Core Insights - Baidu is reportedly initiating an adjustment in its agency model, transitioning from exclusive agency arrangements in cities like Jinan, Chongqing, Wuhan, Fuzhou, and Xiamen to a service provider operation model [1][4] - This change has caused significant concern among long-time Baidu agents, with some already facing severe operational challenges [1][2] - The financial struggles of major agents, such as Kaichuang Group, highlight a broader issue regarding the declining health of Baidu's advertising business [2][4] Company Performance - Baidu's Q1 2025 performance report indicates online marketing revenue of 16 billion yuan, a year-on-year decrease of 6% [1][5] - Despite core revenue growth of 7% to 25.5 billion yuan, the decline in online marketing revenue suggests a stagnation in Baidu's advertising business [5] - Analysts from Citigroup have downgraded Baidu's core advertising revenue forecasts for Q2 and Q3 by 6.1% and 8.9%, respectively, reflecting a negative outlook on advertising income [5] Industry Context - The shift in Baidu's agency model is seen as a response to increasing competition from platforms like Douyin, Xiaohongshu, and WeChat, which are capturing traditional search advertising market share [6] - The recent changes in Baidu's advertising strategy may be part of a larger effort to adapt to market pressures and improve user experience, despite potential short-term impacts on advertising revenue [6][7] - The transition from exclusive to general agency models indicates a significant shift in Baidu's approach to its advertising ecosystem, prompting agents to seek new business models and directions [7]