Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Mr. James Mitchell.
James Mitchell - Goldman Sachs
Great. Thank you very much for taking my question. I wondered if you could talk a little bit more about the sequential increase in traffic acquisition costs as a portion of revenue. And also, you are guiding for faster sequential revenue growth in third quarter 09 than you achieved in third quarter ’08. Is that primarily because there’s no Olympics this year or is it because the macro environment is improving sequentially or is it Phoenix Nest or something else? Thank you.
Robin Li
Haoyu, can you take on the TAC question?
Haoyu Shen
TAC has increased sequentially against Q2 as I think Jennifer mentioned in her prepared remarks, it still continues to be mostly due to the faster growth of our revenue that comes from Baidu Union. So the same as before, the pay-out ratio is stable and we are seeing some of our Union performers very well, so that’s by and large the reason.
James Mitchell - Goldman Sachs
So the individual Union partners are growing faster, it’s not just that you are adding more and more Union partners?
Haoyu Shen
This quarter mostly because some of the existing partners are doing well.
James Mitchell - Goldman Sachs
Okay.
Robin Li
Regarding the sequential growth of revenue for Q3 compared to last year, yes, the main reason is Olympics during Q3 of last year. We are happy with the progress of Phoenix Nest so far but we are not ready to say that Phoenix Nest will have very positive revenue impact at this time because we are pushing out some of the paid results from the classic edition, which would reduce the revenue generation. Once this kind of process is complete, we will start to see net positive impact from the Phoenix Nest.
James Mitchell - Goldman Sachs
Great. Thank you very much.
Operator
Your next question comes from the line of Jeffrey Lindsay with Sanford Bernstein.
Jeffrey Lindsay - Sanford C. Bernstein
Thank you for taking my question. Could I ask, how -- which advertising sectors are looking strongest in your advertising business and how much further has Phoenix Nest to go? Are you at the very beginning at Phoenix Nest or are you part way through the implementation? And how much longer will the implementation take? Thank you.
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