CCTV Report Says Baidu (BIDU) Back to Old Ways
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Baidu (Nasdaq: BIDU) may be in some hot water again following an investigative report by China Central Television.
In its report, CCTV posed as a company selling weight-loss medication -- which the company told Baidu was a fake business -- and a Baidu employee supposedly assisted a reporter in getting around stringent checks on pharma advertisers. Baidu had the company register as a machinery company, then later change its keywords for relevant weight-loss drugs.
CCTV alleges Baidu misleads advertisers into bidding more than necessary for top search rankings. CCTV demonstrated that one reporter paid 16 yuan for a top-ranking keyword which Baidu suggested should start with bids of 36 yuan.
The WSJ said it wasn't clear from the report how many CCTV reporters tried to do the same thing. Baidu has thousands of sales staff, and there may be some who try to beat the system to gain more sales. Baidu did not comment on the report.
One blog also points out three key items investors should turn their attention to: 1) Baidu may need to suspend medical related ads, which could hurt quarterly results, 2) advertisers who feel they've paid too much might cut cost-per-click rates, hurting quarterly results, and 3) any new laws and regulations made might hurt Baidu's quarterly results and future growth.
Shares are 0.3 percent lower Wednesday morning, however have fallen more than 8 percent over the last two trading sessions.
In its report, CCTV posed as a company selling weight-loss medication -- which the company told Baidu was a fake business -- and a Baidu employee supposedly assisted a reporter in getting around stringent checks on pharma advertisers. Baidu had the company register as a machinery company, then later change its keywords for relevant weight-loss drugs.
CCTV alleges Baidu misleads advertisers into bidding more than necessary for top search rankings. CCTV demonstrated that one reporter paid 16 yuan for a top-ranking keyword which Baidu suggested should start with bids of 36 yuan.
The WSJ said it wasn't clear from the report how many CCTV reporters tried to do the same thing. Baidu has thousands of sales staff, and there may be some who try to beat the system to gain more sales. Baidu did not comment on the report.
One blog also points out three key items investors should turn their attention to: 1) Baidu may need to suspend medical related ads, which could hurt quarterly results, 2) advertisers who feel they've paid too much might cut cost-per-click rates, hurting quarterly results, and 3) any new laws and regulations made might hurt Baidu's quarterly results and future growth.
Shares are 0.3 percent lower Wednesday morning, however have fallen more than 8 percent over the last two trading sessions.
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