Baidu’s growing presence in the digital search world can be accredited to its strong revenue growth. According to eMarketer, in 2014 Baidu took in 28.9 percent of all digital ad revenue within China and 4.68 percent of global digital ad revenue. It is expected that Baidu’s search and mobile services will be the driving force behind the company’s growth.
China has a mobile internet user base of 557 million and Baidu prides itself on being a “mobile-first” company. As Baidu spokesman Kaiser Kuo told TechCrunch, “everything we do begins with mobile and takes priority over our PC products…we’re not ignoring PC, but in just eight quarters, we built a mobile business that is the same size as our PC business, which took 15 years to build.”
Baidu claims a 75 percent market share in China’s combined PC and mobile search. According to a Morgan Stanley report from earlier this month, Baidu makes 50 percent of its revenue from mobile, compared with Google receiving only 30 percent.
A Look at Baidu’s Partnerships
Mercedes-Benz, the latest to partner with Baidu, said it will use the search engine’s CarLife to create a more personalized connected-vehicle experience. Audi has since followed suit and will also connect with Baidu to improve its connected-vehicle offering. Baidu’s partnership with Uber is another step to expand the company’s Maps’ reach, though most see Uber as having the most to gain.
Baidu has also partnered with Nokia’s HERE, a mapping service with an extensive international reach. This strategic partnership is Baidu’s attempt to reach China’s growing tourist population travelling abroad.
A Look at Baidu’s Investments
In light of BAT’s recent investments into American startups it is obvious the Chinese players are in a race to support innovation and technological advancement.
Its most recent investment was into Qianhai Mobile, a provider of wifi across commuter and bus routes. The two firms plan to work together to “develop and monetize mobile app distribution and other mobile passenger services powered by Baidu Map.”
Yet a less publicized investment into Taboola, a content recommendation platform headquartered in New York, is expected to work with Baidu to improve Chinese netizens’ search on Baidu.
Baidu’s strategy is no secret. As chairmain and chief executive Robin Li stated, “[Our] platform is comprehensive and robust, and we plan to fully exploit the huge growth potential ahead – in mobile marketing, online to offline, and key select verticals such as healthcare, education and financial services – by leveraging our solid mobile foundation, exceptional technology advantage, and proven operational experience.”
Putting It All in Perspective
Dominate mobile. Internationally. In China, 47.5 percent of web traffic is mobile, compared to just 34 percent in Europe. With Google struggling to gain its footing in China, Baidu is stepping up to take the position of number one search engine in Asia.
Partnering with international startups, wifi providers, mobile device makers, and luxury carmakers – Baidu’s strategy is to widen its know-how and potential market reach without investing in in-house innovation, unlike Google. In the race with BAT, Baidu is innovating like the Chinese do – investing in startups to spark creativity.
Going back to Baidu chairman Robin Li’s comment, Baidu sees the potential for mobile and is building its business on serving the mobile consumer across education, financial, traveling, and health spheres. By investing in these verticals Baidu is boosting its brand image and value.
But with Google making 95 percent of its revenue from advertising and Baidu only 50 percent, Baidu’s investments in startups will help to spread out its revenue model. If Google is the world’s dominant search engine, then Baidu is on its way to be the Asian world’s mobile search provider.
Mobile Speech Recognition
The problem with the act of searching in China has more to do with the language than with search technology. In English, we know that there is a difference between “My Mom is good.” vs “My Mom is great.” A search engine tries to understand the intent and can usually do an adequate job in interpreting that intent and providing the results.
It’s not perfect, but because we are a pretty forgiving language, we figure it out pretty easily. But what if in English, we had 15 different words for “Mom” and most of those we never heard of because they are spoken in different areas of the country? Now add 15 different variations of “good” and “great”. A simple phrase can quickly turn into hundreds of different interpretations and therefore hundreds of very different search results. The written Chinese language doesn’t have “standards”. This is one of the reasons why Chinese websites have so many links in it and so many sites have numbers in them…makes things a hell of a lot easier to traverse.
Mobile speech recognition in China is a game changer though, as it allows anyone to speak their language group, dialect or accent into a mobile device and then the software (or search engine) can interpret the result of the language setting a “standard” in order to come up with a result. There is a great Bloomberg article giving insight into Dragon, the technology Apple’s Siri uses to interpret Mandarin.
As the mobile trend continues to change how people use search in China and on Baidu, all I can say is that I wouldn’t want to be an owner of an Internet café. It would be like me investing in a Mǎchē biānzi (Chinese for “buggy whip”) company.