Baidu bans ads by Binary Options brokers – LeapRate Exclusive

LeapRate Exclusive… LeapRate has learned that Chinese search engine giant Baidu has decided to ban all ads by Binary Options brokers on its network.

Baidu accounts for about 70% of search results in China, a figure fairly close to that of Google search outside of China. So for companies such as online brokers which rely mainly on online advertising for generating new client leads, this could be a game-changer as far as continuing to attract clients from China.

Baidu is allowing existing campaigns already begun by Binary Options providers to conclude, but apparently is not signing up any new Binary Options customers nor initiating new campaigns from existing Binary Options advertisers.

And it all ties into a Chinese student who died recently from a rare form of cancer.

We’ll explain…

Wei Zexi was a 21 year old university student who was suffering from a rare form of cancer called synovial sarcoma. Following a search on Baidu, Wei followed up on a paid advertisement which showed up at the top of Baidu’s search results. He underwent an experimental (and expensive) treatment at a Beijing hospital, which didn’t work.

Wei then went online to express his anger at both the hospital – which had misrepresented several important aspects of the treatment in its paid-for ads – and at Baidu, for allowing the misleading ads with no screening while presenting it as a search result.

Wei’s posts went viral as well as a video he recorded soon before his death on April 14.

After Wei’s death, Baidu came under a wave of popular criticism in China for presenting ads in search results not on a best-results or most-relevant basis, but on a who-paid-most basis.

And the criticism had fairly quick repercussions. First off, Baidu stock took a hit from the scandal, trading down more than 10% in the days after Wei’s death.

But more importantly, China’s regulator of the Internet, the Cyberspace Administration of China, demanded that Baidu make some fundamental changes to its ads and search results policies:

  1. First, Baidu must reduce the number of paid adverts it shows in search results.
  2. Second, it must redo its search results rankings to show results in order of credibility.
  3. And third, Baidu needs to mark paid-for listings in a more clear and prominent way.

And what the Cyberspace Administration of China wants, it gets.

Apparently Baidu is going beyond the regulator’s asked-for changes, and looking ahead while making changes of its own. One of which, is cutting out altogether ads from sectors it deems as risky. And apparently Binary Options are at the top of Baidu’s list.

Baidu will continue to allow Retail Forex broker ads, but we also understand that they will become more expensive – in part because of change #1 listed above the limit on the number of ads shown on each search result page including a limit on paid-for search results on each page. Applying simple demand-supply economics, with fewer ads and paid-for results being shown basic Forex keywords will simply be bid up.

One industry observer familiar with online marketing in the Chinese market told LeapRate that these changes could soon drive CPL rates to above $200 in China. (That is CPL, not CPA).

The changes at Baidu are somewhat similar to Google’s recent decision to ban ads by Payday Loan providers, with Google deciding that with a large number of lower-income people being taken advantage of, they were uncomfortable with the associated liability.

We also were first to report of France regulator AMF’s President Gérard Rameix sending a letter to French President François Hollande, voicing his concerns regarding the risks associated with trading online, and Forex trading in particular. Rameix suggested in the letter a possible ban on advertising in France of investment products associated with a high risk of losses, including both Retail Forex and Binary Options.

We will continue to follow this story as it develops.

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