Baidu Pursues Non-Advertising Markets


Jan. 30 2019, Updated 9:00 a.m. ET

Baidu seeking revenue in smart speaker market

Amid tightening competition for digital advertising dollars, Baidu (BIDU) is trying not to put all its eggs in one basket. Many ad-funded companies are seeking alternative revenue sources. Baidu has ventured into businesses such as building self-driving vehicles, selling cloud computing services, licensing software, and making hardware products such as smart speakers all in an effort to diversify outside advertising.

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In the third quarter of 2018, Baidu was ranked alongside Amazon (AMZN), Google, and Alibaba (BABA) as one of the world’s top smart speaker companies, according to data from Strategy Analytics. It captured 8.4% of the smart speaker market in the quarter to rank fourth globally. Amazon led with a 31.6% global market share, followed by Google with a 22.7% market share. Alibaba came in third with a 9.5% market share.

Non-advertising revenue increased 80%

Baidu’s business diversification quest advanced in the third quarter as its non-advertising revenue increased 80% YoY to $833 million and accounted for 19.5% of total revenue, up from 14.3% a year earlier.

Baidu exited the third quarter a more diversified company than Google parent Alphabet (GOOGL). Non-advertising operations accounted for 13.9% of total revenue at Alphabet in that quarter. At Facebook (FB) non-advertising operations accounted for about 1.5% of revenue in the third quarter. Like Baidu, Alphabet also has ventured into the self-driving and cloud computing businesses in an attempt to diversify its revenue sources.

Baidu reports its fourth quarter of 2018 results on February 12. Investors will be looking to see how the company’s diversification is progressing.


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