Why Baidu has only 10% of revenue after switching phoenix nest

December 1st, Baidu’s new advertising system, phoenix nest will take over Baidu’s original search and promotion system, the change of the business system for Baidu is really considered a rush hour. Even Reuters also believes that Baidu brings an opportunity for Google phoenix nest switch". However, Baidu believes that the impact of switching systems on its next quarter revenue will only be around 10%, but also the chain. In other words, Baidu believes that the switching system may make its fourth quarter revenue decreased by $128 million over the third quarter, at around $1 billion 150 million.

such a big business move, why Baidu will have enough confidence to maintain the stability of revenue it, in fact, its core is still on the phoenix nest system interpretation.

Because Baidu had its

system in order to promote the professional edition and version of the classic, the operation of two different sets of bidding system, therefore, the "nest" of the new system that mainly focused on Baidu Professional Edition completely replace classic edition. That is to say, Baidu abandoned all rank promotion position on the left, follow Google in search results on the left only 6 advertising, as a result, Baidu advertising will be greatly reduced, increased the risk of Baidu revenue.

however, in half a month ago, Baidu management in the third quarter of fiscal year 2009 earnings conference call, Baidu vice president of business operations Shen Haoyu in response to the investment bank Piper Jaffray analyst gene Munster · when the problem is very clear, confidently said: "compared with the previous quarter, our revenue will be low about 10%, the main reason is that before December 1st, the main work of our customer service department is to help users to migrate to the new system; during this period, some customers may be left behind, or they migrate to the new system difficulties, or they are the system of hesitation, thus reducing expenditure. Therefore, we expect the impact of migration on revenue of about 10%." In Shen’s answer, did not mention the reasons for the reduction of advertising.

so, phoenix nest advertising in the end is what kind of? The following is the two Baidu advertising map. Figure 1 shows the location of the search results.


Figure 2 shows the results of each page.


can be seen from Figure 1, Baidu has retained all the advertising position, but for different keywords, will show the form of 1-A or 1-B.

Baidu retained the original professional edition and the classic version of all the promotion position, but the rules of the auction changed. In the past, the classic version is purely competitive, who pay more who will be ranked in front, and now, it greatly improves the quality of the weight of this variable >

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