The headline from this news item in the Drum on 2 May (‘Baidu Q1 profit and income drop as it transitions to AI-first company’) sounds broadly like bad news, but the detail tells a different story. Q1 profits down by a tenth a cause for concern? Not if your business is going through a transition to a different model – away from advertising and towards tech.
The Chinese search business is embracing artificial intelligence, through opportunities like AI cloud, autonomous driving and financial services, and its group president, Qi Lu, is sanguine about its profits and revenues taking a hit for a time, given the long-term promise of the moves.
The commercial and investment choices Baidu is making should be a reminder to all marketing, digital and creative businesses that change is the only constant right now. Standing still is a lot riskier than trying every day to take things in the right direction in an effort to be stronger tomorrow. It might be easier for Baidu than for some others to embrace that idea and invest big in future opportunities, but the mind-set of all parties should be the same. And actions are what count.
At Waypoint we work with marketing businesses all the time that need to embrace a new way of working to create value from a different platform. It’s nothing to be afraid of – quite the reverse, in fact.
by Miles Welch
Partner at Waypoint Partners