Google outlined its plans to reporters last week about their aim to achieve the top share of the search market in China - the second largest population of Internet users after the US. Google entered the Chinese market relatively late - in January 2006 - which was after Yahoo! and other prominent US web services had made inroads here. Google has also been dogged by censorship issues and other Government controls, which will also affect their YouTube service.

However, Google has already achieved nearly 22% share of the Chinese search market with Google.cn, but this remains some way behind the local incumbent, Baidu, which is reported to hold a 55% share of the market. Google claims to be increasing their share and they are now investing more technical and financial support through their Beijing office to allow local managers to have more autonomy to develop their strategy within the country.

China is certainly a huge untapped market for many online companies - there are 137 million people online and this number is continuing to grow and expected to surpass the US market in the next 2 years. However, it is also a very unique market that requires localised knowledge and understanding, as well as an awareness of the potential pitfalls and restrictions that exist. One thing is certain, as in many business sectors now, China and it's potential can't be ignored and Google is making every effort to be a leading player for the future.

Despite any concerns about click fraud (see previous post), pay-per-click advertising has become a marketing phenomenon with exceptional growth in spend being reported over the last 4 years in Australia and the UK, in particular. First developed as GoTo, this early PPC model rebranded as Overture in 2001, by which time Google had also launched its AdWords product and it has been this tool that has driven the growth in this market (and Google's revenues) over recent years.

PPC has been so successful because it has focused the power of search engine traffic into a controlled advertising model. We've compared the strengths and weaknesses of PPC v SEO, but a key advantage of PPC is that companies can easily achieve visibility on search engines, whatever their site design or optimisation may be like, and it can create highly relevant and cost-effective traffic for them within 24 hours. The 'pull' method of advertising means that people will find a company or product when they are actively looking for them, rather than the traditional offline advertising that 'pushes' a message out to a broad market using TV, press or radio.

This use of search can be so cost-effective and measurable that companies are now falling over (or, perhaps more correctly, out bidding) each other to get rankings through sponsored results. Consequently the average cost per click has been increasing over the last few years due to the increasing competitiveness of many market sectors, so that the huge success of PPC advertising is also now beginning to create barriers for many.

The entry costs for a PPC campaign are now becoming higher and many larger companies are now entering the PPC market to dominate rankings with higher bid levels, both to drive traffic and develop their brand, as well as to push competitors down the rankings. This process will begin to shut out those companies with smaller budgets, although there are still many ways to make this form of advertising successful.

Eventually PPC advertising will achieve a natural economic balance and advertisers will need to ensure that their websites convert visitors at a better rate to continue to achieve the best ROI (return on investment). There are some signs of a move back to search engine optimisation as a strong alternative to PPC costs, although we recommend a balance of both techniques to achieve the best opportunities for search traffic.

Latest quarterly figures published by Click Forensics indicate that 'click fraud' from PPC advertising is on the rise - up to 14.8% in Q1 of 2007, which is up from 14.2% in the previous quarter and continuing an upward trend. This company operates the Click Fraud Index, which comprises a network of over 3,500 advertisers and agencies who record data from their PPC campaigns.

This figure is significantly higher than figures released a few months ago by Google, who claimed that just 0.02% of their AdWords traffic is identified as click fraud (once other non-converting clicks are taken into account). Of course, everyone with an interest has an axe to grind (or a business to run) when it comes to these figures and the wide variation in figures comes down to definition and recording methods.

We haven't got space to list the different definitions of click fraud here and the 3 main PPC provides all define this in different ways and probably use slightly different methods to record and combat it. Google has been the most transparent and does show the number of 'invalid' clicks deducted from each AdWords campaign, which tends to range between 2-5%.

Click fraud will remain one of the biggest concerns for PPC advertisers (along with rising click prices) and we will no doubt return to this subject again soon. Regardless of all the figures and the automatic controls that are in place, or the manual checks that can sometimes be done, you can never stop a competitor occasionally clicking on your paid link, particularly if you're in a competitive (and high priced) market or they have the time to waste.

Ultimately the campaign overall still has to be successful and generate a good ROI, including any margin for click fraud costs. That will then come down to your keyword choices, website usability and product or price offer. Click fraud certainly can't be ignored, but it's just one of the factors that will determine whether your online marketing campaign is successful or not.

Advertisers in Australia and New Zealand who are using the Yahoo! Search Marketing pay-per-click advertising service have been contacted this week with an announcement that the new-look service will be introduced later this year.

Originally code-named 'Panama', Yahoo!'s long-awaited upgrade to their PPC service was first launched in the US at the end of 2006 and is now fully operational there, with early reports indicating that it has benefited both advertisers and Yahoo! itself. This comes at a time when Yahoo! has just released its 1st Quarter results for 2007 which show a 9% increase in sales over the previous year (to $1.18b) but an 11% fall in net income, to $142m. However, Yahoo! has stressed that the benefits of Panama are not yet showing and the results later this year will show a better reflection of this new development.

Yahoo!'s new PPC will offer Australian advertisers a more flexible advert and bid management which is more closely aligned to the Google (and Microsoft AdCenter) model. Some changes will need to be made when transferring existing accounts, especially as shorter advert text will be introduced soon, but it should enable some better tools to cover the sponsored search listings on most of the other main Australian and New Zealand search tools not covered by Google.

So the question is, when will it be introduced? If the US results have been so positive, then Yahoo! will want to do this sooner rather than later. There may be a full roll-out to all other regions at the same time, or staged to key markets, so that the UK may see the new system next, followed by Australia in the third quarter of the year. We'll keep you informed of progress and review the new system once it is launched here.

Of course the big news story last week was Google's successful acquisition of Doubleclick for $1.3 billion. This was announced on Friday and completed several weeks of fevered speculation about who would win this battle, since Microsoft was also involved in the bidding.

DoubleClick has been around for years and is primarily an ad-serving software and management service, handling many of the display adverts seen on leading websites. Google has been dabbling with alternative advertising options beyond search but hasn't been keen to work with other companies in this area. That's what makes DoubleClick the perfect acquisition for them, giving them access to a leading online advertising service and also a huge amount of traffic data which can be combined with Google's own search behaviour information.

Perhaps just as importantly for Google is that it has kept DoubleClick away from Microsoft, who were first reported to be interested in buying the company. So as well as strenghtening Google's position in the online advertising market, the move has also weakened Microsoft's position in this sector, since they've now had their target purchase snatched away from them.

Notably, the massive cash purchase by Google was also twice as big as their earlier YouTube purchase and marks their biggest purchase yet. It further establishes them as a powerful online force, which may bring new benefits to the market but also raise more questions and concerns about the growing dominance of Google and their further move away from their core search platform.

A good piece of news announced last week by Google and the other main search engines, Yahoo! and MSN, was a further development with the standardised Sitemap protocol, which should enable websites to get their pages indexed much easier and faster.

We reported in our December newsletter the significant step forward made by the 'big 3' search engines in agreeing a standardised protocol for submitting a Sitemap document - in a number of different formats - which would enable these search tools to index pages from a website more efficiently and more often, if required.

Now Google and the others (who have also been joined by Ask) have taken this another step forward by announcing a simple addition that can be made to a robots.txt file, which will enable these Sitemap files to be identified and indexed by the indexing 'spiders'. This means that you don't necessarily need to register to use Google's Webmaster tools, for example, (although this can still be the best option) but you can just edit your robots file to include the location of the Sitemap file and then let the search engines do the rest.

There's more information about this on the official Sitemaps protocol website.

As this is the first entry on The Marketing Workbench, we thought that a brief description of what it's all about would be a good place to start.

The 'Workbench' is a new section on the Web Marketing Workshop website and the intention is to use this area to record key news stories, discuss the latest trends and to provide tips and advice on many issues related to Internet marketing. It's primarily intended as a resource for our customers, since we felt that our monthly newsletter was becoming too infrequent to keep up with all the developments that are now happening online. The newsletter will still continue, but will become more of a digest for items that are posted here during the previous month.

The information included on the Workbench is, of course, open to other readers as well - whether prospective clients, ex-customers (when we have any!), and the casual browser who may come across an article of interest. All are welcome and feedback or discussion on any postings here would also be encouraged.

So welcome! Please use the Workbench as a resource to help explain or support your Internet marketing activities. If you learn one thing a month, or gain an extra piece of knowledge that helps your online business, then our objectives will be met. Do let us know what you think and what else you might like to see here and we'll continue to develop this as an additional resource over the coming months.