Shenwan Hongyuan Group: GEO is becoming a new paradigm in enterprise marketing. Recommend BABA-W (09988)

Shenwan Hongyuan Group released a research report stating that the transformation of AI technology has profoundly affected people's lives, and with the rise of AI search demand, GEO is becoming a new paradigm for enterprise marketing, driving the competitive logic from traditional SEO bidding recommendations to AI citation competition in the era of large models. The bank believes that the entrance of the new era of traffic will shift to AI applications with better user experience. In this trend, Alibaba not only has the top-notch large model capabilities in China, but also the richest large consumer ecosystem. It can not only provide high-quality scenarios for B-end merchants to implement GEO marketing strategies, but also build an intelligent consumption closed loop around generative AI, ultimately feeding back traffic with user experience to achieve positive circulation. Recommendation: BABA-W (09988). Shenwan Hongyuan Group's main points are as follows: The rise of AI search has led to a transformation of information access portals, and GEO is creating a new paradigm for enterprise marketing. In recent times, the scale and penetration of traditional search engines have declined, while the user base of AI search engines has grown rapidly and is expected to gradually become the new mainstream information access portal. In this context, the user search path has shifted from "search-click on webpage" to "ask-directly get answers", and the traffic competition logic has also evolved from the "click game" of the SEO era to the "citation competition" of the large model era. In this context, Generative Engine Optimization (GEO) provides a new path for enterprise marketing. It aims to increase the "citation rate" and "recommendation probability" of brands and content in large model-generated answers by optimizing content structure, semantic expression, and authoritative endorsement. This shifts enterprises from competing for search clicks through bidding to a new optimization strategy centered on learning AI decision-making processes. GEO establishes a new marketing logic that is different from traditional SEO, shifting enterprise marketing from "influencing users" to "influencing models". Under the GEO framework, enterprises systematically optimize marketing content by studying the preferences of large models for content structure, expression, and authority, in order to enhance the recognition rate, citation rate, and recommendation probability in AI-generated answers. In the new search and recommendation system centered around large models, enterprises need to understand the models themselves. GEO typically covers the entire marketing landing process and implements continuous dynamic tracking and algorithm optimization strategies. Compared to traditional SEO's reliance on short-term traffic placement through bidding rankings, this mechanism enables enterprises to achieve more stable and high-quality exposure, thus potentially achieving higher conversion rates and ROI in the recommendation of AI-generated content. According to IDC and China Academy of Information and Communications Technology, the global GEO industry market size is expected to exceed 12 billion US dollars by 2025, with a three-year compound annual growth rate (CAGR) of 145%, and is expected to maintain a high-speed growth trend by 2027. GEO and intelligent commerce reshape information and transaction traffic portals, Alibaba combines top models with a rich consumer ecosystem, and is expected to win in the future era of large models. With the launch of UCP, Google has partnered with retail giants such as Shopify, Walmart, and Target to establish a unified interaction standard, enabling AI-based handling of the entire process of product discovery, recommendation, ordering, payment, and after-sales service, laying the foundation for the future of intelligent commerce. In this trend, Alibaba is actively laying out AI traffic portals in China, and through the deep integration of self-developed large models and the e-commerce consumer ecosystem, it provides users with an integrated AI question-and-answer and task execution experience, truly connecting the multi-platform traffic within the ecosystem with AI. It also provides scenarios for B-end merchants to implement GEO marketing strategies. Risk warning: Terminal consumption falls short of expectations, intensified industry competition, cloud business development falls short of expectations.