Baidu spends 100m yuan on fledgling marketing firm, created by 25-year-old whiz kid in 2015
With its online advertising income under severe pressure, search giant turns to ‘Professor Li’ and his team to reignite marketing revenue
Baidu, the Beijing-based internet search giant, has splashed out nearly 100 million yuan on a fledgling marketing firm started just a year and a half ago by a 25-year-old Tsinghua University whizzkid.
Li Jing, who only founded Beijing Shoujiao Information Technology in July last year, will become Baidu’s youngest ever vice president after the takeover.
Li’s appointment comes just months after Baidu – which relies heavily on online advertising income – reported better-than-expected profit, but its first decline in revenue in the quarter ending September, since its US listing in 2005.
The company posted a 9.2 per cent increase in third-quarter net profit to 3.10 billion yuan, mainly on lower selling, general and administrative expenses. But the figures also revealed online marketing revenue declined 6.7 per cent year on year to 16.49 billion yuan.
Baidu had about 524,000 active online marketing customers during the period, representing a 15.9 per cent year on year decrease.
The company, run by chairman and chief executive Robin Li Yanhong, has been significantly affected by Chinese regulators’ efforts to put more stringent controls on medical-related paid search advertising since May, following public outrage over the death of university student linked to a cancer treatment he found as a result of an online search result on Baidu.
In an internal memo circulated online on Thursday night, Xiang Hailong, a senior vice president in charge of Baidu’s business products and sales force management, said: “Li and his team will be responsible for advertising creativity, exploring and developing marketing methodologies and marketing the products.” Li will report directly to Xiang.
Li founded Beijing Shoujiao in July 2015 after gaining a masters degree in marketing from the elite Tsinghua. But despite his lack of working experience, he is well-known in mainland’s marketing industry circles, via social media.
He and his small team publish thoughts on marketing strategies under the name “Professor Li” via WeChat, Tencent’s social networking app, and has over 800 million monthly active users.
Mainland media has reported the “Professor Li” WeChat account has half a million subscribers and some of the most popular articles are shared millions of times daily online.
And the company’s online reputation also certainly brings in business. Its consultancy work is charged at 100,000 yuan for three hours, while the team’s public speech training sessions – targeting senior executives – cost 80,000 to 100,000 yuan.
Li used his WeChat account to explain his decision to join Baidu.
“Combined with artificial intelligence and big data technology, we hope we can develop tools that can help better understand consumer behaviour and inspire creativity,” he said.
Nasdaq-listed Baidu confirmed Li’s appointment, but said he was unavailable for comment.
Baidu’s previous youngest VP was 32-year old Li Mingyuan, who resigned last month amid a reported scandal involving undisclosed transactions and ethical violations. He was made VP in 2013.
Baidu sparked public outrage over the paid cancer therapy advert that led to the death of 21-year-old student Wei Zexi in April, and the government has since tightened its controls over search result advertising.
A September report from the London-based market research firm eMarketer, meanwhile, predicted Baidu is set to lose its top spot in the nation’s booming digital advertising market this year to rival Alibaba Group Holding, the owner of the South China Morning Post.
Baidu’s share of China’s digital advertising market is predicated to drop to 21 per cent this year from 28 per cent last year. Meanwhile, Alibaba’s market share is expected to rise by four percentage points to 29 per cent.
China’s top three internet companies by valuation – Baidu, Alibaba and Tencent – together control 60 per cent of China’s $42 billion digital advertising spending.