Baidu’s Core Advertising Segment Contributes 30%, 50% or 70% Of Its Stock?

by Trefis Team
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Baidu (NASDAQ:BIDU) makes money through advertising and content subscription services (similar to Netflix). The company also has other developing avenues of revenue generation such as cloud and autonomous driving. Baidu is China’s leading search engine, with alternatives being Google China, Bing, Sogou, Youdou, Shenma, Easau etc. And in the cloud business, the company competes locally with Alibaba.


Trefis highlights trends in Baidu’s revenues over recent years along with our forecast for 2019 and 2020 in an interactive dashboard. Baidu’s Core revenues have grown at a subdued rate over the last few years, with its content subscription services, iQiyi, driving top-line growth. Despite that, Baidu’s Core segment contributes more than 70% of Baidu’s top line.


An Quick Overview of Baidu’s Revenues

There are two main segments of Baidu’s revenue ($15 billion in 2018):

  • Baidu Core: Segment revenues are derived from advertising income and related services for merchants. Baidu continues to be the largest search engine in China with a market share of roughly 70%.
  • iQiyi: Segment revenues are derived from subscription of streaming and content marketing services. iQiyi is also known as the Netflix of China.

Baidu’s revenue has increased 46% over 2016-18 to $14.9 billion and is expected to increase 26% to $18.7 billion by 2020.

Baidu Core

  • Baidu’s core revenue is expected to grow by 15.6% over 2018-20 to $13 billion (an increase of $1.8 billion)
  • We expect revenues for the segment to be $12 billion (+7% y-o-y) in 2019.
    • Revenue growth is likely to be driven by strong growth in No. of Baidu users as well as an increase in average revenue per user (ARPU)
    • Over the next 2 years, we expect user growth of 6.7% from 692 million to 738 million, and ARPU growth of 8.3% from $16.3/user to $17.6/user
  • The growth in Baidu’s user base is likely to continue due to limited participation of foreign search engines in China. Also, the increasing component of AI in Baidu’s offerings is likely to help drive up pricing (through more intuitive ad serving).
  • Furthermore, Baidu’s growing focus on increasing user monetization is likely to lead to faster ARPU growth relative to user growth.


  • iQiyi is also known as the Netflix of China. iQiyi’s streaming business is also likely to benefit from increase in the artificial intelligence component in Baidu’s offerings.
  • Especially for content-based offerings, increase in receptiveness of suggestions is likely to influence incremental consumption and thus growth in revenue.
  • For iQiyi, revenue growth has been higher at a CAGR of 49% with the division adding $2 billion in revenues the last two years.
  • We expect revenues for the segment to grow to $5 billion (+28% y-o-y) in 2019.
  • Revenue growth of about $2.1 billion over two years to be driven by increasing online content consumption trends.

Additional details about actual revenues for Baidu’s segments over the years and our forecasts are available in our interactive dashboard.

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