BIDU(US:BIDU) Xin Lang Ke Ji·2025-08-19 01:24Core Viewpoint - Baidu is reportedly undergoing a significant adjustment in its advertising agency model, transitioning from exclusive agency arrangements in several cities to a service provider model, which has raised concerns among its long-time partners about the sustainability of their businesses [1][9][10]. Group 1: Agency Model Changes - Baidu is eliminating the exclusive agency mechanism in cities such as Jinan, Chongqing, Wuhan, Fuzhou, and Xiamen, shifting to a service provider operation model [1][9]. - The change has led to significant distress among long-time Baidu partners, with some agencies, like Kaichuang Group, facing severe operational challenges and employee salary delays [2][5][6]. - Kaichuang Group, once Baidu's second-largest advertising agency, has lost its exclusive agency status, making it vulnerable to competition from other agencies and Baidu's direct operations [7][8]. Group 2: Financial Performance - Baidu's Q1 2025 financial report indicates that online marketing revenue reached 16 billion yuan, a year-on-year decrease of 6%, highlighting a decline in the growth momentum of its core advertising business [3][13]. - Despite a 7% year-on-year increase in Baidu's core revenue to 25.5 billion yuan, the decline in online marketing revenue suggests underlying issues in the advertising segment [13]. Group 3: Market Challenges - The advertising agency sector is facing broader challenges, with multiple core agencies experiencing operational difficulties, which may reflect a deeper issue within Baidu's advertising business [12][14]. - The competitive landscape is intensifying, with platforms like Douyin, Xiaohongshu, and WeChat eroding traditional search advertising market share, prompting Baidu to rethink its strategies [15]. - Analysts have downgraded Baidu's advertising revenue forecasts for the upcoming quarters, indicating a pessimistic outlook for the company's advertising business [13].