Toutiao’s rise (and Baidu’s decline) reflects China’s changing marketing trends

China’s digital advertising market will reach over US$ 50 billion this year, and Chinese tech giant Baidu is poised to be one of its biggest beneficiaries. But according to an analysis (in Chinese) from Chinese media QDaily, in the future, the company may surrender its position to a newer contender, such as Chinese news aggregator app Jinri Toutiao (今日头条).

Toutiao’s impressive revenue growth backs up this claim. In 2014, the company reported RMB 300 million of revenue, while in 2015, that number reached RMB 1.5 billion. Last year, Toutiao reported RMB 6 billion of revenues from in-feed ads. This year, the company’s founder and CEO Zhang Yiming has set the target at RMB 15 billion.

This growth rate is similar to what Baidu experienced in 2011 during the golden age of PC when it reported RMB 14.5 billion of profits and established itself as a true Internet giant. Last year, however, Baidu earned RMB 64.5 billion from ads which was only 0.8% higher than the previous year. In Q3 of 2016, Baidu’s advertising business was down 6.7%.

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