• by Laurie Sullivan  @lauriesullivan, March 23, 2010

One day after Google began redirecting traffic from Google.cn to its Hong Kong portal Google.com.hk, analysts, advertising and marketing executives began stepping up efforts to figure it all out. Despite financial models from analysts that indicate the redirect could work, some advertising and marketing executives have little faith in long-term prospects, while others are keeping their fingers crossed.

Rosemary Lising, managing director of Asia-Pacific (APAC) at GroupM Search in Singapore, says the agency will continue to monitor search results from Google in the region to see if there's a drop off in performance of keywords. The Chinese government still has the ability to block Web sites, keywords and pieces of content. "Google is a good second player," she says. "It also keeps the competition on their toes. Hopefully, with this move, Google will continue to have a place in China."

Even if Google finds a place in China, the move also provides an opportunity for other players to step in. Another big player in the market, QQ -- a social media site owned by Chinese Internet portal Tencent -- could make a play for the paid search sector, but it would take time, Lising says.

For now, the focus remains on clients. GroupM will continue to provide services on the best engine that drives profit, Lising says. Some are less optimistic. Here in the United States, Didit Chief Executive Officer Kevin Lee believes that for advertisers trying to reach the market in mainland China, this will likely result in a nearly total shutdown of Google as an advertising and marketing opportunity.

The redirect from the China to Hong Kong portal is only temporary, Lee believes. "China may leave the uncensored results up and available to the population of mainland China for a brief time, but it's not likely to last," he says. "Advertisers are pretty much stuck with Baidu as their only option if Google access is blocked."

Piper Jaffray Analyst Gene Munster says a check on Google's Hong Kong portal shows the service is uncensored as promised. The firm's last series of censorship checks for seven sensitive keywords on Google.cn showed 52% fewer results than Google.com. Searches done in the new Hong Kong portal demonstrate virtually no difference in the total number of results compared with Google.com.

The promise by Google demonstrates the intention to maintain a presence in China through sales and research and development teams. The Mountain View, Calif. company explained in a blog post that the decision to redirect the Chinese portal to the Hong Kong portal would offer uncensored search in simplified Chinese, specifically designed for those in mainland China.

But Munster says the Chinese government could still intervene, which would impact Google's stock price. "It appears China had knowledge of Google's plan to redirect traffic to Hong Kong," he says, noting that it was unlikely China's government was taken by surprise. "Our take is that if the Chinese government intended to shut down access to Google's Hong Kong portal, it would have done so soon after Google's announcement in policy change."

And although the move appears to be legal, Broadpoint AmTech Analyst Ben Schachter doesn't believe Google's redirect strategy was sanctioned or agreed to by Chinese authorities.

Most believe that the morals of executives running Google remain in the correct place -- pushing for net neutrality and freedom of speech -- but the global political statement could backfire. "Google is looking for loopholes to continue its service in China to both make money and push its political agenda," says David Goldman, senior search specialist at MRM Worldwide. "When China has had enough with Google's shenanigans, the company will have to back out and leave behind millions, even billions of potential dollars."