• by Laurie Sullivan  @lauriesullivan, February 23, 2011

China Mobile and Xinhua News Agency launched a search engine earlier this week. Panguso offers news, images, video, community, music, commentary and more for traditional online services. The service will expand to mobile devices, including the ability to send search results to mobile phones through SMS. The joint venture combines content from China's largest news agency with a local mobile network.

The project demonstrates the growing importance of search for U.S. companies in international markets, and China's fervor to gain an edge in online marketing and advertising.

Panguso adds one more search engine to the success of Baidu and China's search engine Sina, which also shows growth. Piper Jaffray estimates Google search generated about $18.50 per user in 2010, and Baidu will generate about $5.85 per user for 2010. "If you assume Sina monetizes an average of 200 million Weibo users through display ads, sponsored posts and a daily deal product, we think $1-2 dollars per user in the next 3-5 years is a fair estimate," Piper Jaffray analyst Gene Munster wrote in a report.

Some believe the move to develop statewide Internet support tightens control by Chinese officials, a response to protests carried via social Web sites like Facebook and Twitter that began in the Middle East, but also spread to parts of China. At least one U.S. law enforcement official notes that China will create a self-sustaining Internet. Reports suggest that panguso.com filters the content much more than Baidu, China's largest search engine.

With any government that controls media inputs so aggressively, there is always the risk of being banned or filtered, according to Rob Griffin, SVP and global director of product development at Havas Digital. Griffin will host a fireside chat about expanding search campaigns into international markets at OMMA Global San Francisco March 1. "They tow a hard line in their eyes, but to everyone else, the line is very grey," he says. "It's only a matter of time before Internet technologies and social communities combined with search functions enable the local masses to rise up in protest."

The unrest has not stopped U.S.-based search agencies from expanding support into Asia. SearchIgnite opened an office in Singapore, the second facility in Asia, to support agencies in the region, such as MRM Worldwide, as well as Septeni and Cyberagent, two of the largest digital local shops. It's a big market with growth potential, according to the company, which Japanese agency Dentsu acquired in January 2010.