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Baidu is still that Baidu, but search rivals have become super apps

via:CnBeta     time:2019/10/21 14:14:10     readed:135

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But now, baidu needs to be wary of not traditional search companies, but super application operators Tencent and startups.

New pattern of search industry

However, the competition in China's search market is not toward the competition between Baidu and Google, but rather has become a closed ecosystem that prevents advertising budgets and users from flowing to Tencent, Baidu's Chinese rival, and start-up companies.

Although the ambitions of China's technology giants are affected by the external environment, the loss of users' attention will pose a direct threat to their revenue. The total value of China's digital advertising market is about $60 billion, and the growth rate has slowed down.

"Search is no longer a competition between traditional search providers, they are now competing with everything else." David Dai, a senior analyst at Bernstein, said.

Although the overall search query volume in China continues to grow moderately, Chinese users are now spending more and more time on short video and chat platforms. On these platforms, they are exposed to content that Baidu can't search.

Market share of Baidu and Sogou

Baidu's advantage lies in the huge amount of user data accumulated by the company as the largest search provider in China in the past decade, and the more than 70% of search queries it processes enable it to optimize search results better than any of its competitors. But Dai Hao said that users now spend more time on the information flow provided by Baidu rivals, and that recommendation is more useful than search in the information people consume.

After Google's withdrawal from the mainland in 2010, Baidu has successfully resisted the attacks of several domestic rivals on its hegemony, including the search service launched by Qihoo 360 in 2013, and then the mobile search engine Shenma search, launched in 2014 and supported by Alibaba group.

User search turns to today's headlines and wechat

Now Baidu is facing a tough battle: protect its revenue from being eaten by Tencent's and byte leaping search businesses. Tencent and byte skipping not only develop popular applications, but also covet the search field. They want to launch search functions based on independent information ecosystem and wider network.

As the parent company of tremolo and one of the most valued companies in the world, byte beat launched its search function in the headline of its news aggregation application today in August this year. Byte beat has won the investment of Softbank. Its popular games, news and short video applications make it a rare Chinese start-up company with huge overseas users.

Byte skipping has been considering initial public offering applications as soon as this year, but in India, there are growing regulatory hurdles and the impact of the external environment, so it becomes more and more important to push forward new initiatives in China's domestic market.

"Byte skipping has gained so much traffic through its news and short video applications, and many users have started to search for content in their ecosystem, which is why they are pushing their search business to a higher level and generating revenue from it." "The problem with Baidu's search is not that its business model is wrong, but that the behavior of users is changing," said Zhang xueru, an analyst at the company.

Monthly active users of wechat, Baidu and other platforms

Pangolin, a byte leaping Advertising Alliance launched last year, claims 36 billion ad requests per day from its 700 million active users, citing analysts' expected data that pangolin has become China's largest advertising network.

According to a report released last week by Huachuang securities, search has lost its position as the core information providing channel for advertisers, and competition from today's headlines, wechat and other platforms has "shaken Baidu's dominant position". The report's authors point out that although Baidu's ad click through rate is still higher than today's headlines, the increasing use of "automated recommendation" or "programmed advertising purchase" means that enterprises will increasingly rely on the efficiency of their recommendation algorithms. "The high accuracy of byte skipping algorithm will gradually make it a market leader." The report's author wrote.

Analysis of Huachuang securities shows that in the first six months of this year, byte beat advertising revenue exceeded Baidu. Today's share of headline in China's total mobile advertising revenue increased nearly 8 percentage points compared with last year, while Baidu dropped nearly 6 percentage points.

Baidu's advertising revenue in the second quarter was 17 billion yuan (US $2.4 billion), down 8.5% year-on-year, while its net profit fell from 6.4 billion yuan to 2.4 billion yuan. By contrast, the advertising revenue of byte skipping over the same period was RMB 27 billion, up 170% year on year.

Baidu also faces increasing competition from Tencent. Tencent has been working more closely with Sogou, China's second-largest search engine, which has become a controlling shareholder since 2013. Sogou is currently the only platform that can search wechat public account, which is becoming more and more popular news source.

Baidu's response

In order to resist the competition launched by competitors, baidu is increasingly focusing on content and information flow services, and trying to consolidate the overall number of users.

But as the effect of marketing investment in the saturated market decreases, this effort is becoming an increasingly expensive investment. At the same time, baidu is in the smart speaker,Cloud servicesAnd betting in the area of autonomous driving may take a while to pay off.

Dai Hao, a senior analyst at Bernstein, believes that Baidu's search technology may be slightly different from market leading platforms such as Adsense, the Google Advertising Alliance, but if they can't adapt to changes in user habits, they will be marginalized.

"In China, what's really at the forefront now is recommendation advertising technology. At this point, China may be ahead of the world. I'm referring to byte skipping. " He said.

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