Badiu’s Mobile Monetization Strategy Begins to Pay Off – Challenges Remain

Baidu Mobile MonetizationChinese Internet Giant, Baidu is ramping up mobile monetization through mobile paid search, contextual ads, and mobile VAS (mostly games).

Baidu Mobile traffic + landing page optimization drive ads adoptions
Baidu’s mobile search volumes account for ~1/3 of Baidu’s organic search traffic, or 500 mn mobile search queries per day. Increasing mobile traffic would incentivize Baidu’s search customers to allocate more of their ads budgets to mobile vs. PC.

However, a key challenge for PC-based websites is to display web content on mobile devices, with the lack of mobile landing pages resulting in a suboptimal user experience, fewer mobile browsing activities, and fewer page views. Thus, online advertisers have been reluctant to buy ads on mobile, based on our observations. Baidu has been undertaking initiatives to change this, such as

  • Baidu prioritizes rankings of mobile optimized web pages in its search results
  • Baidu is helping its paid search customers and Baidu Union members to optimize their web pages for mobile display
  • Baidu developed “Baidu” apps based on the same kernel of its mobile browser, making it a de facto mobile browser without directing traffic to default browsers on mobile device

Baidu Search App as a Browser
Baidu’s search application functions as a browser. In addition to generating organic search traffic to paid links, the app displays popular news and hot topics that could channel non-search traffic to websites such as those of Baidu Union members. Carrying Baidu’s contextual ad links, these websites could generate revenues for Baidu once users click these ads.

In addition to mobile search, the acquisition of 91 Wireless, which closed in early October, expands Baidu into mobile game distribution, a fast growing and supposedly high-margin business, app distribution services, with app developers paying app stores to match apps to users – a natural extension of Baidu’s search functions, and an extensive app distribution channel, which would help Baidu to deepen its “light app” approach and thus enable it to carry in-app search, further enhancing its reach in mobile content, especially in long-tail app content.

Baidu’s PC search (query) market share dropped from 82% in December 2012 to August 2013’s 78%, according to iResearch. So the shift towards mobile is inevitable.