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Baidu Aggressive marketing to grab mobile share

March 5th, 2014

Baidu MobileChinese Internet Giant Baidu, started 2014 with trends that are not unfamiliar to the market but in a more extreme way: strong revenue guidance showing acceleration, partly due to acquisitions, while margin outlook indicating more aggressive marketing to grab mobile market share in addition to a drag by loss-making subsidiaries like Qunar and video. As more advertisers are ready for mobile marketing (60% with mobile landing pages) and monetization of mobile search improves (60% of PC’s pricing), we see co throwing more resources to drive user traffic and grab share ahead of any big move by competitors like Qihoo, Sogou and ETao.

Baidu’s initiatives include promoting multiple mobile apps such as security, map, cloud storage to enhance user stickiness. Continue aggressive pre-installation of search apps to reduce dependence on paid traffic from mobile browsers and expansion in content verticals such as games, healthcare and education to serve niche user needs.

Baidu has been going through a dramatic 2-year transition, after being criticized on underinvestment with net margins of 50% at its peak in 12. Net margins will be trending down to mid- to high-20% on GAAP basis after 14 and becoming in line with global peers’.

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