daily

Yes, that’s a real situation. Whenever you come across a chinese internet marketing agency, you should ask a question first. Are you a real agency or just a reseller.

Agencies revenue base in its professional service, and charge by the percentage of budget or charge by the man power used.

Resellers revenue base in its commission or rebate from the service providors. Normally those providors are search engines, protals etc.

Most of the internet technology companies are resellers, they serve for baidu, yahoo china, sina, sohu…… and resell their PPC, online advertisement, they even resell domain and hosting.

During the past 5 years, resellers were the main force that enhance the development of internet business in china.

Normally, resellers were divided into 3 types. National distributors, district deallers and local resellers.

National distributors, like Timev, once signed a national dealership contract and had the exclusive right to distribute PPC or CPM, they normally build up an reseller channel covering most of the provinces and cities of china. They share part of the commission with sub-resellers / local resellers. National distibutors, such as Timev, are sort of pioneer for this industry in China, they educate the market, resellers and advertisers.  Most of the time, they dont contect the advertisers.

District dealers, they dont have a national wide dealership, but they still own an exclusive district dealership. Here district means one or more specific provinces or cities. They build district reseller channel, and have direct sale for advertisers.

Local resellers, they resell for both dealers and those providers (SEs or Portals), they have direct sale, they own a team of tele-marketing employees.

Internet industry here in China follows all the thoery of trandition business. Providers (SEs and Portals) and resellers are always balancing each other with higher revenue and profit. So the commission policies were changing all the time. Policies are getting more and more strict, the rebate targets are getting higher and higher.

There are several different destinations for resellers: merged by SEs, launch own marketing tools or solutions, become an agency, died.

Baidu was the first one to buy resellers, they bought their shanghai reseller 71W.com at 2004. And baidu’s other actions did kill some resellers, they just took over all the client / advertisers at certain provinces and cities. Some reseller company owners even wanted to get united and fight Baidu. At 2004, articles, bbs, blogs were talking about the crisis for resellers.

If there were not good price, most of the resellers didnt want to be merged. But they also want to survive. So nearly every of them want to launch their own service, and become more creactive. They launched small business directories, affiliate marketings and other internet applications. But most of them still dont find their vision and right method to develop their own business.

Some resellers are looking forward to be a real agency. They improve client relation management, budget control and study tools for real search engine marketing.

2006 is the turning corner for resellers. There is also opportunities for global players and VCs. Because, in terms of market share expanding, resellers are more aggresive than agencies.

This entry was posted on Tuesday, May 30th, 2006 at 4:20 pm and is filed under Any. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.