How does the phenomenal growth of China's online population impact on search marketing in the country? See how local companies like Baidu and Sina leverage the growth.

A recent study by Beijing-based research firm BDA reveals that the number of internet users in China has overtaken that of the U.S. BDA indicated that China is now the world's largest online nation.

China is said to have leapfrogged over the U.S., with the number of web surfers in the country reportedly increasing by around 200,000 daily. According to the Economic Times of India, the U.S. had until recently held the mantle of the top country in terms of internet users ever since the inception of the web. China, meanwhile, was ranked second place back in 2002, before overtaking the U.S. in this recent assessment.

So what does this mean for search marketers? What are the areas within search marketing that can be better leveraged, and what conclusions can be drawn? Previously, we all knew and accepted that China was a potentially huge market, but now this potentially huge market has become No. 1 in terms of online internet population (and continuing to increase rapidly).

The search behaviour in China is also changing; more keywords are being used in search and marketers are responding in kind. Baidu, China's most commonly used search engine, can attest to this through its latest financial results, which show a rapid increase of keyword buying.

On the other hand, SinoTech Search reported that its average number of keywords in a search campaign went up 120 percent in 2007. The number of keywords being used in a single string had also increased. A spokesperson from the company said it is not uncommon to see three, four and five keywords in a single search phrase being purchased; whereas, it was rare just last year to get more than one or two. This move towards long-tail keyword buying shows a greater understanding of search dynamics and goes from using frequency keywords to long tail keywords. To illustrate how this plays out, we take an example of a young couple that wants to buy an apartment in Beijing. The couple was in need of money, so they searched online for loans.

First search: "loans"
Type: frequency keyword
What they got: Very unspecific information from car loans to house loans, maybe even credit card offers. So they had another try.

Second search: "apartment loans"
Type: frequency keyword phrase
This time, they got some valuable information about house loans, interest rates from banks that were located throughout the country, but nothing that made them say, "That's it, let's do it." So they had to go deeper.

Third search: "compare apartment loans"
Type: long-tail keyword
By now, they would have an overview of the range of interest rates for house loans and knew of some banks that might be located near them. But they needed a bank that was close to them, so they went even deeper and launched another search.

Fourth search: "compare house loans in Beijing"
Type: long-tail keyword
They finally found a website that compared all apartment loan interest rates in their city.

Other examples of long-tail keyword searches could also include, "cheap apartment loans in Beijing"; "bank with low-interest apartment loans in Beijing".

Search engines in China tend to have more users than popular portals (such as Sina, Tom.com, etc.); however, portals currently have greater advertising revenue. So there's a big opportunity for Chinese search engines to capture some of that online ad spend. The usage overlap of internet readers for search engines and portals is 100 percent. Therefore, search engines have great revenue potential as users migrate away from portals and towards search engines -- a pattern that was played out in the U.S. in the late 1990s and is fundamentally still holding true today.

In summary, search marketing in China is becoming a more common form of online marketing, coupled with the growth of the internet in China and the greater appreciation of online advertising ROI, the opportunities for this medium will only increase.

Dr. Mathew McDougall is group CEO and executive chairman of the SinoTech Group. Read full bio.