Baidu’s Search Ad Revenue Drops 10-15% After Paid Ad Scandal

Chinese internet giant sacks staff over paid for search listings from the Guardian reports Baidu has dropped the ads of four clients after finding out their medical licenses were false. According to the Guardian, this has resulted in Baidu’s ad revenue dropping ten to fifteen percent, plus the release of several ad representatives who have allegedly helped these false medical practices gain top ranking in Baidu.

Baidu’s stock fell 60% on the news that Baidu allegedly allowed unlicensed medical services adverse for medical practices. Robin Li, Baidu’s chief executive told Xinhua:

Baidu employees who are found to have been involved in the scandal will be penalized… We have already fired people who helped fabricate documents for unlicensed suppliers.

We have removed the key words of all four clients mentioned in the report and have begun to double-check the licenses of all other hospitals and pharmacies on our client list.

One searcher told the China Central Television that he spent 10,000 yuan (~$1,500 us dollars) at one of those clinics. He later found out the procedure did not work and he had to go to a public hospital to fix the issue for only a 100 yuan.

I doubt Google validates the medical licenses of doctors who advertise for medical terms. But at the same time, this would not necessarily be a legal issue for Google – or would it? To be perfectly honest, I am not sure why Baidu is taking such heat for this? Maybe because they place their paid ads directly into the organic results? I would do some tests on this but my Chinese is less than adequate.