That does the crisis at Baidu means for other companies?

By simone.brunozzi -, CC BY-SA 2.0,

After years of success, Baidu is now in serious difficulties. The main culprits are Wechat and the Walled Gardens, which conceal search results.

Like Google, Chinese search engine provider Baidu earns the most money from paid ads. After many years in which the profits bubbled, the enterprise sees itself in the meantime before large problems. Turnover stagnated in 2019 compared to previous years at 26.3 billion yuan (3.3 billion euros), the share price slumped by more than 60 percent since the beginning of the year.

Baidu sees itself under pressure above all from powerful competitors such as Alibaba and Wechat. Because their contents are hidden behind so-called Walled Gardens. For Baidu there are hardly possibilities to make this content findable. Internet users are increasingly using their own search masks to display content. When switching from the desktop to the mobile Internet, new players such as Tiktok are constantly appearing. Its parent company, Bytedance, has now announced the launch of its own search engine.

Baidu or Wechat: Who will win the race?

With more than one billion active users, Wechat has become the most important marketing channel for companies and a serious competitor for Baidu – on the one hand through its internal search engine, and on the other through the possibility for companies to place ads.

Who wants to address successfully Chinese customers, should not be content with the mechanism of an official Wechat account, but worry also about the virale marketing – for example by co-operation with Influencern or Wechat advertisement.

If you want to address younger target groups, you should focus more on current trends such as short video. While Tiktok, for example, continues to meet with scepticism in Europe, the platform in China is increasingly addressing middle-aged groups as well as younger people. Companies can now also place ads on Tiktok and link to their website or Tmall account from there.

Baidu ecosystem still plays an important role

A classic focus on Baidu with a mix of search engine optimization and advertising should not be thrown completely overboard. Over the past two decades, Baidu has created a complete ecosystem of platforms that are still important for businesses: Due to the fact that the Chinese version of Wikipedia is blocked in Mainland China, Baidu Baike remains the number one online encyclopedia there with 16.3 million articles.

Companies should also try to get a well-founded entry there. However, the hurdles are higher than with Wikipedia. Foreign company owners must present Baidu with documents that provide information about their company, such as the commercial register entry or the business registration. Baidu Zhidao is another platform that is of interest to foreign companies. Here, similar to Quora, users give each other advice and answer each other’s questions. While Baidu Zhidao continues to play an important role for many Internet users, alternative offerings such as App Zhihu are becoming increasingly important.

The bulletin board platform Baidu Tieba, for years an important channel for small and medium-sized enterprises to measure user sentiment, has lost much of its importance in recent years. For foreign companies, it is becoming less and less worthwhile to get involved.

Advertisements on Baidu: Are the high costs worth it?

The equivalent of Google Ads in China is Baidu Tuiguang (百度推广官方网站). Just like the big competitor from the USA, it is possible to place ads both via the search network and the display network.

In the search network, ads appear above, to the right and below the organic search results. To ensure that only potentially interested users see certain ads, Baidu analyzes user behavior and categorizes website visitors by age, gender, region, hobbies, and other attributes.

However, as with the publication of articles on Baidu Baike, the effort involved in placing ads should not be underestimated. It may take months before an account is successfully opened. In addition, the budgets that are necessary to achieve the corresponding reach are comparatively high. Companies should analyze on a case-by-case basis whether the costs for Baidu advertising are worthwhile or whether it no longer makes sense to focus more on other marketing measures such as Wechat advertising.

For German companies in China, Baidu will continue to play an important role in the online marketing mix: Entries on Baidu Maps and Baidu Baike are a basic requirement for all kinds of companies to be seen.