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TopRank Online Marketing and the Direct Marketing Association have just announced a partnership to develop and deliver a series of educational workshops on social media marketing entitled, “Social Media Smarts: Introduction to the Social Web, Tools and Tactics.”

With marketers facing tighter budgets in the coming months, social media marketing offers new opportunities for companies to engage customers, improve brand awareness and increase sales with budgets that are more recession friendly than many traditional marketing efforts.

Leading the workshop will be Lee Odden, CEO of TopRank Marketing, who will introduce participants to the marketing opportunities with social media through best and worst practices examples. As you can see from the photo in this post, I’m much taller than Lee.

But, according to George Markham Director, Education Services at Direct Marketing Association, “Lee is a well rounded digital marketer uniquely qualified with over ten years experience as an internet marketing consultant and a background in corporate training.” Markham adds, “As a consultant working on the front lines of social media marketing for companies large and small, Lee brings first-hand knowledge and real-world examples to teach attendees how to develop a successful social media strategy.”

But I’m still taller.

The Social Media Smarts workshop will provide attendees with insight into blogging and blog marketing, social networks, microblogging, social news and bookmarking, video sharing, image and audio sharing, wikis and social media analytics.

Rounding out the workshop is a social media strategy exercise that will empower attendees to create their own social media strategy and develop a framework for building a business case within their organizations.

Lee is quoted in a press release as saying, “As a high demand digital marketing and PR agency, we’re seeing tremendous benefits from educating in-house marketing staff on the finer points of social media marketing.” He adds, “Offering both good and bad social media marketing examples along with strategy, tools, tactics and analytics can really empower companies to succeed.”

Now, I’ve served on panels with Lee. I know Lee. And that’s exactly the way Lee talks.

The first of the Social Media Smarts workshop series will be conducted in New York, December 4th and 5th, at the Microtek training facility in lower Manhattan. If you are in the nieghborhood, drop by and heckle Lee.

And remember: I’m taller. Actually, I was standing on my toes for this photo. Lee’s actually pretty tall, too.

Citysearch appears to be going for the jugular with its newly rebuilt site. While many sites add a little social here and a little mobile there, Citysearch is going for the three hottest trends all at once: Social, Local, Mobile.

“We rebuilt the Citysearch platform to give our users what they asked for — a new site that drills down to the hyper-local level with content for specific neighborhoods,” said Jay Herratti, CEO of Citysearch. “We also expanded our social and community tools by integrating Facebook Connect deeply into our site experience. Now users will be able to see their Facebook friends on Citysearch and share reviews and recommendations.”

This is a completely smart strategy as the economy gets tighter. Expect to see these trends grow even hotter despite the Wall Street-Capitol Hill drama.

I can see all sorts of possibilities. People are relocating or working in a different part of town. The ability to check out new local restaurants, entertainment venues, etc via their mobile and connect with people socially will be powerful.

Here’s what Citysearch is saying the new experience will be like:

– More local — Citysearch is expanding its local coverage from 140 local city guides to over 75,000 cities and neighborhoods nationwide. New geo- targeted search technology provides a truly local experience to users, allowing them to target businesses according to zip code. Citysearch also restores balance to local business coverage by providing content from three distinct voices: users, editors and merchants.

– More social — With Facebook Connect, users can log into Citysearch using their Facebook account, allowing them to discover new local businesses and share reviews with their friends online and providing a personal view of their neighborhood and favorite local spots. New social features also enable users to create profiles, more easily review businesses and infuse their opinions and unique local content into their social graph. Connectivity to more major social networks will follow in the coming months.

– More mobile — Mobile by Citysearch puts reviewing into the palm of the consumer’s hand. Key features include an interface tailored to each individual mobile device — optimizing content layout and keystrokes required to surface search results — on-the-go reviews, and mobile menus.

– More intuitive — The new interface offers a streamlined registration process, easy review writing interface, new search refinement and navigation tools. Other new features include a follow-along map with integrated content that moves as the user scrolls down the page, making it easier for users to see everything they need in one place.

What do you think of the update? Let us know in the comments.

Related Reading:
MapQuest Partners with Citysearch for Comprehensive Search Results
AOL to Distribute Citysearch Content, Ads

Yahoo! Search BOSS is now allowing developers to use a feature called Key Terms. The feature is derived from technology that is used in Search Assist.

Yahoo! says developers can use Key Terms to create refinement terms for their own search applications as well as creating semantic analysis or new relevancy models.

In releasing Key Terms, Yahoo! is introducing a new universal parameter: “view.” The Yahoo! Search blog gave the following example for a search for the new President-elect:

I hope that I have gotten your attention with regard to page title tags. As I mentioned before, not everyone really pays attention to these. If you just want to blog or create a web site without really focusing on SEO, then that should be just fine. However, if you have the [...]

Last week, Google introduced Sponsored Videos to YouTube and also recently started testing ads on Image Search. Today, text ads come to Google Finance and soon, Google News will be getting some ad testing.

The ad testing on Google News will be a bit different. The ads will appear on the results for “search refinements.” Google gave the example of conducting a search on the “regular” Google for an iPod. Clicking on the news search link from the results would be a refinement. That’s where you would see the ads, should you be graced with the testing.

What do you think of the expansion of ads to other Google Properties? Let us know in the comments.

RingCentral Virtual Phone System

links for 2008-11-16

Multi Level Network Maketing Defined

Walmart Sends DMCA Notice to SearchAllDeals, TechCrunch

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New market research has found that blog readers are strongly influenced by blog content when it comes to purchase decisions across a number of categories, and that blogs play a key role in ushering readers to the point of an actual purchase. BuzzLogic, a social media analysis company and ad network, sponsored the market research and JupiterResearch, a Forrester research company, conducted the survey of more than 2,000 online consumers in the US.

Their Harnessing the Power of Blogs survey also found that blog readership has grown 300% over the past four years. The results also suggest that consumers who read blogs more than once per month — or frequent blog readers — use blogs as the top online navigation tool to discover other blog content, ranking higher than general Web search or blog search.

The new market research will be the focus of a free webinar, “Consumers and the Influence of Blogs: What it Means for Your Marketing Mix,” which will be held on Thursday, November 20, 2008, at 2:00 p.m. EDT / 11:00 a.m. PDT. The free webinar will be moderated by Matt McGowan, vice president and publisher for Incisive Media’s digital marketing businesses, and will feature Barry Parr, Analyst at JupiterResearch, and Rob Crumpler, President and CEO of BuzzLogic.

Looking more closely at how blogs factor into consumer purchase decisions and the nature of blog influence on buying behavior, the survey found:
• Blogs influence purchases: 50% of blog readers say they find blogs useful for purchase information.
• Blogs sway more purchases among readers than social networks: More frequent blog readers say they trust relevant blog content for purchase decisions than content from social networking sites. Enid Burns of The ClickZ Network focused on this finding in her recent story about the survey, “Study: Blogs Influence Purchases More Than Social Sites.”
http://www.clickz.com/showPage.html?page=3631303
• Niche focus ups influence factor: For those who have found blog content useful for product decisions, 56% said blogs with a niche focus and topical expertise were key sources.
• Blogs go beyond tech: Outside of technology-related purchases, for which 31% of readers say blogs are useful, other key categories include: media and entertainment (15%); games/toys and/or sporting goods (14%); travel (12%); automotive (11%); and health (10%).

According to the study, blogs factor in to critical stages of the purchase process, weighing most heavily at the actual moment of a purchase decision. When it comes to respondents who said they have trusted blog content for purchase decisions in the past, over half (52 percent) say blogs played a role in the critical moment they decided to move forward with a purchase.

Blog readers were also surveyed about the influence of blogs as it relates to the following steps of the purchase process:
• 21% decide on a product or service,
• 19% refine choices,
• 19% get support and answers,
• 17% discover products and services,
• 14% assure,
• 13% inspire a purchase
• 7% execute a purchase.

For frequent blog readers, ads on blogs are on par with sponsored search results. However, trust of blog advertising exceeds that of social networking site advertising. A quarter of these readers say they trust ads on a blog they read; paid search links also accounted for 25% of the responses, while 19% say they trust ads on social networking sites.

The study also suggests that ads on blogs spur a number of activities: 40% of blog readers have taken action as a result of viewing an ad on a blog; 50% of frequent blog readers say this is the case. The top activities include:
• 17% read product reviews online,
• 16% sought out more info on a product or service,
• 16% visited a manufacturer or retailer website.

JupiterResearch designed and fielded the survey in August 2008 to online consumers selected randomly from the NPD Group US online consumer panel. A total of 2,210 individuals responded. For more information on the survey’s methodology, go to JupiterResearch.

Now, blogs certainly aren’t considered the “newbies” of the social media scene – “granddaddies” is probably a more appropriate term. But that gives them an advantage from a marketing perspective – the medium has matured and moved from early adopter phase to the mainstream.

This may come as a surprise to some search engine marketers, but blog readers do not appear to rely as heavily on search as a means to find new blogs as consumers of traditional online media do. According to the new survey, one in five consumers who have read a blog in the past 12 months — or general blog readers — use blog links to discover new blogs. Further, the study suggests blogs are not consumed in isolation — 49% of blog readers and 71% of frequent readers read more than one blog per session. Other key findings include:
• Links more powerful than search: For frequent readers, links beat search as a navigation tool: 38 percent said blog links were the top tool for discovering new blog content as compared to 34 percent who voted for Web search.
• Links signal trust: For frequent readers, blog links appear to have similar impact as a trusted recommendation from a person (a response from 39 percent of survey participants).
• Blog search not yet mainstream: Blog search engines received the lowest ranking from respondents: 6 percent of general readers and 11 percent of frequent readers say they use these tools to discover new blogs.

If you are interested in getting more details about Harnessing the Power of Blogs, register for the free Webinar. Again, it will be held on Thursday, November 20, 2008, at 2:00 p.m. EDT / 11:00 a.m. PDT.

Earlier this year, Google launched a media measurement tool called Ad Planner, designed to assist media buyers in their purchasing decisions. The tool was available in limited release by invitation/application only.

Now, the tool is available to anyone with a Google account. There are also some new features for Ad Planner.

Define your audience by keywords and geography - You can use search terms and location to help determine your target audience

Site results management - Choose among three new ranking methods to display results from the sites you’re considering running your campaigns on. Select from niche sites, larger sites, or a balance of the two.

Interactive bubble chart - this feature helps offers a visual that helps you compare demographics, frequency, traffic, and unique visitors.

International demographic data - Check out audience data from France, Germany, Italy, Spain, and the UK.

Related Reading:
Does Google Analytics Share Data with Google Trends and Ad Planner?

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Chinese search engine Baidu saw a whopping 91% increase in the third quarter of 2008. The search engine had been seeing explosive growth leading up to the Beijing Olympics, which occurred during the third quarter.

Baidu expects profits in the fourth quarter to be around 80-85%. In the second quarter, Baidu’s profits increased by 87%.

Here’s the full press release:

Baidu Announces Third Quarter 2008 Results
Wednesday October 22, 5:00 pm ET

BEIJING, Oct. 22 /Xinhua-PRNewswire/ — Baidu.com, Inc. (Nasdaq: BIDU - News), the leading Chinese language Internet search provider, today announced its unaudited financial results for the third quarter ended September 30, 2008. (1)

(Logo: http://www.newscom.com/cgi-bin/prnh/20041011/BAIDULOGO )

Third Quarter 2008 Highlights
— Total revenues in the third quarter of 2008 increased to RMB919.1
million (US$135.4 million), representing an 85.1 % increase from the
corresponding period in 2007.
— Operating profit in the third quarter of 2008 increased to RMB368.3
million (US$54.2 million), representing a 119.1% increase from the
corresponding period in 2007.
— Net income in the third quarter of 2008 increased to RMB347.9 million
(US$51.2 million), representing a 91.4 % increase from the
corresponding period in 2007.
— Diluted earnings per share (”EPS”) for the third quarter of 2008 were
RMB10.00 (US$1.47); diluted EPS excluding share-based compensation
expenses (non-GAAP) for the third quarter of 2008 were RMB10.49
(US$1.54). Costs and expenses related to Baidu’s Japan operations,
incurred in both Japan and China, in the third quarter of 2008 were
RMB32.7 million (US$4.8 million), which reduced diluted EPS by RMB0.94
(US$0.14).
— The number of active online marketing customers during the third
quarter grew to over 194,000, an increase of 7.2% from the previous
quarter.

“I’m pleased to announce solid results for the third quarter,” said Robin Li, Baidu’s chairman and chief executive officer. “As China’s leader in paid search, Baidu has a large and diverse customer base covering numerous industries and sectors. Such diversity gives us great stability and positions us to capture future growth. Companies throughout China are increasingly recognizing the value of Baidu’s paid search as an effective marketing tool and we remain confident in our long-term growth potential.”

Jennifer Li, Baidu’s chief financial officer, said, “The impact of the 2008 Beijing Olympics on our business was in line with our projection for the quarter. We were also able to improve our operating margin again this quarter, highlighting the scalability of our business.”

Baidu recently launched the beta version of an online C2C platform that enables merchants to sell their products and services online via a Baidu- registered store. The new platform complements Baidu’s search business, enabling transaction fulfillment among our users. E-commerce is an emerging industry in China and there are vast opportunities for future growth in the sector. Baidu will continue to focus on providing the best quality experience for Internet users.

Third Quarter 2008 Results

Baidu reported total revenues of RMB919.1 million (US$135.4 million) for the third quarter ended September 30, 2008, representing an 85.1% increase from the corresponding period in 2007.

Online marketing revenues for the third quarter were RMB918.2 million (US$135.2 million), representing an 85.1% increase from the third quarter of 2007. Growth was mainly driven by increases in both the number of active online marketing customers and revenue per customer. Baidu had more than 194,000 active online marketing customers in the third quarter of 2008, representing a sequential increase of 7.2% and an increase of 35.7% from the corresponding period in 2007. Revenue per active online marketing customer for the third quarter increased to approximately RMB4,700 (US$692), a sequential increase of 6.8% and an increase of 34.3% from the corresponding period in 2007.

Traffic acquisition costs (TAC) as a component of cost of revenues were RMB108.8 million (US$16.0 million), representing 11.8% of total revenues, compared to 11.9% in the corresponding period in 2007.

Bandwidth costs as a component of cost of revenues were RMB48.0 million (US$7.1 million), representing 5.2% of total revenues, compared to 6.4% in the corresponding period in 2007. Depreciation costs as a component of cost of revenues were RMB56.9 million (US$8.4 million), representing 6.2% of total revenues, compared to 8.2% in the corresponding period in 2007.

Selling, general and administrative expenses were RMB163.2 million (US$24.0 million), representing an increase of 48.0% from the corresponding period in 2007, primarily due to the expansion of the direct sales force and an increase in customer service staff.

Research and development expenses were RMB78.2 million (US$11.5 million), representing a 109.0 % increase from the corresponding period in 2007, primarily due to an increase in research and development staff.

Share-based compensation expenses, which were allocated to related operating cost and expense line items, increased in aggregate by 211.1% to RMB17.0 million (US$2.5 million) in the third quarter of 2008 from RMB5.5 million in the corresponding period in 2007. The increase in share-based compensation expenses primarily reflects an increase in the number of options granted to employees.

Operating profit was RMB368.3 million (US$54.2 million), representing a 119.1% increase from the corresponding period in 2007. Operating profit excluding share-based compensation expenses (non-GAAP) was RMB385.3 million (US$56.8 million) for the third quarter of 2008, a 122.0% increase from the corresponding period in 2007.

Adjusted EBITDA (non-GAAP), which is defined in this announcement as earnings before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses, were RMB457.3 million (US$67.4 million) for the third quarter of 2008, representing a 104.7% increase from the corresponding period in 2007.

Income tax expense was RMB34.8 million (US$5.1 million), compared to an income tax expense of RMB2.6 million in the third quarter of 2007. The year- on-year increase in tax expenses was due to higher tax rates applicable to some of our PRC subsidiaries as their tax holidays either expired or partially elapsed.

Net income was RMB347.9 million (US$51.2 million), representing a 91.4% increase from the corresponding period in 2007. Basic and diluted EPS for the third quarter of 2008 amounted to RMB10.15 (US$1.50) and RMB10.00 (US$1.47), respectively.

Net income excluding share-based compensation expenses (non-GAAP) was RMB364.9 million (US$53.7 million), a 94.9% increase from the corresponding period in 2007. Basic and diluted EPS excluding share-based compensation expenses (non-GAAP) for the third quarter of 2008 were RMB10.65 (US$1.57) and RMB10.49 (US$1.54), respectively.

As of September 30, 2008, Baidu’s cash, cash equivalents and short-term investments amounted to RMB2.3 billion (US$338.0 million). Net operating cash inflow and capital expenditures on a cash basis for the third quarter of 2008 were RMB482.2 million (US$71.0 million) and RMB85.1 million (US$12.5 million), respectively. A portion of our capital expenditure for the quarter was related to the construction of Baidu’s new campus facility.

Outlook for Fourth Quarter 2008

Baidu currently expects to generate total revenues in an amount ranging from RMB1,025 million (US$151 million) to RMB1,055 million (US$155 million) for the fourth quarter of 2008, representing an 80% to 85% increase from the corresponding period in 2007 and a 12% to 15% increase from the third quarter of 2008. This fourth quarter forecast reflects Baidu’s current and preliminary view, which is subject to change.

(1) This announcement contains translations of certain RMB amounts into
U.S. dollars at specified rates solely for the convenience of the
reader. Unless otherwise noted, all translations from RMB to U.S.
dollars are made at a rate of RMB 6.7899 to USD 1.00, the effective
noon buying rate as of September 30, 2008 in The City of New York for
cable transfers of RMB as certified for customs purposes by the
Federal Reserve Bank of New York.

Conference Call Information

Baidu’s management will hold an earnings conference call on October 22, 2008 at 8:00 PM U.S. Eastern Time (8:00 AM, October 23, Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:
US: +1-617-786-2902
UK: +44-207-365-8426
Hong Kong: +852-3002-1672
Passcode for all regions: 55689997

A replay of the conference call may be accessed by phone at the following number until October 29, 2008:

International: +1-617-801-6888

Passcode: 69587650

Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com .

About Baidu

Baidu.com, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu’s ADSs, each of which represents one Class A ordinary share, currently trade on the NASDAQ Global Select Market under the symbol “BIDU”.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the outlook for the fourth quarter of 2008 and quotations from management in this announcement, as well as Baidu’s strategic and operational plans, contain forward-looking statements. Baidu may also make written forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Baidu’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our growth strategies; our future business development, results of operations and financial condition; our ability to attract and retain users and customers; competition in the Chinese language and Japanese language Internet search markets; competition for online marketing customers; changes in our revenues and certain cost or expense items as a percentage of our revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to copyright and other intellectual property rights; the expected growth of the Chinese language and Japanese language Internet search markets and the number of Internet and broadband users in China; and Chinese governmental policies relating to the Internet and Internet content providers. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of October 22, 2008, and Baidu undertakes no duty to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Baidu’s consolidated financial results presented in accordance with GAAP, Baidu uses the following measures which are non-GAAP financial measures: adjusted EBITDA, operating profit excluding share-based compensation expenses, net income excluding share-based compensation expenses, and basic and diluted EPS excluding share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures” and “Reconciliation from net cash provided by operating activities to adjusted EBITDA” set forth at the end of this release.

Baidu believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain expenses and expenditures that may not be indicative of its operating performance from a cash perspective. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to Baidu’s historical performance and liquidity. Baidu computes its non-GAAP financial measures using the same consistent method from quarter to quarter since April 1, 2006. We believe these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP operating profit excluding share-based compensation expenses, net income excluding share-based compensation expenses, and basic and diluted EPS excluding share-based compensation expenses is that these non-GAAP measures exclude share-based compensation charge that has been and will continue to be for the foreseeable future a significant recurring expense in our business. A limitation of using non-GAAP Adjusted EBITDA is that it does not include all items that impact our net income for the period. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

Baidu.com, Inc.
Condensed Consolidated Balance Sheets

September 30 December 31,
(in RMB thousands) 2008 2007
Unaudited Audited

ASSETS
Current assets:
Cash and cash equivalents 2,088,554 1,350,600
Short-term investments 206,360 242,037
Accounts receivable, net 100,193 64,274
Prepaid expenses and other current
assets 109,597 65,996
Deferred tax assets, net 2,587 2,587
Total current assets 2,507,291 1,725,494

Non-current assets:
Fixed assets, net 748,582 678,886
Land use right, net 95,008 96,472
Intangible assets, net 33,814 40,460
Goodwill 51,081 51,093
Investments, net 20,197 15,439
Deferred tax assets, net 17,060 15,716
Other non-current assets 84,394 32,348
Total non-current assets 1,050,136 930,414

TOTAL ASSETS 3,557,427 2,655,908

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and other
liabilities 371,745 359,310
Customers’ deposits 357,884 257,577
Deferred revenue 9,149 11,832
Deferred income 633 2,485
Total current liabilities 739,411 631,204

Non-current liabilities:
Long-term payable — 3,000
Deferred income — 332
Total non-current liabilities — 3,332

Total liabilities 739,411 634,536

Shareholders’ equity
Class A Ordinary Shares, Par value
US$0.00005 per share, 825,000,000
shares authorized, and 25,136,147
shares and 25,413,789 shares issued
and outstanding as at December 31,
2007 and September 30, 2008 11 10
Class B Ordinary Shares, Par value
US$0.00005 per share, 35,400,000
shares authorized, and 8,996,842
shares and 8,873,986 shares issued
and outstanding as at December 31,
2007 and September 30, 2008 4 4
Additional paid-in capital 1,254,593 1,171,575
Accumulated other comprehensive loss (127,770) (81,953)
Retained earnings 1,691,178 931,736
Total shareholders’ equity 2,818,016 2,021,372

TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY 3,557,427 2,655,908

Baidu.com, Inc.
Condensed Consolidated Statements of Income

For the Three Months Ended
September September
30, 30, June 30,
(in RMB thousands except for share, 2008 2007 2008
per share information) Unaudited Unaudited Unaudited

Revenues:
Online marketing services 918,179 496,120 802,183
Other services 946 410 428
Total revenues 919,125 496,530 802,611

Operating costs and expenses:
Cost of revenues (note 1, 2) (309,342) (180,704) (280,980)
Selling, general and administrative
(note 2) (163,247) (110,312) (174,213)
Research and development (note 2) (78,231) (37,433) (71,078)
Total operating costs and expenses (550,820) (328,449) (526,271)

Operating profit 368,305 168,081 276,340

Other income:
Interest income 11,375 12,519 10,378
Exchange loss, net (5) (331) (204)
Other income, net 3,009 4,040 7,032
Total other income 14,379 16,228 17,206

Income before income taxes 382,684 184,309 293,546

Income taxes (34,825) (2,580) (28,561)

Net income 347,859 181,729 264,985

Earnings per share for Class A and
Class B ordinary shares:
Basic 10.15 5.35 7.74
Diluted 10.00 5.23 7.62

Weighted average aggregate number of
Class A and Class B ordinary shares
outstanding:
Basic 34,257,974 33,983,137 34,217,081
Diluted 34,786,353 34,763,639 34,786,342

(1) Cost of revenues are detailed as
follows:
Business tax and surcharges (57,288) (30,702) (49,511)
Traffic acquisition costs (108,797) (59,155) (101,693)
Bandwidth costs (48,029) (31,837) (43,012)
Depreciation costs (56,907) (40,654) (57,790)
Operational costs (37,379) (17,979) (27,795)
Share-based compensation expenses (942) (377) (1,179)
Total cost of revenues (309,342) (180,704) (280,980)

(2) Includes share-based compensation
expenses as follows:
Cost of revenues (942) (377) (1,179)
Selling, general and administrative (6,933) (68) (16,484)
Research and development (9,149) (5,027) (11,618)
Total share-based compensation
expenses (17,024) (5,472) (29,281)

Reconciliations of non-GAAP results of operations measures to the nearest
comparable GAAP measures (*) (in RMB thousands, unaudited)

Three months ended September 30, 2007
GAAP Result Adjustment Non-GAAP Results
Operating profit 168,081 5,472 173,553

Three months ended September 30, 2007
GAAP Result Adjustment Non-GAAP Results
Net income 181,729 5,472 187,201

Three months ended June 30, 2008
GAAP Result Adjustment Non-GAAP Results
Operating profit 276,340 29,281 305,621

Three months ended June 30, 2008
GAAP Result Adjustment Non-GAAP Results
Net income 264,985 29,281 294,266

Three months ended September 30, 2008
GAAP Result Adjustment Non-GAAP Results
Operating profit 368,305 17,024 385,329

Three months ended September 30, 2008
GAAP Result Adjustment Non-GAAP Results
Net income 347,859 17,024 364,883

(*) The adjustment is only for share-based compensation.

Reconciliation from net cash provided by operating activities to adjusted
EBITDA(*) (in RMB thousands, unaudited)

Three As a Three As a Three As a
months % of months % of months % of
ended total ended total ended total
September revenues June 30, revenues September revenues
30, 2007 2008 30, 2008
Net cash
provided by
operating
activities 254,870 51% 403,378 50% 482,172 52%

Changes in
assets and
liabilities,
net of
effects of
acquisitions (17,800) -4% (37,893) -5% (45,293) -5%
Income taxes
expenses 2,580 1% 28,561 4% 34,825 4%
Interest income
and other, net (16,228) -3% (17,206) -2% (14,379) -1%

Adjusted EBITDA 223,422 45% 376,840 47% 457,325 50%

(*) Definition of adjusted EBITDA: earnings before interest, taxes,
depreciation, amortization, other non-operating income, and share-
based compensation expenses.

For more information, please contact:

Investor inquiries:

China
Linda Sun
Baidu.com, Inc.
Tel: +86-10-8262-1188
Email: ir@baidu.com

Helen Plummer
Ogilvy Financial, Beijing
Tel: +86-10-8520-3090
Email: helen.plummer@ogilvy.com

U.S.
Thomas Smith
Ogilvy Financial, New York
Tel: +1-212-880-5269
Email: thomas.smith@ogilvypr.com

Media inquiries:

Ceren Wende
Ogilvy Financial, Beijing
Tel: +86-10-8520-6514
Email: ceren.wende@ogilvy.com