Merkle has China on the mind.
The CRM and performance marketing agency revealed Thursday it had entered into a reseller agreement with dominant Chinese search engine Baidu.
Although the deal is not necessarily exclusive, it is the first of its kind for Baidu with a US partner agency.
As a result of the deal, Merkle gains access to inventory through the Baidu search engine, as well as Baidu Maps and Baidu Union, an ad network with sponsored links spanning 600,000 third-party sites.
Merkle will use marketing platform Kenshoo, which has an API integration with Baidu, to manage and execute buys at the price of a real-time auction.
In other words, there would be no fees or commissions based on spend or ongoing “program management costs” to source Baidu media and Merkle could essentially bypass wholesalers when buying Baidu media.
“This allows us to provide Baidu’s service to a US-based advertiser, yet execute a friction-free buy using Merkle staff in China, at a really good price,” explained George Gallate, EVP and CMO of Merkle, who added that Merkle already employs a team of 400 in China who will help support the effort.
Although the deal was just announced, Gallate said the reseller agreement has been in effect for about three months and 10 Merkle clients have campaigns running on a trial basis.
He added that interest in Baidu’s media and the Chinese consumer has been more prevalent among travel clients, who want to reach China’s fast-growing middle class, as well as B2B and technology brands and luxury retailers.
Gallate was based in Shanghai for three years as global chairman of HAVAS Worldwide Digital.
Despite the opportunities for advertisers to target China’s explosive mobile and digital consumer base, he said, there are cultural nuances agencies and brands face when expanding in the region.
For instance, all ads and supporting language typically must be written in Mandarin, which is a barrier to entry for many US companies.
However, establishing a presence on Baidu is key, given its penetration within the Chinese market.
“Baidu delivers twice as many impressions as the whole of China Central Television, the Chinese government’s TV network. And it’s twice as targeted because your media is based on intent,” said Gallate. “It’s awesome reach, as well as massively targeted, so it makes sense for an e-retail marketer to develop a footprint in the Chinese market.”
Baidu holds an estimated 80% of Chinese search market share in terms of revenue, though some experts have predicted declines in search share as regional competitors like Alibaba make advances, and mobile outstrips desktop searches.
“Baidu’s interest in the deal [with Merkle] is to develop their revenue outside of China,” Gallate said. Baidu’s interests are evident in other ad tech partnerships, such as a multimillion-dollar investment in recommendation engine Taboola.
“They have ambition for a substantial portion of their revenue to come from [the US] by 2020 … and they’re selectively choosing partners who are performance-based.”
