by Craig Macdonald, CMO, Covario, Inc.

China’s control of the media in its country will now extend to the Internet with Google’s decision to eliminate its censored server there. Going forward, Google will shift all Chinese Internet traffic to its server in Hong Kong. Obviously, this won’t sit well with the Chinese government, which is now likely to be in a position where it believes it has no other choice than to censor content coming from Hong Kong.

Consequently, Google’s exit from China is significant. However, this is more of a political than a marketing issue. The outstanding question remains how far the Chinese government will go towards censoring social networks, such as Facebook and Twitter.

In our view, the biggest losers are the Chinese citizens, who may not have as much Internet freedom as they’ve come to enjoy. Even the Chinese government itself may feel the sting of negative sentiment about censoring content from Hong Kong, if that occurs. On the business side, Google will certainly lose market share in China.

That said, on the plus side, Google could become more competitive in Japan and South Korea, regaining influence in the Asia Pacific region. Besides Baidu, the No. 1 search engine in China, there’s no clear winner. Microsoft/Bing could use this opportunity to leverage its engineering resources in China to fast track the availability of bing.cn to seize market share.

Google’s announcement has a neutral impact on advertisers. Advertisers have been dealing with Chinese censorship for years, so there is no real change for them, and Search Marketing will continue with Baidu. Covario believes advertisers should keep investing in this region.

About Covario, Inc.

Covario, Inc. is the leader in SEM and SEO software and services for the Forbes Global 2000. The Covario portfolio provides global organizations with robust interactive and search marketing analytics solutions for paid search advertising, organic search engine optimization (SEO), and display advertising. Covario enables complex and distributed organizations to control brand integrity, ensure budget transparency and deliver quantifiable results across business units, distribution channels and languages.  Headquartered in San Diego, CA, Covario’s growing customer list include some of the world’s best known brands in high tech manufacturing, retail, ecommerce, financial services, consumer electronics, media, entertainment, publishing and consumer packaged goods. For more information on Covario call 858.397.1500 or visit www.covario.com.